Barclays Share News (BARC)

LONDON (Alliance News) - London's main stock indices closed higher Wednesday, following a banquet of mostly positive UK corporate news for investors to chew over before a US Federal Reserve interest rate decision later in the evening.

The FTSE 100 closed up 1.2% at 6,631.00, and the FTSE 250 ended up 0.7% at 17,501.84, but the AIM All-Share closed flat at 749.16.

In mainland Europe, the CAC 40 in Paris ended up 0.8% and the DAX 30 in Frankfurt up 0.3%.

On Wall Street at the London close, the DJIA was trading up 0.6%, the S&P 500 was up 0.5%, while the Nasdaq Composite was up just 0.1%. Twitter shares were weighing on the Nasdaq index, down 13%, after its poorly received earnings report.

Investors will now be looking ahead to the US Fed's statement at 1900 BST in search for any clues about the timing of its first interest rate hike in nine years. Fed Chair Janet Yellen has indicated it would be appropriate to raise interest rates before year-end if the US economy evolves as expected, although she also has noted the timing of the first rate hike will be determined on a meeting-by-meeting basis.

It is largely expected that there will be no changes to monetary policy in Wednesday's statement but many market participants are looking at September as the month when the central bank will make its first move on interest rates.

"Any changes in the Fed's language will be heavily scrutinised for clues on whether the first hike could come at the next meeting in September. Naturally, different people will interpret the data very differently, probably dependent on their own bias and the result is big market swings and huge volatility. Especially given the proximity to the potential lift-off date," said Craig Erlam, senior market analyst at Oanda.

Analysts at Societe Generale anticipate the Fed decision to be uneventful, but they continue to maintain their central scenario of a September rate hike.

"Recent Fed speeches – particularly by Chair Yellen – suggest that the Fed has a strong desire to begin policy normalization and would like to start the process sooner rather than later. The hurdle with respect to domestic data appears to be quite low, and we believe that economic conditions will support a rate-hike decision by the September FOMC meeting," SocGen said. "If there is a delay, it will likely be driven by international or financial developments."

On the London Stock Exchange, GlaxoSmithKline reported half-year results at midday which drove its shares 3.1% higher. The pharmaceutical giant said it was on track to achieve its guidance for 2015, and said it remains confident in its outlook for 2016, as exceptional gains from asset sales helped boost profit in its first half.

It posted a pretax profit of GBP10.08 billion for the half year to end-June, increased from GBP1.89 billion a year before primarily, as a result of a GBP8.45 billion gain related to the sale of its oncology business to Novartis. Revenue rose to GBP11.51 billion from GBP11.17 billion.

British American Tobacco closed up 3.6% as it reported growth in profit in the first half of 2015, although revenue was hit by adverse exchange-rate movements, but BAT said it remains confident it will deliver an improved performance in the second half.

The FTSE 100-listed tobacco company reported a rise in pretax profit in the six months to June 30 to GBP3.5 billion from GBP2.6 billion, as revenue grew 2.4% at constant currency rates to GBP7 billion from GBP6.8 billion, but declined 5.9% to GBP6.4 billion at current rates. It said that revenue was driven by good pricing, but was hit by negative currency movements.

Barclays closed up 1.8% after it reported a jump in second-quarter net profit. Newly appointed Executive Chairman John McFarlane said the bank intends to pay a flat dividend for 2015 and wants to intensify efforts to cut risky assets in its non-core division.

Net profit increased to GBP1.15 billion in the quarter ended June 30, compared with GBP161 million in the corresponding period the prior year. The numbers included a GBP496 million gain on assets acquired from failed investment bank Lehman Brothers in 2008 and provisions of GBP850 million for customer compensation in the UK, among other charges.

Compass Group shares ended as the worst blue-chip performers down 5.3%, having hit their lowest level so far in 2015. The catering services and outsourcing company said it would book some restructuring charges related to its oil and gas-exposed business, which will flatten its margins for the 2015 financial year, though organic revenue held up in the third quarter.

Compass said it is delivering good operating efficiencies in its 2015 financial year and said its operating margin has improved in the first nine months. But Compass said that, in addition to the ongoing restructuring activities it has undertaken, it is pro-actively cutting costs in its offshore and remote business, which primarily serves the oil and gas and mining industries.

The incremental restructuring plan it will launch for this division will cost the company GBP20 million to GBP25 million a year in both 2015 and 2016 and, as a result, will mean its operating margin for the 2015 financial year to the end of September will be flat.

In the FTSE 250, Premier Farnell shares closed 16% lower, after hitting a six-year low. The technology products and services company warned it now expects its adjusted operating profit for its first half to be down 10% compared to the previous year, hit by slowing sales, challenging market conditions and the continued weakness of the euro. As a result, it now expects full-year adjusted operating profit to be down around 6% compared to the previous year.

Foxtons Group rose 7.4% after it said it expects to meet market expectations for its full year, as it posted a fall in pretax profit for its first half. Foxtons posted a pretax profit of GBP18.1 million for the half year to end-June, down from GBP23.1 million a year before, as revenue fell to GBP71.1 million from GBP72.8 million and administrative costs rose to GBP53.0 million from GBP49.8 million as a result of an increase in the company's branch network.

Greggs was the best mid-cap performer, however, ending up 8.5%. The bakery and food-to-go retailer reported a big rise in profit in the first half of 2015 and said it is confident it will deliver a good year of growth ahead of its previous expectations.

The company reported a jump in pretax profit in the 26 weeks to July 4 to GBP25.6 million from GBP8.6 million, as revenue grew to GBP398.4 million from GBP374.4 million. It said that revenue was boosted by an improvement in its products and due to investments it made into its shop estate. Profit also had been hit the year before by exceptional costs of GBP8.3 million.

Greggs share set a new 52-week high of 1,293.00p during trading and have more than doubled over the past year.

In the economic calendar Thursday, there are Japanese industrial production at 0050 BST, and German unemployment data at 0855 BST. The European Central Bank will publish its economic bulletin at 0900 BST, before European business sentiment survey results at 1000 BST. In the afternoon are German inflation data at 1300 BST, followed by US second quarter GDP at 1330 BST.

In the UK corporate calendar, there are half-year results from FTSE 100-listed AstraZeneca, Royal Dutch Shell, Centrica, Intercontinental Hotels Group, Schroders, BAE Systems, Rolls Royce Holdings, Royal Bank of Scotland Group, Smith & Nephew, Diageo, Intu Properties and Merlin Entertainments. There also are updates from a host of FTSE 250-constituents including Henderson Group, Inchcape and Laird. BT Group releases first quarter results, and Babcock International Group releases a trading update.

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

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