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LONDON (Alliance News) - The FTSE 100 closed at its highest level so far in 2016 Wednesday, with strong exports data from China boosting miners and other stocks with exposure to the Asian giant, but with Tesco missing the gains despite returning to profit in its recently-ended financial year.

The UK's biggest retailer reported a profit in financial 2016 and its first quarterly like-for-like sales growth in three years, but Chief Executive Dave Lewis said there is still much more to do to turn the business around. Shares in the blue-chip supermarket chain plunged 4.9%.

Tesco said it made a pretax profit in the year ended February 27 of GBP162.0 million, having suffered a GBP6.33 billion pretax loss the year before, when it booked a staggering GBP6.69 billion of impairments, writedowns and restructuring charges after admitting it had overstated profits in recent years by booking revenue too early.

These charges did not repeat in financial 2016, helping Tesco to return to profit once again, but the GBP162.0 million statutory pretax figure was considerably below the analyst consensus estimate of GBP447.0 million. Group operating profit before exceptional items, however, grew to GBP944.0 million from GBP940.0 million, beating analyst expectations of GBP932.0 million.

Revenue slipped to GBP54.43 billion from GBP56.93 billion, and while it was expected to fall, the final figure was slightly lower than the GBP55.32 billion analyst consensus estimate.

The FTSE 100 ended up 1.9%, or 120.50 points, at 6,362.89, its highest level so far in 2016.

Miners and other companies with exposure to China benefited from strong data from China's General Administration of Customs, which showed the country's exports climbed at the fastest pace in a year in March, while imports declined at a slower pace, suggesting that its economy is gaining momentum at the end of the first quarter.

Exports grew 11.5% year-over-year in March, above economists' forecasts for a 10.0% rise and reversing February's 25.4% decline. At the same time, imports dropped 7.6% in March from a year ago, slower than the expected 10.1% decrease, and a 13.8% fall seen in February. The trade surplus came in at USD29.9 billion in March, which was below the expected surplus of USD34.95 billion.

Asian stocks ended higher, with the Nikkei 225 index in Tokyo up 2.8%, the Shanghai Composite up 1.4% and the Hang Seng in Hong Kong up 3.2%.

In London, Standard Chartered rose 9.0%, whilst Burberry Group added 3.2%. Miners Anglo American ended up 6.6%, BHP Billiton up 7.9%, and Rio Tinto up 5.6%. Evraz ended at the top of the FTSE 250, up 11%.

Oil prices retained their gains from Tuesday, when Brent crude reached a four-month high at USD44.78 a barrel, after Russian news agency Interfax reported that Russia and Saudi Arabia reached a consensus on freezing oil output. Interfax cited a diplomatic source in Doha ahead of a meeting of oil producers in the capital of Qatar on Sunday.

Brent was quoted at USD44.26 a barrel at the London equities close, having stood at USD44.29 a barrel at the same time Tuesday. Meanwhile, gold stood at USD1,244.08 at the close, compared to the USD1,254.90 on Tuesday.

OPEC cut its forecast for global oil demand growth in 2016 and warned of further reductions, according to Reuters. The news agency said the Organization of the Petroleum Exporting Countries cited concern about Latin America and China, pointing to a larger supply surplus this year.

World demand will grow by 1.20 million barrels per day in 2016, OPEC said in its monthly report, 50,000 bpd less than expected previously. OPEC also cited the impact of warmer weather and the removal of fuel subsidies in some countries.

However, OPEC also said Saudi Arabia kept output steady in March, a sign Riyadh is serious about a discussing an output freeze on Sunday, Reuters said.

Shares in BP ended up 2.3%, while Royal Dutch Shell 'A' shares added 2.4%, closing around their highest level so far in 2016. Mid-cap oil company Tullow Oil edged up 11%.

The FTSE 250 ended up 1.5%, or 252.66 points, at 17,047.96 and the AIM All-Share rose 0.8%, or 5.49 points, at 731.19.

