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LONDON (Alliance News) - Stocks in London were mixed Thursday midday amid a flood of UK blue-chip company news, while Markit's UK services-sector activity reading completed a "hat trick" of weak Purchasing Managers' Index readings for the country.

The FTSE 100 index was down 0.1%, or 3.33 points, at 6,108.69. The mid-cap FTSE 250 was up 0.1% at 16,667.42, and the AIM All-Share was 0.23 points down at 723.63.

In Paris, the CAC 40 was down 0.3%, while the DAX 30 in Frankfurt was flat.

The UK service sector activity expanded at the slowest pace in more than three years in April, survey data from Markit showed. The Chartered Institute of Procurement & Supply/Markit services Purchasing Managers' Index fell to 52.3 in April from 53.7 in March, while economists expected a score of 53.5. The rate of expansion slowed for the third time in the past five months and reached its lowest since February 2013.

"Today's disappointing UK services PMI wraps up a hat-trick of weak numbers this week, providing the clearest indication yet that UK growth is moving in the wrong direction in the second quarter," said IG analyst Joshua Mahony.

On Tuesday, manufacturing PMI had come in at 49.2 points, below the 51.0 score in March and economists expectations of 51.2, while on Wednesday, construction PMI was shown to have slipped to 52.0 from 54.2 in March, shy of consensus forecast of 54.0.

"With the services sector making up 79% of UK's gross domestic product, today's three-year low for the services PMI indicates that not only will expectations of growth be lower, but the chance of a 2016 rate hike just fell further," Mahony noted.

The Bank of England will announce its next monetary policy decision on Thursday next week.

Still in the economic calendar Thursday, US initial and continuing jobless claims are due at 1330 BST, while the Energy Information Administration natural gas storage data are at 1530 BST.

Stocks in New York were called higher, with the Dow 30 and the S&P 500 indices both seen up 0.2% and the Nasdaq 100 pointed up 0.3%.

In the US corporate calendar, telecommunications company Motorola and media firm News Corp release first-quarter and third-quarter updates, respectively, after the New York close.

There was a raft of corporate news for the market to digest Thursday morning in London.

BT Group shares were the best performers in the FTSE 100, up 3.7%.

BT reported a rise in pretax profit for its most recently ended financial year, and set out its guidance for the next two years, as the telecommunications firm outlined plans to invest around GBP6 billion in broadband and 4G coverage in the UK over the next three years.

BT reported a pretax profit of GBP3.03 billion for the year to end-March, up from GBP2.65 billion the year before, as revenue rose to GBP19.04 billion from GBP17.98 billion. BT proposed a full-year dividend of 14.0 pence per share, up 13% from 12.4p the year before. It expects to grow its dividend by more than 10% in each of the next two financial years.

BT outlined guidance for normalised free cash flow of between GBP3.1 billion and GBP3.2 billion in the year ahead, then growing to GBP3.6 billion the following year.

Haitong Research said BT results were "clearly better" than consensus forecasts, with the free cash flow guidance around 3% to 5% above consensus.

RSA Insurance Group, up 2.6%, also pleased analysts with a "robust", "solid" update, with Shore Capital and Panmure Gordon retaining Hold recommendations after the insurer's first-quarter results. RSA said it saw good underwriting results in the first quarter, driving up operating profit, as it benefited from benign weather conditions and as underlying results continued to indicate an improving picture.

RSA said insurance market conditions in the first quarter, to the end of March, were broadly unchanged against the same period in 2015. Slow growth in the market and strong competition has driven sharp price-volume trade-offs, the group said, in line with its expectations.

Group net written premiums in the quarter were flat year-on-year, reflecting the impact of the disposal of non-core operations RSA has undertaken.

Clothing and homewares retailer Next was up 2.0%, benefiting from an upgrade to Neutral from Underperform by Credit Suisse. Meanwhile, National Grid was up 1.2% after the electricity network operator was upgraded to Overweight from Neutral by JPMorgan.

Wm Morrison Supermarkets was up 1.1%. The supermarket chain reported a fall in total sales but growth in like-for-like sales in the first quarter of its financial year, as it warned it expects continued deflation in the UK grocery market.

Morrisons said total sales excluding fuel in the 13 weeks ended May fell by 1.8% year-on-year, while falling by 0.9% including fuel. On a like-for-like basis, sales excluding fuel grew by 0.7% and by 1.2% including fuel. Morrisons said total sales were hit by supermarket closures it made and by its disposal of the 'M local' convenience-store chain.

Like-for-like transactions were up by 3.1% in the quarter, driven by a "significant" increase in sales of its Food-to-Go range, and like-for-like volume growth was "strong", Morrisons said.

Centrica shares were under selling pressure, down 11%, after the energy firm unveiled plans to conduct a substantial placing to allow the company to progress its new strategy without the risk of losing its solid credit ratings. It intends to issue a considerable amount of shares to institutional investors to raise funds, so the company can reduce debt and accelerate its strategy by funding two acquisitions.

The FTSE 100-listed company said it plans to issue around 350.0 million shares, which is equal to around 7.0% of its current issued share capital. It will be conducted through a bookbuild process which will determine the price, but Centrica hinted it wants to raise at least GBP750.0 million.

Jefferies said that, whilst raising equity is an "expensive way of paying down debt", the company will "clearly be in a modestly stronger financial position post the placing".

Inmarsat was down 4.7%. The satellite business revised down its 2016 guidance for revenue after it amended its cooperation agreement in the US with Ligado Networks and reported a fall in pretax profit for the first quarter of the year. Inmarsat reported a pretax profit of USD58.5 million in the three months to end-March, down from USD96.3 million a year before, on revenue of USD298.6 million, down from USD304.8 million.

Inmarsat said the underlying trading environment in 2016 has continued to be tough, and demand weakened in the first quarter. Additionally, for operational reasons the ramp up in revenue from its Global Xpress satellites is "proceeding more slowly than previously expected."

Meanwhile, Rolls-Royce was down 4.7%. The engine marker said profit for 2016 will be significantly weighted to the second half, with the first half expected to be close to break even, stripping out finance charges and tax. The group said the outlook for the second half is brighter, based on increased large engine deliveries, good underlying growth in aftermarket revenue and anticipated benefits from the restructuring programme.

Medical devices maker Smith & Nephew was off 2.9% after saying revenue grew in the first quarter year-on-year, driven by a strong performance in developed markets and partially offset by weakness in China and the Gulf region.

In the FTSE 250, Greggs was the best mid-cap performer, up 5.9%. The bakery chain was initiated at Buy by Investec, with the broker saying Greggs's repositioning into the food-on-the-go market opens up a host of long-term growth opportunities.

By Daniel Ruiz; danielruiz@alliancenews.com

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