ATK.L Share News (ATK)

LONDON (Alliance News) - London share prices ended lower Thursday, after both the Bank of England and the US Federal Reserve warned on the potential implications a Brexit could have on the global economy, as a new poll gave the Leave campaign the lead a week ahead of the EU referendum.

The FTSE 100 fell 0.3%, or 16.32 points, to 5,950.48. The blue-chip index jumped at the end of the session, taking back much of the day's losses. The FTSE 250 ended down 1.6%, or 266.28 points, to 16,032.04, while the AIM All-Share finished down 1.1%, or 7.76 points, to 709.29.

"The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets," the BoE said in a statement following its monetary policy meeting.

The BoE cautioned that a vote to leave the EU on June 23 could materially alter the outlook for output and inflation, and therefore the appropriate setting of monetary policy. In the face of greater uncertainty about the UK's trading arrangements, sterling was likely to depreciate further, perhaps sharply, the bank noted.

The pound was close to falling below the USD1.40 line, touching a low of USD1.4013 for the first time since early April. However, it recovered some ground at the London equities close, quoted at USD1.4082, compared to USD1.4195 at the same time Wednesday.

The Monetary Policy Committee, led by Governor Mark Carney, voted 9-0 to hold interest rates at a record low 0.50%. Rates have been at this low level for seven years. Policymakers also unanimously voted to maintain quantitative easing at GBP375 billion.

Thursday evening, Carney and UK Chancellor George Osborne will give a speech at the Mansion House Bankers Dinner at 2100 BST.

With just a week left before the deciding vote, a Survation poll on behalf of IG showed the Leave campaign in the lead at 45%, up 7 percentage points since Survation's last poll, whilst Remain was at 42%, down 2 points, and 13% were undecided, down 5 points from the previous poll.

"Interestingly for all the Brexit-fear currently plaguing the markets, Spreadex has seen a consistent trend of clients opting to put their money behind the Remainers. In both size and frequency of bet choosing to stay in the EU has come out on top, that support by and large continuing throughout the last fortnight despite the deluge of polls having Vote Leave pulling ahead," said Spreadex analyst Connor Campbell.

Campbell highlighted that in the run up to the General Election in 2015, Spreadex's clients consistently backed a Conservative majority even as the polls showed Tories and Labour neck-to-neck. "So it isn't hard to imagine a similar outcome this time around," Campbell noted.

The BoE echoed Fed Chair Janet Yellen's comments late Wednesday, when she warned of the "consequences" of Brexit for economic and financial conditions globally.

Yellen noted in her press conference that the possibility the UK will leave the EU was "one of the factors" in the Federal Open Market Committee's decision against hiking the US benchmark interest rate, with the Fed Funds rate left at 0.25-0.50%. Brexit "could have consequences for economic and financial conditions in global financial markets. If it does so, it could have consequences, in turn, for the US economic outlook," Yellen said.

The Fed also cited the slowing "pace of improvement" in the US labour market, low inflation and geopolitical headwinds as other reasons not to hike rates in its June monetary policy meeting.

The Fed's dot-plot of FOMC members' interest rate forecasts still signalled two rate increases this year, but now six out of the 17 participants anticipated only one rate hike this year, up from one participant in March.

The US Labor Department said US inflation edged up by 0.2% month-on-month in May after climbing by 0.4% in April. Economists had expected prices to rise by 0.3%. On an annual basis, inflation rose 1.0% in May from 1.1% in April.

Excluding food and energy prices, the core consumer price index rose by 0.2% month-on-month, matching the increase seen in the previous month as well as economist estimates. On a yearly basis core inflation rose by 2.2% from 2.1% in April.

Meanwhile, first-time claims for US unemployment benefits climbed more than expected in the week ended June 11, another report from the Labor Department showed. The report said initial jobless claims rose to 277,000 from the previous week's unrevised level of 264,000. Economists had expected jobless claims to edge up to 270,000.

In New York, stocks were lower, with the Dow 30 index down 0.4%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.7%.

In Asia, the Nikkei 225 index in Tokyo ended down 3.1%, the Shanghai Composite closed down 0.5%, and the Hang Seng in Hong Kong fell 2.1%. Early Thursday, the BoJ matched expectations by keeping its monetary stimulus unchanged as policymakers wait to the see the full impact of the negative policy introduced early this year.

In Europe, the CAC 40 in Paris fell 0.5%, while the DAX 30 in Frankfurt dropped 0.6%. The euro was quoted at USD1.1114 at the equities close, having stood at USD1.1249 late Wednesday.

Among individual stocks in London, Randgold Resources and Fresnillo ended as the best two performers in the FTSE 100, up 4.8% and 1.6%, respectively. The gold miners benefited from an increase in the precious metal's price. Gold was at USD1,309.49 an ounce at the close, compared to USD1,284.20 on Wednesday. Gold touched a high of USD1,315.44, its highest level since August 2014. FTSE 250-listed peer Centamin rose 4.9%.

Meanwhile, BP also ended among the blue-chip gainers, up 0.3%, after the oil major was upgraded to Buy from Neutral by Citigroup. BP shrugged off the decline in crude prices. Brent oil was down for sixth consecutive session, quoted at USD47.48 a barrel at the close, compared to USD49.24 on Wednesday.

Back to the mid-cap index, N Brown Group was the biggest gainer, up 5.5%. The home shopping and catalogue retailer reported a fall in revenue in the first quarter of its financial year, but said it is trading in line with expectations and left its full-year guidance unchanged.

WS Atkins added 5.3% after the design, engineering and project management consultancy posted a 23% rise in pretax profit for its financial year, which it said was ahead of market expectations despite continuing uncertainty in some of its markets. WS Atkins declared a dividend for the year of 39.5 pence per share, up 8.3% from 36.5p the year earlier.

Safestore Holdings edged up 2.3%. The self-storage provider said it expects its earnings for its full financial year to be "modestly above the top end of current market expectations", although its pretax profit dipped in its first half as the gain on investment properties came in lower. The company declared an interim dividend of 3.60p per share, up 20% from 3.00p a year earlier.

Bookie William Hill fell 7.1% after Investec cut its recommendation to Reduce from Add. The broker said "internal issues not seen by competitors, technology risk and regulatory headwinds combine to create a bleak outlook" for the company.

In the UK corporate calendar Friday, Record, John Laing Environmental Assets Group, and Real Estate Credit Investments PCC release full-year results.

In the economic calendar, the eurozone current account is at 0900 BST, while US housing starts are at 1330 BST. The US Reuters/Michigan consumer sentiment index is at 1500 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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