ALO.L Share News (ALO)

LONDON (Alliance News) - UK stocks had settled down by midday Tuesday but still traded lower after declining at the open following a weak performance by Asian equity markets.

Building materials company Wolseley led the biggest FTSE 100 fallers. It said its pretax profit was lower due to one-off charges, but its trading profit pushed higher and it will return GBP300.0 million to shareholders via a share buyback.

Wolseley said its pretax profit for the year to the end of July was GBP508.0 million, compared to GBP676.0 million a year earlier, due to it booking GBP242.0 million in exceptional charges in the year, mostly related to a GBP234.0 million write-down on its business in the Nordic region.

But trading profit for the group was up to GBP857.0 million from GBP752.0 million a year earlier, driven by revenue rising to GBP13.30 million from GBP11.95 billion a year earlier. Trading profit for the group is defined as operating profit before exceptional items and the amortisation and impairment of acquired intangibles.

However, Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said: "Management caution in relation to the outlook for North American industrial markets provides a clear focus, with a downgrading of 2016 first half like-for-like revenue guidance key. The UK heating market continues to prove challenging, while a previously announced impairment charge taken in relation to its Nordics business adds to the negativity."

Wolseley shares were trading down 12% at 3,683.00 pence, having earlier hit a low of 3,618.00p, their lowest price since January 19.

The FTSE 100 index was 0.5% lower at midday to 5,926.34 points. The FTSE 250 was down 0.6% at 16,507.50 and the AIM ALL-Share was down 0.6% as well to 722.55 points.

European stock indices were outperforming London, with the CAC 40 index in Paris up 0.2% and the DAX 30 in Frankfurt up 0.3%.

Asian stocks fell sharply on Tuesday, with the Nikkei 225 index in Tokyo ending down 4.1%, the Hang Seng closing off 3.0% and the Shanghai Composite index down 2.0%. Hong Kong had been closed on Monday for a holiday.

In the US, futures indicated Wall Street for a higher open, with the Dow 30 index and Nasdaq 100 both pointed up 0.2% and the S&P 500 up 0.3%.

Elsewhere in the London market, Glencore shares were rebounding strongly from their 16% decline on Monday, when broker Investec published a note suggesting it and rival Anglo American could see their equity value all but "evaporate" should commodity prices remain low.

On Tuesday, UBS published a note in which it maintained its Buy rating on Glencore and said its shares have been oversold. UBS said it expects the stock to re-rate over the coming 6 to 12 months. Glencore traded up 3.8% at 71.35p, having set a new all-time low of 66.67p on Monday.

Other resource stocks also were rebounding from Monday's losses, with Royal Dutch Shell 'B' shares up 2.4%, BP up 1.6% and Antofagasta up 1.7%. However, Anglo American traded down 0.8%.

In the FTSE 250, Tullow Oil was up 2.8% at 162.00p, after receiving upgrades from Cantor Fitzgerald and Macquarie, with both brokers saying they now see the stock fairly valued. Shares in the oil and gas company have retreated by 65% from its peak of 456.90 pence seen in April.

Mitie Group traded up 3.3% after it said it has performed well in the first half of its financial year and said it remains confident of delivering robust organic revenue growth for the year to the end of March.

The FTSE 250-listed outsourcer said its organic revenue has been strong in the first half, ending on Wednesday, with growth driven by new contracts and expansions of existing deals. Mitie said 94% of its target revenue for the full year has been secured and it said its overall performance will be weighted, as normal, to the second half.

Mitie also said it is confident that the introduction of the National Living Wage in the UK, an effective minimum wage for over-25s, will not have a material impact on its future earnings.

On AIM, Alecto Minerals traded up 33%. The miner said it has completed an internal scoping study on an enlarged project following on from its joint venture agreement with Desert Gold Ventures back in March. The companies signed a co-operation agreement to jointly develop their neighbouring gold deposits in Mali.

The internal scoping study has suggested there are "significant cost savings" to be made by jointly developing the two projects.

Panmure Gordon shares were hit after it said it swung to a pretax loss in the first half of 2015 as net commission and fee income declined amid tough market conditions. The stockbroker said its pretax loss for the six months to the end of June was GBP230,000, compared to a GBP2.0 million profit a year earlier, as its net commission and fee income declined 20% to GBP13.1 million from GBP16.2 million.

The company said the first half had been challenging on a number of fronts, given external factors such as the UK General Election in May, disruptive market volatility in China and the economic fallout from Greece's debt negotiations. Panmure traded down 21%.

In domestic economics news, UK mortgage approvals increased to a 19-month high in August, the Bank of England reported. The number of mortgage approvals increased to 71,030 from 69,010 in July. This was the highest since January 2014, when it totalled 75,611 and was also above the expected level of 69,800.

The stronger mortgage approvals data reinforce the belief that house prices will see solid increases over the coming months, IHS Global Insight Economist Howard Archer, said. It is likely that August's performance may have been lifted by some house buyers looking to move quickly to try to lock in a low mortgage interest rate before they start rising, he added.

Still ahead in the economics calendar, the German consumer price index is due at 1300 BST before US Redbook index at 1355 BST and consumer confidence at 1500 BST. Bank of England Governor Mark Carney will be speaking at Lloyds of London at 2015 BST.

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

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