(Alliance News) - London stocks gave back some mid-morning gains to trade lower at midday on Tuesday, with looming reports from US banks such as JPMorgan and Citigroup in focus as earnings season kicks off.
The FTSE 100 index was down 18.93 points, or 0.3%, at 7,598.67. The FTSE 250 was up 43.28 points, or 0.2%, at 21,760.04, and the AIM All-Share was up 0.1% at 967.36.
The Cboe UK 100 was down 0.2% at 12,873.32, the Cboe UK 250 was up 0.3% at 19,639.53, and the Cboe Small Companies down 0.2% at 12,434.38.
In European equities on Tuesday, the CAC 40 in Paris was down 0.4%, while the DAX 30 in Frankfurt was 0.2% lower.
"European shares slid slower alongside US futures, despite modest gains registered by Asian equities overnight. While Asian stock investors welcomed the fact that the US administration is to lift China's currency manipulator status ahead of the highly anticipated Phase One trade deal signing, European and American traders don't expect a huge impact on most markets as the news was already largely priced-in," said Pierre Veyret at ActivTrades.
"Investors in Europe and in the US have instead preferred to focus on this week's earnings reports with financial giants like JPMorgan Chase & Co, Morgan Stanley and Blackrock kicking-off the season," said Veyret.
Stocks in New York were called slightly lower, with the Dow Jones, S&P 500 index and Nasdaq Composite all seen down 0.1%.
On the data side, US inflation is out at 1330 GMT and on the corporate side, banks JPMorgan, Citigroup and Wells Fargo will kick off earnings season.
"The bar has been successfully and reliably lowered heading into the season and expectations are for a fourth consecutive quarter of negative earnings growth," said Craig Erlam at Oanda.
"If the banks can secure a "decent start" to earnings season, gold could take a hit," said Erlam.
"The safe haven need has faded dramatically over the last week and with it, the demand for gold. Despite dipping below earlier, it is still trading in the USD1,540-1,560 range and may continue to find support around these levels. A decent start to earnings season may weigh further though, with both improving sentiment and a stronger dollar weighing on the yellow metal," he said.
Gold was quoted at USD1,544.70 an ounce against USD1,551.79 at the close on Monday. Gold miners such as Fresnillo and Hochschild Mining were 1.8% and 2.4% lower respectively.
Peer Centamin, meanwhile, was down a sharper 9.4%. Suitor Endeavour Mining said it does not intend to make a firm takeover offer for the FTSE 250 constituent.
Endeavour said Centamin has not sought an extension to the offer deadline of Tuesday. Given the lack of information received, Endeavour said, it has now decided against bidding for Centamin.
Endeavour in December had proposed a deal in which Centamin shareholders would get 0.0846 of an Endeavour share per Centamin share held, giving Centamin's shareholders a 47% stake in a combined company. The proposal valued Centamin at GBP1.47 billion.
Since then, the two have criticised each other's behaviour during merger talks, with Endeavour accusing Centamin of being unwilling to properly look into a combination.
In other commodities, Brent oil was quoted at USD64.60 a barrel midday Tuesday from USD64.24 late Monday.
In forex, the pound was quoted at USD1.2987 at midday Tuesday, compared to USD1.2989 at the close on Monday. Sterling continued to slide after Monday's data showing the UK economy contracted by 0.3% in November compounded fears of an interest rate cut from the Bank of England.
"I'm not really sure what a rate cut will do at this stage and many expect a bounce in the data in the coming months regardless. The pound remains under USD1.30 against the dollar though and could come under further pressure if the data doesn't improve," said Oanda's Erlam.
The euro stood at USD1.1130 at midday Tuesday, against USD1.1144 late Monday. Against the yen, the dollar was trading at JPY109.98 compared to JPY109.89 late Monday.
Back in London, Taylor Wimpey was up 2.5% after the housebuilder ended 2019 with a record order book.
In a trading statement for 2019, the company said the housing market remained stable throughout the past year, albeit with more challenging conditions in London and the south east of England and at higher price points.
Total house completions in 2019 increased by 5% to 15,719, including joint ventures, compared to 14,933 in 2018. The company said it ended 2019 with a record total order book valued at GBP2.17 billion, compared to GBP1.78 billion a year ago.
In the FTSE 250, Dixons Carphone rallied 6.1% after Goldman Sachs raised the electronics retailer to Buy from Neutral.
Grafton Group, up 5.0%, said trading in November and December was better than anticipated.
The Irish building materials supplier said it expects to report adjusted operating profit of about GBP202 million for 2019, compared to GBP194.5 million in 2018.
Daily like-for-like revenue is expected to be 1.9% higher in 2019 versus the year before, despite slipping 1.8% in the fourth quarter.
Elementis slumped 14% on a profit warning. For 2019, the FTSE 250 specialty chemicals firm expects adjusted operating profit to be between USD122 million to USD124 million, a 6.8% to 8.2% decline from GBP133 million in 2018.
The Personal Care segment had a mixed end to the year, as a solid performance in cosmetics offset competitive pressures in AP Actives. The Energy unit performed weaker due to a slowdown in North American drilling activity, Elementis said, as did the Chromium segment as a result of a weak demand environment and lower market prices.
However, Coatings performed well as demand conditions remains in line with expectations, it said, and Talc was buoyed by solid demand for industrial talc and new business.
Elsewhere in London, boohoo shares bounced 5.2% after the fast fashion retailer raised its annual guidance.
In a trading statement for the four months ended December 31, the online clothing retailer said revenue increased by 44% to GBP473.7 million from GBP328.2 million a year ago. As a result, boohoo said it now expects revenue growth for financial year to February 29 to be 40% to 42%, ahead of its previous guidance of 33% to 38%.
The company also said it expects adjusted earnings before interest, taxes, depreciation and amortisation margin to be 10% to 10.2%, ahead of its previous guidance of around 10%.
Lekoil dived 69% after the Nigerian oil firm confirmed it has been duped by fake investors.
The company at the start of January said it had agreed the loan with the Qatar Investment Authority to fund drilling and development at the Ogo field off the coast of Nigeria.
However, Lekoil said representatives from the QIA had questioned the validity of the loan agreement. It also confirmed it had paid USD600,000 to Seawave Investment which acted as an introducer to those "purporting to be the QIA".
After the London market close on Monday, in another statement, Lekoil then confirmed the loan seems to have been agreed with people "who have constructed a complex facade in order to masquerade as representatives of the QIA". Lekoil said it conducted due diligence on both the people offering the loan as well as introducer Seawave.
By Lucy Heming; lucyheming@alliancenews.com
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