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LONDON (Alliance News) - The FTSE 100 ended slightly higher Wednesday, buoyed by better-than-expected Purchasing Managers' Index scores from the eurozone and the UK.

On the eve of the UK's General Election, with the final polls predicting that no party will get a majority, the FTSE 100 ended up 0.1% at 6,933.74, while the FTSE 250 closed down 0.2% at 17,412.08. The AIM All-Share index finished flat at 751.57.

The UK services sector grew at its fastest pace in eight months in April, led by marked gains in new business, survey results from Markit Economics revealed. The seasonally adjusted Markit/CIPS UK Services PMI for the services sector rose to 59.5 from 58.9 in March. Economists had expected a score of 58.5.

The latest reading was the highest since August last year and the British services sector has now expanded for 28 months in a row, which is the longest sequence of growth in seven years.

"Fears of the economy slumping amid election jitters are allayed as an upturn in service sector activity has helped offset sharp slowdowns in both manufacturing and construction. The PMI surveys suggest the economy is showing robust growth momentum, expanding at a rate of 0.8% at the start of the second quarter," said Chris Williamson, chief economist at Markit.

In Europe, the French CAC 40 and the German DAX both ended up 0.2%, after eurozone readings also beat the initial flash estimates that were released in April.

The Eurozone Markit composite PMI, which looks at manufacturing and service companies in the private sector, fell to 53.9 in April from 54.0 in March, but was above the flash estimate of 53.5. It also remained above the 50.0 mark which indicates an expansion.

The services PMI came in at 54.1 in April, slipping slightly from March's 54.2 reading but ahead of the flash estimate of 53.7.

The UK General Election takes place on Thursday, with the results coming out from the 650 seats up for grabs well into Friday morning. The final polls ahead of the election continued to show the Conservatives and Labour almost tied, suggesting that neither will win enough seats to form a majority government and there may then follow days of horse trading as the parties try and form a coalition or a minority government that's supported by other parties in key matters like the budget.

Analysts are concerned about potential policies put forward by both parties, including a Conservative pledge to hold a referendum on whether the UK stays in the EU, and Labour pledges to cap energy prices and break up energy companies, amongst other policies seen as anti-business.

"Financial markets have very little idea as to the make up of the next government of the UK. Markets tend not to like uncertainty," Hantec Markets analyst Richard Perry said.

The pound rose against the dollar, boosted by the PMI readings, but also strengthening against the greenback following another sign of sluggishness in the US labor market, as payroll processor ADP released a report Wednesday showing that private sector employment increased by much less than expected in the month of April.

ADP said employment in the private sector increased by 169,000 jobs in April compared with a downwardly revised increase of 175,000 jobs in March. Economists had expected private sector employment to climb by about 200,000 jobs compared to the addition of 189,000 jobs originally reported for the previous month.

When the London equity markets closed, the pound was trading at USD1.5242. Meanwhile, the euro was also higher against the dollar at USD1.1329, a level it hasn't seen since late February.

Wall Street was also lower when the European markets closed, with the DJIA down 0.2% and the S&P 500 and the Nasdaq Composite down 0.1%.

The oil price continued to rise for most of the day Wednesday, with Brent reaching its highest level since the end of November at USD69.59 and West Texas Intermediate hitting USD62.56, its highest point since mid-December.

However, the price dropped sharply late in the afternoon, even though US EIA crude oil stocks came in lower than expected in the week ending May 3. Crude oil stocks fell by 3.8 million barrels, compared with economists' forecasts of a 1.5 million barrel rise, while gasoline stocks rose by 401,000 barrels, less than half the increase expected by analysts.

When the European equity markets closed, Brent oil was trading at USD68.20 per barrel.

Sage was the best performer in the FTSE 100, closing up 8.0%. The software and services company said it remains on track to meet its financial targets for its current financial year, as revenue rose 6.5% in its first half. The company is targeting 6% organic revenue growth and 28% operating margin in its current year.

Imperial Tobacco Group was also amongst the best performers, up 1.7%. The company reported lower operating profit for the first half of its financial year as total tobacco volume declined, partly due to reduced sales in Iraq, but its results improved excluding the impact of a stock optimisation programme it undertook last year, partly thanks to price increases and growth for its key brands.

J Sainsbury was the worst performer in the blue-chip index, down 3.2%. The supermarket chain reported its first pretax loss for a decade as it joined bigger rival Tesco in booking huge property writedowns due to its curtailed expansion plan and as it counted the cost of the price cuts it's having to make in response to changing UK shopping habits and the challenge of German discount grocers.

It reported a pretax loss of GBP72 million for the year ended March 14, compared with a pretax profit of GBP898 million the year before, as it booked a charge of GBP287 million to account for sites that it will no longer develop and a GBP341 million charge for stores that are unprofitable or only slightly profitable.

In the FTSE 250, Supergroup was the biggest gainer, up 7.4%. The retailer reported growth in sales for the fourth quarter of its financial year and in the full year as a whole and said it expects its underlying profit for the year to meet previous guidance. It reported revenue for the 15 weeks to April 25 of GBP134.8 million, up from GBP113.8 million in the same period the year before, while revenue for the full financial year grew 12% to GBP484.7 million from GBP430.9 million.

In a busy corporate calendar Thursday, Aviva and RSA Insurance Group issue first-quarter interim management statements, while Wm Morrison Supermarkets issues an interim management statement. EasyJet releases its April traffic statistics, while BT Group publishes its fourth-quarter results. Derwent London, Telecity Group, Beazley, Esure Group and Kennedy Wilson Europe Real Estate issue first-quarter interim management statement, while Randgold Resources releases first-quarter results. Trinity Mirror issues a trading statement.

In the economic calendar Thursday, German factory orders are due at 0700 BST. In the US, Initial jobless claims are due at 1330 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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