AGK.L Share News (AGK)

LONDON (Alliance News) - A largely positive week for UK equities ended on low note Friday, as the excitement caused by the first US Federal Reserve interest rate hike in almost a decade started to wear off.

"Despite seeing a very clear directional response to the Fed's hike on Wednesday, there are significant market jitters following yesterday's US led sell-off as the promise of a Santa rally threatens to slip away," said IG market analyst Joshua Mahony.

The FTSE 100 index closed down 0.8% at 6,052.42, but ended the week 1.7% higher. The FTSE 250 closed down 0.4% at 17,105.87 and ended up 1.4% on the week. The AIM All-Share was an outlier, ending up 0.4% at 725.15 on Friday but actually closing the week slightly lower.

In Europe, the situation was much the same. The French CAC 40 ended down 1.1% Friday but up 1.7% on the week, and the German DAX 30 ending down 1.2% but up 2.6% on the week.

On Wall Street at the London close, the Dow Jones Industrial Average traded down 1.1%, the S&P 500 was down 0.9% and the Nasdaq Composite ended down 0.6%.

The pound was a touch higher against the dollar from the London equities close Thursday. Sterling traded at USD1.4909 Friday, compared to USD1.4885 on Thursday. The euro was also higher at USD1.0848, compared to USD1.0818 Thursday.

London stocks' outperformance compared to Wall Street and Europe was due to a bounce in its heavily weighted resource sector amid firmer commodity prices. Brent oil dipped below the USD37 a barrel mark briefly during the session but at the London close was quoted at USD37.57 a barrel, not far off the USD37.19 price at the close on Thursday.

The price of gold was much higher than it was at the London close on Thursday, at USD1,065.60 an ounce, compared to USD1,052.20 an ounce on Thursday.

Anglo American led the best performers in the FTSE 100, up 5.7%, Royal Dutch Shell 'A' up 0.9% and Fresnillo up 0.8%.

Although a significant number of blue-chip gainers were resource stocks, analysts were not confident the rebound in commodity prices will be sustained.

"With commodity prices likely to remain under pressure, volatility here is likely to continue, inducing significant price swings in the process, but the recovery in miners has been helped somewhat by a rebound in copper prices which are finding support," said Michael Hewson, chief market analyst at CMC Markets.

Connor Campbell, financial analyst at Spreadex, also was cautious on commodities, saying "investors' current commodity concerns may well continue to nip any nascent Santa rally in the bud."

Cruise operator Carnival was also one of the top FTSE 100 performers, closing up 2.7%. The company reported a material rise in earnings during the last financial year as lower costs offset a dip in revenue caused by exchange rates, and Carnival said it is expecting its earnings to experience an even larger rise in 2016.

The company reported a 47% jump in pretax income to USD1.79 billion in the year ended November 30 from USD1.22 billion a year earlier, despite revenue taking a slight dip to USD15.71 billion from USD15.88 billion after taking a USD800.0 million hit from currency exchange rates.

Basic earnings per share for the year rose accordingly to USD2.26 from USD1.57.

In the FTSE 250, Restaurant Group ended up 3.0% at 675.00 pence after UBS initiated coverage on the stock with a Buy rating and 860.00p price target. The Swiss bank said it sees significant upside potential for the company driven by its restaurant roll-out.

UBS analyst Heidi Richardson believes the group's expansion potential could be four times the company's own targeted increase and could support double-digit revenue growth for 18 years, assuming 2.5% growth in like-for-like sales.

Bodycote also benefited from a positive broker note. N+1 Singer upgraded its rating on the specialty chemicals company to Buy from Hold, saying it expects market sentiment towards the company to improve in 2016, following a tough 2015 for the stock. Shares in Bodycote have fallen by 15% in the year to date.

The broker cut its price target on the stock to 635p from 785p, but said it sees "double digit upside risk" to its new target. Bodycote closed up 2.0% at 550.00p.

FTSE 250-listed temporary power supplier Aggreko closed down 2.3% after it confirmed it pulled out of the bidding process for the 2016 Rio de Janeiro Olympic and Paralympic Games.

The company said that it had made the decision after it had been advised it had not been awarded the first tranche of contracts, citing the preparation required for an event of that scale.

The economic calendar is quiet on Monday as the festive week begins. The Bank of Japan's monthly economic survey is released at 0500 GMT before German producer price index at 0700 GMT. The Deutsche Bundesbank's monthly report is at 1100 GMT at the same time as the results of the Confederation of British Industry's trades survey. The Chicago Federal Reserve national activity survey index is at 1330 GMT and preliminary reading of eurozone consumer confidence is at 1500 GMT.

The only scheduled release in the UK corporate calendar is a trading statement from JZ Capital Partners, which invests in US and European microcap companies and US real estate.

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

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