BP Share News (BP.)

LONDON (Alliance News) - The FTSE 100 closed higher for the second day in a row Tuesday, ending the day at its highest closing level since March 6, buoyed in part by a strong performance by oil major BP and drugs company Shire.

Meanwhile, it was a volatile day for the pound. Sterling fell sharply against the euro and the dollar in the wake of some weaker-than-expected UK gross domestic product data, before re-making the losses as the session progressed.

BP, which is the second largest company in the FTSE 100 by market capitalisation, closed up 0.5%. The oil giant's shares rose after it said its pretax profit fell 73% in the first quarter, due to lower revenues and after last year's result was buoyed by the sale of its stake in TNK-BP, but it raised its quarterly dividend for the second time in six months and said further share buybacks were possible.

It raised its quarterly dividend by 8.3% to USD9.75 cents per share and said it remains confident on achieving its planned targets in 2014.

BP Chief Executive Bob Dudley called the company's performance a "very solid start" to the year and highlighted strong operating cash flow, exploration success, upstream project start-ups, and the ramp-up of its upgraded Whiting refinery.

However, BP said that it is still working out how the latest sanctions against Russian interests will affect its investment in gas giant Rosneft. BP has a 19.75% stake in the world's largest extractor of natural gas. Rosneft CEO Igor Sechin was among those hit by the latest sanctions from the US Monday as the west continued to ramp up pressure on Russia over the crisis in Ukraine.

Pharmaceuticals company Shire ended up 3.7%, having spent a large part of the day as the biggest blue-chip gainer after Reuters quoted people familiar with the matter saying that US pharmaceutical company Allergan Inc was preparing to re-approach Shire about a potential takeover bid.

However, a later report from Bloomberg said Allergan had contacted other drug makers, including Sanofi and Johnson & Johnson, to check if they are interested in acquiring Allergan. The maker of Botox is currently exploring alternate options after Canadian drug maker Valeant Pharmaceuticals International Inc. offered to buy it for USD45.7 billion.

The FTSE 100 closed up 1% at 6,769.91, the FTSE 250 closed up 0.4% at 15,896.64, and the AIM All-Share index closed up 0.4% at 815.6.

In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt closed up 0.8% and 1.5%, respectively.

It was a similar story on Wall Street, where, at the close of the UK equity market, the NASDAQ Composite is up 0.6%, the DJIA is up 0.5%, and the S&P 500 is up 0.4%.

St James's Place, closing up 1.6%, was another stand out blue-chip winner in London. The wealth manager reported an increase in funds under management in its first quarter, after taking in GBP1.2 billion in net inflows, a 26% increase on the comparative quarter of 2013.

The firm said its funds under management grew by GBP1.5 billion to GBP45.8 billion over the quarter to end-March, despite the slight fall in world stock markets. New money invested, which amounted to GBP1.9 billion, drove net inflows, supported by a positive investment performance of GBP300.0 million.

Experian and Intertek moved in different directions, with the former closing up 1.3%, and the latter closing down 0.1%, after Intertek said its Chief Financial Officer Lloyd Pitchford had resigned and will leave the company on September 30 to join Experian as chief financial officer.

In the FTSE 250, Telecity was the biggest gainer Tuesday, ending the day up 15%. Shares in the company shot up after it reaffirmed its full-year currency-neutral revenue growth target of 10% for 2014, after growth accelerated in the first quarter compared with 2013. It said it continued to expect revenue of between GBP355 million to GBP362 million for the year, while also maintaining its medium-term capital expenditure guidance range of between GBP110 million to GBP130 million.

At the other end of the spectrum, Serco Group closed down 15%, making it the mid-cap index's biggest loser. The outsourcing company said late Monday that it may have to ask shareholders to strengthen its balance sheet through an equity placing after a further deterioration in its performance so far this year.

In the forex market, the pound, which had been trading against the dollar at levels not seen since November 2009, slipped to an intra-day low of USD1.6788 and EUR1.2104 in the aftermath of some weaker-than-expected UK GDP figures.

The preliminary reading of UK growth revealed that the UK economy grew at 0.8% in the first quarter of 2014, which was up from the 0.7% posted in the fourth quarter of last year, but slightly slower than the 0.9% growth expected by economists. Year-on-year, UK GDP grew 3.1% in the first quarter, slightly lower than the 3.2% that had been expected.

However, sterling soon regained its strength against both the euro and dollar.

It benefited from a sharp drop in the euro following the preliminary reading of Germany's consumer price index. German CPI grew 1.3% year-on-year in April, up from the 1.0% posted in March, but short of the 1.4% that economists had been expecting. On a monthly basis, consumer prices fell 0.2%, while economists had forecast a a more modest decline of 0.1%.

The harmonized index of consumer prices rose 1.1% annually in April, following a 0.9% gain in March. Economists had forecast an inflation figure of 1.3%. Month-on-month, the HICP dropped 0.3% in April. Economists had expected a 0.1% decline.

At the close of the UK equity market, the pound trades at USD1.6827 and EUR1.2182, while the euro trades at USD1.3809.

Still to come Tuesday, technology stocks Twitter and eBay are due to release quarterly earnings results after the US market close.

On Wednesday, the Bank of Japan releases its latest interest rate decision at 0300 GMT, with a policy statement released at the same time. Japanese housing data is scheduled soon after, at 0500 GMT, with the Bank of Japan's outlook report at 0600 GMT. The UK GfK consumer confidence index is due out just after midnight.

German retail sales numbers for March are released at 0600 GMT, with French consumer spending and producer prices data at 0645 GMT. German and Italian unemployment information is released at 0755 GMT and 0800 GMT, respectively. The preliminary readings of consumer price inflation for Italy and the wider euro area are published at 0900 GMT.

In the US, the Mortgage Bankers Association releases its MBA mortgages applications data at 1100 GMT. The ADP employment change reading for April is published at 1215 GMT, shortly ahead of the preliminary estimates for US first quarter gross domestic product. The Chicago purchasing managers' index is released at 1345 GMT.

Later in the day, the Federal Open Market Committee will release its latest interest rate and monetary policy decisions upon the conclusion of its latest policy meeting at 1800 GMT.

In another busy day in the corporate calendar, FTSE 100-listed Standard Life, Next, and Tullow Oil are joined by FTSE 250-constituents International Personal Finance, Ladbrokes, SVG Capital, Ultra Electronics, Playtech, and Greene King in releasing trading updates.

Meanwhile, blue-chip GlaxoSmithKline and mid-cap CSR publish first quarter results, while Home Retail Group provides full-year results, and DS Smith releases a pre-close statement. Antofagasta releases its first quarter production report.

Investors in London may again struggle to get to their desks on Wednesday as the second day of a 48-hour strike by members of the Rail, Maritime and Transport (RMT) Union threatens to cause chaos for millions of commuters.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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