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LONDON (Alliance News) - UK stocks started Thursday higher, helped by a dovish interest rate guidance by the US Federal Reserve, while FTSE 100 miner Rio Tinto and pharmaceutical giant GlaxoSmithKline both announced that their chief executives are to retire.
Anglo-Australian miner Rio Tinto said Chief Executive Sam Walsh will retire from his role in July.
Walsh, 66, has been chief executive since 2013 and on the Rio Tinto board since 2009. He will be replaced by Jean-Sebastien Jacques, currently the chief executive of Rio's Copper & Coal business. Jacques will become deputy chief executive, and will join the board, with immediate effect to ensure a smooth transition.
Shares in Rio Tinto were up 5.1%, joining a broader rally in commodity stocks.
Also retiring is Andrew Witty, chief executive of drugmaker GlaxoSmithKline. The FTSE 100-listed group said a formal search for his successor will now begin, with internal and external candidates to be considered.
"GSK is a very special company with an inspiring mission and many dedicated people. By next year, I will have been CEO for nearly ten years and I believe this will be the right time for a new leader to take over," said Witty, who is due to step down in March 2017.
Glaxo was down 0.2%.
The FTSE 100 moved up 0.5%, or 32.84 points, just after the open to 6,208.33. The blue-chip index opened higher after the Federal Reserve left its benchmark interest rate unchanged late Wednesday and now only expects to raise US rates twice in 2016, having predicted four hikes in its December meeting.
The interest rate guidance came below market expectations and sent the dollar lower against other currencies. The dollar's decline supported commodity prices, with gold now trading at USD1,265.50 an ounce, up from USD1,228.57 at the London stock market close on Wednesday.
The rise in the gold price supported shares in precious metals miners, with Fresnillo up 5.5%, Centamin up 7.3%, and Acacia Mining up 5.3%.
Multi-commodity miners were performing even better, with Anglo American up 9.6%, Glencore up 8.1% and Antofagasta up 7.1%.
Oil prices also rose. US benchmark West Texas Intermediate traded at USD39.34 a barrel just after the London open Thursday, up from USD37.74 a barrel just before the Fed statement on Wednesday.
Oil-related stocks rallied on the higher oil prices. BP was up 2.2% and Royal Dutch Shell 'B' up 1.7%.
The FTSE 250 was up 0.6% at 16,860.05, while the AIM All-Share was down 0.2% at 708.67. European stocks also started brightly. The CAC 40 in Paris was up 0.8% and the DAX 30 in Frankfurt up 0.5%.
In Asia, the Japanese Nikkei 225 index ended down 0.2%, the Shanghai Composite closed up 1.2% and the Hang Seng index in Hong Kong up 1.2%.
Elsewhere in UK corporate news, OneSavings Bank was one of the best performers in the FTSE 250, up 5.8%. The challenger bank said pretax profit for the year to the end of December grew to GBP105.3 million from GBP63.7 million a year earlier. This was helped by costs associated with its listing in London in June 2014 not repeating.
Loans and advances for the group grew 31% in the year to GBP5.1 billion from GBP3.9 billion in 2014, driven by robust organic loan origination activity and the acquisition of a second-charge mortgage portfolio. The cost-to-income ratio also improved, down to 26% from 28% thanks to strong income growth and a focus on cost controls in the business.
Kier Group, up 2.2%, said pretax profit declined in the first half of its financial year, as the cost of the integration of its Mouchel acquisition offset a rise in revenue.
The property, residential, construction and services company said pretax profit for the six months to the end of December was GBP18.0 million, a 35% fall from the GBP27.8 million reported last year, as non-underlying costs came in at GBP26.2 million from GBP9.2 million in 2014.
This included a cost of GBP15.5 million for the integration of UK-based infrastructure and business services company Mouchel, which Kier acquired in April. Kier said the cost was "as forecast", adding the integration was "substantially complete". Stripping out these costs, underlying pretax profit was up 19% to GBP44.2 million from GBP37.0 million.
Kier said there were "robust pipelines in property and residential" and noted its order books total GBP9.00 billion in construction and services. It said it is on course to deliver its expectations for the full year.
Premier Farnell was the worst performer in the FTSE All-Share, down 6.0%. The technology products distributor said its pretax profit sank in its recently-ended financial year due to a margin squeeze caused by a strong dollar, pricing pressure and a less-favourable sales mix.
The company said its pretax profit for the year to the end of January was GBP29.2 million, compared to GBP54.1 million a year earlier, even though revenue increased to GBP982.7 million from GBP960.1 million.
The profit line took a hit from the group's gross margin declining to 34.4% from 36.8%. The group also booked costs related to the sale of its Akron Brass business, which it offloaded in March 2015 for USD224.2 million.
In the economic calendar, focus will be on the Bank of England which will announce its monetary policy decision at noon alongside its meeting minutes. The monetary policy committee is unlikely to bring in any surprises say analysts.
There are also eurozone trade balances and inflation data at 1000 GMT. US current account and continuing and initial jobless claims are at 1230 GMT, alongside the Philadelphia Fed manufacturing Survey. US JOLTS job openings and Conference Board leading indicator are at 1400 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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