ADN.L Share News (ADN)

LONDON (Alliance News) - UK stocks edged higher Monday in a gentle start to the week, though oil prices sank after the Organization of the Petroleum Exporting Countries said it now expects lower demand for its crude oil in 2016 than previously anticipated.

In its monthly report, OPEC said demand for its crude oil is projected at 31.5 million barrels per day in 2016, down by about 100,000 barrels per day than it had forecast in its last report.

The oil cartel said its crude supply decreased by 175,000 barrels a day in February, to average around 32.3 million barrels per day, according to secondary sources. This was due to decreases in output by Iraq, Nigeria and UAE, which offset increases from Iran, Saudi Arabia and Kuwait.

According to the OPEC report on Monday, Iran produced 3.1 million barrels a day in February, up from 2.9 million in January. On Sunday, Iran's oil Minister Bijan Namdar Zanganeh reiterated the country intends get production up to 4.0 million barrels a day, the level it saw before international sanctions were imposed due to concerns about its nuclear programme.

Crude oil prices dropped Monday. At the London stock market close Brent oil was quoted at USD39.11 a barrel, down from USD40.47 seen at the same time on Friday.

Gold was also lower, trading at USD1,243.00 an ounce at the London close against USD1,260.50 on Friday.

The FTSE 100 ended the day up 0.6%, or 34.78 points, to 6,174.57, with the blue-chip index moving within a 30 point range for the majority of the session. The FTSE 250 closed up 0.6%, or 97.85 points, to 16,693.10, and the AIM All-Share ended up 1.5%, or 10.54 points, to 713.00.

In Europe, the CAC 40 index in Paris closed up 0.3% and the DAX 30 in Frankfurt ended up 1.6%.

In the only economic news of the day from Europe, eurozone industrial production rebounded to the fastest pace of growth in more than six years.

Industrial production grew 2.1% month-on-month in January, partly reversing a revised 0.5% fall in December, data from Eurostat revealed. Production growth was the fastest since September 2009, when output climbed 2.3%. Economists had forecast a 1.7% rise for January.

However, Jack Allen, a European economist at Capital Economics, said January's strong rise in euro-zone industrial production was probably just a blip. Survey evidence suggests that the sector remains too weak to prevent the region's economic recovery from slowing this year, Allen noted.

The euro was largely unmoved by the data. At the London stock market close it traded the dollar at USD1.1111, lower than the USD1.1181 seen at the market close on Friday.

The pound, meanwhile, was quoted at USD1.4322 against the dollar at the London close, versus USD1.4391 at the close on Friday.

In the London stock market, emerging markets-focused financial companies Aberdeen Asset Management, up 7.0%, and Standard Chartered, up 3.1%, were among the best performers in the FTSE 100, alongside miners Anglo American, up 4.7%, and Glencore, up 4.5%. The stocks were helped by the Chinese stock market regulator, which over the weekend pledged to support the domestic equity market.

Old Mutual, which closed up 3.2%, named Rob Leith, a former global head of investment banking and global markets at Russia's Sberbank CIB, to oversee the separation of its four main businesses, in a move designed to cut debt, costs and complexity.

The four divisions include the Anglo-South African financial services group's 66% stake in New York-listed OM Asset Management and a 54% stake in Johannesburg-listed lender Nedbank, already publicly traded entities in their own right. The separation "may involve equity market activity" for Old Mutual's UK-focused wealth management arm and its emerging markets business based in South Africa.

Hotels operator InterContinental Hotels Group also closed as one of the best performers in the FTSE 100, up 2.8%, as more merger and acquisition news emerged in the hotels sector.

Starwood Hotels & Resorts Worldwide said it received a non-binding proposal from a consortium of companies to acquire all of the outstanding shares of common stock of Starwood for USD76.00 per share in cash.

On November 16 last year, Starwood entered into a definitive merger agreement with Marriott International under which Marriott would acquire Starwood in a stock and cash transaction. Starwood has received a waiver from Marriott enabling it to engage in discussions with, and provide diligence information to, the consortium in connection with its proposal.

IHG would be a "natural new target" should the Starwood deal not come off, according to Jasper Lawler, an analyst at CMC Markets, who said the latest development "speaks well" for takeover activity in the hotels sector.

NMC Health closed as the best performer in the FTSE 250, up 6.4%, as it gave a positive outlook for 2016, set to benefit from the fast growing private healthcare market in the United Arab Emirates, even as it faces a newly enlarged competitor in Mediclinic International.

The private healthcare operator said that it expects a good year for the UAE's economy in 2016, supported by gross domestic product growth of around 3.0% despite lower oil prices, based on forecasts from rating agencies.

For the healthcare sector specifically, a key driver will be the ongoing adoption of mandatory healthcare insurance in Dubai, with an expected increase in insurance-covered patients rising to 3.0 million from 1.0 million, according to the Dubai Healthcare Authority, NMC said.

St Mowden Properties Group, up 5.4%, benefited from an upgrade to Buy from Hold by Liberum. The broker said the uncertainty surrounding the New Covent Garden Market scheme in south London has been excessive.

Russia-focused property investment group Raven Russia said it was continuing to "batten down the hatches" as it suffered from the downturn in the Russian economy caused by western sanctions imposed on the country and other economic problems.

The Russian market has been under significant pressure, first due to economic sanctions placed on the country by western powers over Russia's actions in Ukraine, but also due to the sharp decline in the world oil price, a major part of Russia's economy.

Raven made a pretax loss of USD205.1 million in 2015, compared to a loss of USD98.0 million in 2014, mostly as a result of the group booking a USD251.2 million loss on the value of its investment portfolio.

The stock closed as the worst performer in the FTSE All-Share, down 8.9%.

The AIM All-Share was boosted by GW Pharmaceuticals, which saw its share price more than double after the company reported positive results from a key late stage study of its flagship treatment epidiolex in Dravet syndrome, a rare form of childhood epilepsy.

GW Pharmaceuticals said it achieved its primary endpoint in the study of a "significant reduction" in convulsive seizures compared with a placebo.

Epidiolex has both an orphan drug designation, and a fast designation from the US Food and Drug Administration in the treatment of Dravet syndrome, and is also being assessed in late stage trials for Lennox-Gastaut syndrome, also another rare form of epilepsy, and soon in a third epilepsy indication, Tuberous Sclerosis Complex.

The main focus in the economic calendar for Tuesday comes before the London stock market open. The Bank of Japan will disclose its monetary policy decision at 0300 GMT, followed by a press conference at 0630 GMT. It will be the Japanese central bank's first decision after it lowered its interest rate into negative territory in January.

Later, French and Italian inflation readings are at 0745 GMT and 0900 GMT. Employment changes for the eurozone are reported at 1000 GMT.

In the afternoon, the New York state manufacturing index is at 1230 GMT, as are US retail sales and producer price index. US business inventories and the National Association of Home Builders' housing markets index are both at 1400 GMT.

The highlights in the UK corporate calendar are full-year results from miner Antofagasta and life insurer Legal & General, while a trading statement from supermarket chain J Sainsbury will also be of interest.

In the FTSE 250, there are full-year results from construction and infrastructure group Balfour Beatty, steel maker Evraz, vehicle distributor and retailer Inchcape, property investor Hansteen Holdings and oil and gas company Cairn Energy. Online grocery delivery service Ocado Group releases a first quarter trading update.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

Copyright 2016 Alliance News Limited. All Rights Reserved.