AFR.L Share News (AFR)

LONDON (Alliance News) - UK shares ended broadly lower Monday, with weak oil prices weighing on the blue-chip and mid-cap indices and reversing an assault on the 7,000 point mark by the FTSE 100 earlier in the session.

The FTSE 100 ended down 0.1% at 6,940.64, having touched a new record intraday high of 6,974.26 after British manufacturing activity was reported to be the strongest in seven months.

The FTSE 250 finished down 0.1% at 17,249.92, after also reaching a new record intraday high of 17,335.01, while the AIM All-Share closed down 0.2% at 713.10.

"If the FTSE can sustain this form it could reach the 7,000 mark by the end of the month; however, at the moment oil seems set on spoiling the party," said Spreadex analyst Connor Campbell.

The price of Brent crude oil touched a low around USD60.73 Monday afternoon, and at the London close it was quoted USD60.94 a barrel. Oil-related companies were among the worst performers in both FTSE 100 and FTSE 250.

Tullow Oil was the biggest faller in the FTSE 100, down 7.8%, making it the leading candidate to drop out of the blue-chip index in this week's index review.

Tullow also warned Monday that it could be hurt by the ratcheting up of tensions in a maritime border dispute between Ivory Coast and Ghana. Tullow said it has been advised by the government of Ghana that the Ivory Coast has requested that provisional measures be put in place until the Special Chamber of the International Tribunal of the Law of the Sea has given a full verdict on a boundary dispute, which is expected towards the end of 2017.

Royal Dutch Shell 'B' shares, down 2.1%, and 'A' shares, down 1.3%, were among the worst performers in the FTSE 100 along with BG Group shares, which ended down 1.0%. BP shed 0.3%.

In the FTSE 250, Premier Oil was among the biggest fallers, down 6.2%, with Cairn Energy, down 4.1%, and SOCO International, down 3.0%, also among the worst performers. Ophir Energy lost 0.4%.

Meanwhile, the downtrodden shares of oil explorer Afren were the best performers in the mid-cap index, up 15%, after Afren said it has secured a further deferral of the USD50 million amortisation payment due on the USD300 million Ebok lending facility to March 31. The payment had been due on January 31. Afren also said it remains in talks with its bondholders and potential third-party financiers to secure its financial position.

European stocks also ended mixed, with the French CAC 40 off 0.7% and the German DAX 30 adding 0.1%, reflecting the differing fortunes of their local manufacturing sectors.

The headline manufacturing Markit PMI for France fell notably to 47.6 in February from 49.2 in January, versus the flash score was 47.7. Germany's PMI rose to 51.1 in February from 50.9 in January. The eurozone as a whole scored a final PMI reading of 51.0, unchanged from January's six-month high. The reading was below the flash score of 51.1.

British manufacturing activity was the strongest in seven months during February with growth in output and new orders strengthening further, creating more jobs, results of the survey by Markit Economics showed. The seasonally adjusted Markit/CIPS Purchasing Manager's Index for the manufacturing sector climbed to 54.1 in February. Economists had forecast a score of 53.3. January's reading was revised up to 53.1 from 53.0.

A PMI reading above 50 suggests expansion in the manufacturing sector. The UK index has now remained above the 50 mark for two years, the report added.

Eurozone inflation remained negative for the third straight month in February but the rate of decline in prices slowed more than expected, a flash estimate from Eurostat revealed. The harmonized index of consumer prices fell 0.3% from last year, slower than January's 0.6% decline and the expected decrease of 0.5%.

Meanwhile, the unemployment rate in the single-currency region also improved by more than expected. The rate fell to 11.2% in January down from the revised 11.3% in December. Economists had expected the figure to remain unchanged from the previous December reading of 11.4%.

On Greece, Spreadex Analyst Connor Cambell said: "Even on a day where the focus was elsewhere, important news managed to leak out in regards Greece. This time the information came from the mouth of Spain’s economy minister, who claimed that there will be a third, EUR50 billion bailout for Greece, with Spain itself providing around 14% of the figure."

Separately, Greece on Monday said it will not have any problem meeting its financial obligations this month, after reports indicated that the country might have difficulty repaying its international creditors in the coming months.

"The public should not be concerned...the Greek government has been looking for solutions to ensure there are no problems in paying the IMF and the other financial commitments we have in March," government spokesman Gavriil Sakellaridis said. He said the government would not have any trouble meeting its financial obligations, including a EUR1.5 billion International Monetary Fund repayment, this month.

Meanwhile, on Saturday, The People's Bank Of China said it has cut its one-year lending rate by 0.25 percentage point to 5.35%. The Chinese central bank also reduced deposit rates by 0.25 percentage points to 2.5%. The bank has made the rate cut in order to stimulate the world's second-largest economy amid concerns of slowing economic growth. The country is facing a weakening property market, a higher proportion of investment being sent offshore and a growing risk of falling prices.

Among non-oil stocks in London, British Land was among the best FTSE 100 performers, up 2.0%, after the property developer said it has bought the Surrey Quays Leisure Park in Canada Water for GBP135 million, completing its strategy of snapping up assets in the area as part of a regeneration plan.

Oxford Instruments was among the biggest gainers in the FTSE 250, up 5.5%. The maker of tools and systems for industry and research said it has agreed with its bank lenders to increase its revolving credit facility and extend its term for nearly two years, also increasing the net debt to earnings ratio covenant on the facility for a year.

Meanwhile, Amlin ended as the worst performer in the mid-cap index, down 6.2%. The insurer reported a drop in pretax profit in 2014 amid pressure on investment returns and a lower underwriting result. Nevertheless, Amlin said it would increase its ordinary dividend for the year by 3.8% to 27.0 pence per share, while also moving to declare a special dividend of 15.0 pence per share, citing confidence in its capital position.

In the US, with labour issues at West Coast ports continuing to cause problems for exporters, the Institute for Supply Management released a report on Monday showing that US manufacturing activity growth slipped to its lowest in more than a year. The ISM said its purchasing managers index fell to 52.9 in February from 53.5 in December, its worst reading in 13 months.

At London close, the Nasdaq Composite was up 0.7%, after touching a new record high at 5,000,33. The DJIA was up 0.7% and the S&P 500 was up 0.5%.

In the economic calendar Tuesday, German retail sales are at 0700 GMT, while UK construction PMI is at 0930 GMT. Eurozone producer prices are at 1000 GMT. In the US, Redbook index is at 1350 GMT, and ISM New York index is at 1445 GMT.

In the corporate calendar Tuesday, Barclays, Glencore, Direct Line Insurance Group, Clinigen Group, Ashtead Group, Costain Group, Impellam Group, Breedon Aggregates, Devro, Jardine Lloyd Thompson, James Fisher & Sons, Laird and Moneysupermarket.com Group also release full-year results. Johnson Service Group will provide first-quarter results, and Stagecoach Group will issue an interim management statement.

By Daniel Ruiz; danielruiz@alliancenews.com

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