BT Share News (BT.A)

LONDON (Alliance News) - Stocks in London ended lower Friday, ending a miserable week that has seen oil prices go below the USD30 line, while miners remained a drag as another selloff in Chinese stocks failed to reassure investor's confidence in the health of the Asian giant's economy.

The FTSE 100 ended down 1.9% at 5,804.10, having declined by 1.8% in the week as a whole. The FTSE 250 closed down 1.5% at 16,160.60 and the AIM All-Share down 1.4% at 698.29.

Similarly, the CAC 40 in Paris finished down 2.4%, while the DAX 30 in Frankfurt dropped 2.5%.

It has been a hard week for oil prices, with both Brent and West Texas Intermediate crude benchmarks having fallen below USD30 a barrel, hitting lows they haven't seen in broadly 12 years.

In the first two weeks of 2016, oil prices have declined by around USD10, slumping deeper amid speculation that the Organization of the Petroleum Exporting Countries will continue pumping oil at a breakneck pace despite the global supply glut. Adding to this, Iran's crude is coming back to market after years of sanctions, just as Saudi Arabia is having a price war with its non-OPEC competitors.

In the last few days, oil prices have been trading close to the USD30 line, with WTI and Brent briefly slipping below it for the first time this week on Tuesday and Wednesday, respectively.

Brent and WTI rebounded on Thursday to highs of USD31.16 a barrel and USD31.73 a barrel, respectively. However, oil prices came under pressure again on Friday, with the North Sea benchmark touching a low of USD29.28 a barrel, a level not seen since February 2004. Similarly, the US benchmark touched lows it hasn't seen since December 2003 at USD29.27 a barrel.

Brent was quoted at USD29.39 a barrel at the London close Friday, while WTI was quoted at USD29.51 a barrel.

However, Kallum Pickering, an analyst at Berenberg, said the markets are overreacting to the oil price fall.

"Financial markets are reacting with near-panic. But do we really have to worry about cheap oil? No," said Pickering. "The sharp decline in the price of oil since mid-2014 reflects mostly a welcome increase in supply. It is a healthy shot in the arm for almost all major economies. But when markets are nervous, almost everything is bad news."

Nevertheless, London-listed oil stocks ended in the red on Friday, with Royal Dutch Shell 'A' down 3.1%, BP down 3.1% and BG Group down 2.3%. Mid-caps Tullow Oil and Cairn Energy were down 6.2% and 4.7%, respectively.

Oil companies were not the main drag among stocks, however, with the FTSE 350 Mining Sector index was the worst performer, down 5.3%. A further sell-off in Chinese shares, which fed fears about the health of the world's second largest economy, also dragged on the sector.

The Shanghai Composite index ended down 3.6%, while the Hang Seng in Hong Kong closed down 1.5%, and the Nikkei 225 index in Tokyo closed down 0.5%.

The top four fallers in the in the FTSE 100 were all miners, with Anglo American down 11%, Glencore down 6.5%, BHP Billiton down 6.6% and Antofagasta down 5.3%.

In New York, shares were lower at the London close, with the Dow Jones Industrials and the S&P 500 both down 2.3% and the Nasdaq Composite down 3.1%.

There was a largely weak set of economic data in the US, ahead of the three-day weekend for Martin Luther King's Birthday, meaning the New York market will be closed on Monday.

The University of Michigan released a report on Friday showing that US consumer sentiment has improved for the fourth straight month in January, reflecting more positive expectations for future economic growth.

The preliminary report said the consumer sentiment index climbed to 93.3 in January from the final December reading of 92.6. Economists had expected the index to inch up to 93.0. The bigger-than-expected increase by the headline index came as the index of consumer expectations climbed to 85.7 in January from 82.7 in December.

However, manufacturers in New York State saw a sharp deterioration in business conditions in January, results of a key regional survey showed. Results were well below what economists were predicting and marked the lowest levels in about 7 years. The figures also showed a multi-year low in optimism.

The Federal Reserve Bank of New York said that its Empire State index came in at -19.37 for January. This was down sharply from the reading of -6.21 in December.

Retail sales in the US saw a modest decrease in the month of December, according to a report released by the Commerce Department. The report said retail sales edged down by 0.1% in December following an upwardly revised 0.4% increase in November. Economists had expected sales to come in unchanged compared to the 0.2% uptick originally reported for the previous month.

Another report from the Commerce Department showed US business inventories dipped by 0.2% in November after edging down by 0.1% in October. Economists had expected inventories to come in unchanged, matching the October's reading.

At the London close, the pound was quoted at USD1.4292, while the euro traded the dollar at USD1.0946. The gold price was at USD1,088.24.

Elsewhere on the London Stock Exchange, pharmaceutical giant Shire ended among the few gainers in the blue-chip index, up 1.2%, still recovering from the losses seen on Monday after the announcement of its much anticipated share-and-cash acquisition of US-based Baxalta.

The UK Competition and Markets Authority approved BT's GBP12.5 billion acquisition of mobile operator EE. The CMA, the UK's antitrust regulator, said it decided despite a number of concerns raised by other UK telecoms operators that the deal would not result in a substantial lessening of competition.

"Since our provisional findings, we have taken extra time to consider responses in detail but the evidence does not show that this merger is likely to cause significant harm to competition or the interests of consumers," said John Wotton, chair of the CMA's inquiry.

Shares in BT closed down 0.8% having initially gained on the news.

In the FTSE 250, Tate & Lyle added 3.4%. Liberum issued a positive note on the sugar and sweeteners company, with the broker saying the group hosted a "confident" capital markets day on Thursday.

"In our view, Tate laid out credible plans to deliver its ambition to transform the group into a materially Specialty Food Ingredients-focused business by 2020," said Liberum analyst Robert Waldschmidt.

JD Sports Fashion ended up 2.8%, adding to the gains it had seen on Thursday, when the sports and outdoor clothing retailer upgraded its expectations for the year to the end of January.

At the other end of the index, MoneySupermarket.com Group dropped 11%. The company said its full-year operating profit adjusted for costs relating to amortisation and acquisitions should grow by around 13% and end up slightly ahead of market expectations.

However, there was a decline in revenue at the price comparison website's insurance activities in the final quarter of the year, as rivals stepped up the competition.

In a light corporate calendar Monday, Rio Tinto releases its fourth-quarter operations review, while Ibstock issues a trading statement.

In the economic calendar, China's house price index is due at 0130 GMT, while Japan's industrial production data are expected at 0430 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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