Mid-cap car parts and bicycles retailer Halfords Group rose 9.5%, after it said the recovery of its bicycles business continued in the fourth quarter, with revenue growth across the business. Total revenue for the 11 weeks to April 1 rose 3.2%, leaving total revenue up 1.7% for the 52 weeks to the same date.

Meanwhile, WH Smith shares fell 1.4% despite the books, stationary and magazines retailer saying its pretax profit grew in the first half of its financial year as a continued strong performance for its travel division pushed revenue higher. WH Smith said pretax profit for the half year to the end of February rose 11% year-on-year to GBP80.0 million from GBP72.0 million.

Investec analyst Kate Calvert said WH Smith delivered a consistent, in-line performance in the first half. However, shares in the company are up 32% in the past 12 months and currently trade on a 2017 price-earnings multiple of 17-times, well ahead of the 13.2-times general retail sector average. For any material rise in the shares to come about, Calvert said there would need to be merger and acquisition activity in the company's travel division.

In the London Main Market, Premier Foods dropped 27% to 41.54 pence. US spices and flavourings company McCormick & Co said it has not to make an offer for the UK food company after deciding it would not be able to make a bid which would secure approval from the Premier Foods board.

McCormick had tabled a 65.00p per share offer for Premier Foods at the end of March after the London-listed company had rejected two other offers. Premier then faced pressure from shareholders to enter into talks with McCormick and relented after the higher offer had been made. Premier said last week the talks with McCormick had been "constructive", but on Wednesday McCormick said it would not be making an offer for Premier.

The Chinese exports data euphoria was also spurring stocks in New York at the London close, with the Dow 30 up 0.9%, the S&P 500 up 0.8% and the Nasdaq Composite up 1.3%.

In Europe, the CAC 40 index in Paris closed up 3.3% and the DAX 30 in Frankfurt up 2.7%. European stocks were also supported by comments from Italy's Economy Minister Pier Carlo Padoan to financial daily Il Sole 24 Ore that there is no risk the EUR5 billion backstop fund to bail out the country's weaker lenders will be blocked by European authorities.

Investors in Europe shrugged off at a report from Eurostat showing that eurozone industrial production fell 0.8% in February from January, when it grew by a revised 1.9%. Economists had forecast a 0.7% drop. On a yearly basis, industrial output growth eased to 0.8% from revised 2.9% in January, below expectations of 1.2% growth. Nonetheless, production grew for the second straight month.

The euro was at USD1.1276 at the London equities close, against USD1.1386 at the same time Tuesday. Meanwhile, the pound was at USD1.4211, compared to USD1.4239 Tuesday.

Economists are expecting Thursday's Bank of England decision to be a non-event, with the Monetary Policy Committee to keep its bank rate at the record low level amid the impending EU vote. As the key June 23 referendum on the UK's status as a member of the European Union draws closer, the effects of uncertainty are creeping into UK data releases and is likely to mean the Bank of England will maintain its interest rate at 0.5%.

The decision is expected to be announced at midday, alongside minutes from the meeting.

Also in the economic calendar Thursday, the eurozone's consumer price index is due at 1000 BST. The same from the US is due at 1330 BST, as well as US initial and continuing jobless claims. President of the Federal Reserve Bank of Atlanta Dennis Lockhart gives a speech at 1500 BST.

In the UK corporate calendar, Burberry Group, Persimmon, Hays, Mothercare, PZ Cussons, Poundland Group, Scapa Group, Lavendon Group, and Alternative Networks release trading statements. Unilever publishes first-quarter results. JD Sports Fashion, Havelock Europa, Matchtech Group, Epwin Group, Avocet Mining and OptiBiotix Health release full-year results, whilst Debenhams and Scottish Oriental Smaller Companies release half-year results.

By Daniel Ruiz; danielruiz@alliancenews.com

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