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LONDON (Alliance News) - Stocks in London opened mixed Friday, with IAG as the worst blue-chip performer even though it reported a rise in operating profit in the third quarter and upgraded its profit guidance for 2015.
The FTSE 100 index opened down 0.1% at 6,389.83 points, the FTSE 250 was flat at 17,108.13, while the AIM All-Share was up 0.1% at 741.28. In Europe, the CAC 40 in Paris was up up 0.5% and the DAX 30 in Frankfurt was up 0.4%.
International Consolidated Airlines Group, which on Thursday approved its first dividend payment since it was created in 2011, said its operating profit in the third quarter to the end of September was EUR1.25 billion, up from EUR900.0 million a year earlier and still up to EUR1.21 billion when excluding the contribution from Aer Lingus Group, the Irish flag carrier IAG acquired this year.
For the nine months to the end of September, operating profit for the group was up to EUR1.77 billion from EUR1.05 billion a year earlier, a 69% rise.
The strong results in the quarter meant IAG has upgraded its operating profit guidance for the full year to EUR2.25 billion to EUR2.30 billion, a firmer target than the previous guidance for profit to be in excess of EUR2.20 billion. The new guidance also excludes any contribution from Aer Lingus.
Shares in the British Airways and Iberia owner were down 4.6% at the open.
Meanwhile, Royal Bank of Scotland Group was down 1.1%. It reported improved third-quarter net profit, as it booked a big gain on the loss of control of Citizens, the US retail bank it is selling, but warned that the costs of restructuring and addressing past conduct and litigation are not about to go away.
The bank said it made a GBP952 million net profit in the three months to September 30, compared with GBP896 million in the corresponding quarter the prior year. That included a GBP1.15 billion gain on the loss of control of Citizens, and the bank also confirmed that it is set to sell its remaining 20.9% stake in that bank.
Citizens Financial Group on Thursday said that RBS is now expected to exit its remaining 20.9% stake in the US retail bank. According to Citizens, RBS has launched a registered underwritten public offering to sell all of its remaining 110.5 million shares in the bank. RBS had previously set out plans to divest the rest of its stake by the end of 2015.
RBS peer Barclays was down 0.9% after several price target cuts from JPMorgan, Goldman Sachs, Exane BNP and Societe Generale. The bank closed Thursday as the biggest faller after it missed market expectations and cut guidance for 2016, as its adjusted pretax profit fell in the third quarter.
In the FTSE 250, Vectura Group is the best performer, up 4.7%, after it said it has secured two milestone payments following an approval of an inhaler in the US and after hitting a development milestone in Europe.
It said the US Food and Drug Administration has approved the dual combination Utibron Neohaler and Seebri Neohaler products for the long-term treatment of patients with chronic obstructive pulmonary disease. The approval has triggered a USD22.5 million milestone payment to Vectura from Swiss pharmaceuticals giant Novartis, Vectura's partner on the product.
Separately, the group has been paid a USD750,000 cash milestone after a further development milestone was hit for its VR632 therapy in the European Union. VR632 is an asthma and COPD inhaled treatment therapy which users Vectura's dry powder inhaler and formulation technology.
Outside company news, the Bank of Japan said that its Monetary Policy Board, governed by Haruhiko Kuroda, decided by an 8-1 majority vote to keep its target of raising the monetary base at an annual pace of about JPY80 trillion. The bank also maintained its asset purchase program unchanged.
Some economists had hoped that the Bank of Japan would announce additional stimulus, as the domestic economy is still struggling with deflation and a fits-and-starts recovery. The yen firmed up in reaction to the decision and is currently trading at the upper 120-range against the dollar.
"The market response suggests markets content with the status quo and especially the option for more QE later as well as the BoJ's confidence in a growth turnaround," said Accendo Markets analyst Michael van Dulken.
"Not dissimilar to the hawkish Fed statement mid-week seeing the positive outlook on growth outweighing the prospect of higher rates on the horizon. Markets still like cheap money, but may be coming round to a return to preference for actual growth," van Dulken added.
The Japanese Nikkei 225 index closed Friday up 0.8%. In China, the Shanghai Composite finished down 0.1%, while the Hang Seng in Hong Kong ended down 0.8%.
Wall Street ended mostly lower Thursday, with the DJIA down 0.1%, the S&P 500 flat and the Nasdaq Composite down 0.4%.
Growth in US economic activity slowed in the third quarter, according to a report released by the Commerce Department on Thursday. The report said annualised real gross domestic product rose by 1.5% in the third quarter compared to the 3.9% jump seen in the second quarter. Economists had expected a 1.7% increase.
In the economic calendar Friday, eurozone inflation and unemployment are at 1000 GMT. In the US, personal consumption data is at 1230 GMT, the Chicago purchasing managers' index is at 1345 GMT, and the Reuters/Michigan consumer sentiment index is at 1400 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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