(Alliance News) - The FTSE 100 traded lower in opening dealings on Thursday as caution set in ahead of the European Central Bank's latest policy decision, due around midday.
At the bottom of London's blue-chip index was WM Morrison Supermarkets, after reporting a fall in interim profit, while International Consolidated Airlines was higher as it unveiled plans for a EUR2.74 billion raise.
The FTSE 100 index was down 23.59 points, or 0.4%, at 5,989.25 early Thursday. The mid-cap FTSE 250 index was up 122.81 points, or 0.7%, at 17,717.74, and the AIM All-Share index was flat at 952.28.
The Cboe UK 100 index was down 0.6% at 596.53. The Cboe 250 was up 0.5% at 15,118.19, and the Cboe Small Companies up 1.1% at 9,518.27.
In mainland Europe, the CAC 40 in Paris was down 0.1% while the DAX 30 in Frankfurt was 0.2% higher early Thursday.
The ECB will release its latest interest rate decision at 1245 BST, followed by a press conference with ECB President Christine Lagarde at 1330 BST.
"The ECB are not expected to adjust policy at this meeting so the focus will be firmly on the new economic projections and comments from Christine Lagarde," said Fiona Cincotta at City Index.
"It was reported yesterday that the ECB were confident in the outlook for the bloc's recovery, the upbeat comments sent the euro higher," Cincotta continued. "However, attention will also be on Christine Lagarde and whether she will build on Chief Economist Philp Lane's concerns over the strength of the euro."
The euro traded at USD1.1827 on Thursday ahead of the ECB announcement, firm on USD1.1812 late Wednesday. Against the yen, the dollar was quoted at JPY106.07, down from JPY106.23.
Sterling was quoted at USD1.3009 early Thursday, firm versus USD1.2999 at the London equities close on Wednesday.
Hastily arranged Brexit talks will take place on Thursday after the EU reacted strongly to UK Prime Minister Boris Johnson's move to override key parts of the Withdrawal Agreement break with Brussels.
An "extraordinary meeting" of the Joint Committee between the UK and EU is being held in London after Johnson unveiled proposed legislation to alter key elements of the Brexit deal with Brussels regarding Northern Ireland.
Chancellor of the Duchy of Lancaster Michael Gove will meet senior EU official Maros Sefcovic to discuss the situation, as talks between the UK's chief Brexit negotiator David Frost and his Brussels counterpart Michel Barnier continue.
The meeting between Gove and Sefcovic comes as the speaker of the US House of Representatives, Nancy Pelosi, insisted there was "absolutely no chance" of Congress passing an American trade deal with the UK if the Northern Ireland peace process was "imperilled".
On the London Stock Exchange, International Consolidated Airlines and WM Morrison Supermarkets were bookending the FTSE 100.
IAG rose 2.7% on plans to raise EUR2.74 billion to strengthen its balance sheet.
The British Airways parent will issue 2.98 billion shares at a subscription price of EUR0.92, representing a 36% discount to the theoretical ex-rights price based on Wednesday's closing price. The funds will be used to strengthen IAG's balance sheet by reducing leverage and boosting liquidity.
Turning to trading, IAG said it saw a "significant increase" in bookings in June, to around 30% of prior year levels by the end of the month. Since July, however, IAG has experienced an "overall levelling off" of bookings.
"Short-haul bookings have fallen slightly following the re-implementation of quarantine requirements by the UK and other European governments for travellers returning from specific countries including Spain," IAG noted.
As a result, available seat kilometres are expected to decline 63% in 2020, from a forecast of minus 59% originally. Third-quarter capacity is expected to fall 78% and fourth quarter capacity by 60%.
"Despite a lower capacity in 4Q 2020 than under the previous planning scenario, the group continues to expect that it would reach breakeven in terms of net cash flows from operating activities during 4Q 2020. This is as a result of mitigating actions taken to reduce operating expenses further and enhance working capital," said IAG.
Morrisons was down 4.2%, meanwhile, as interim profit fell on Covid-19 costs.
For the half-year to August 2, revenue was down 1.1% to GBP8.73 billion, hit by "very low demand" for fuel during and after lockdown, though which is now recovering. Excluding fuel, revenue was up 8.8% to GBP7.55 billion.
Like-for-like sales - excluding VAT and fuel - in the half-year were up 8.7%, and rose 12% in the second quarter alone.
Pretax profit fell to GBP145 million from GBP202 million a year ago, as the grocer noted a net Covid-19 cost of GBP62 million in the half.
"In May we estimated that the costs relating directly to Covid-19 during 2020/21 would be broadly offset by the in-year business rates cost saving. This remains our expectation: we anticipate that the GBP62 million first-half net cost will be offset by a similar second-half net benefit, with extra Covid-19 specific costs at around half the level of the first half and a full six months of rates relief of c.GBP137 million," WM Morrison said.
In the FTSE 250, mobile phone and electronics retailer Dixons Carphone advanced 6.4% as it hailed an "outstanding" online performance as it said it is exploring listing a minority stake in its Nordics business.
UK & Ireland Electrics like-for-like revenue was up 12% in the 17 weeks to August 29. Online sales more than tripled year-on-year while stores were closed, Dixons said, and have continued "at more than double" last year's sales since stores reopened.
UK & Ireland Mobile total revenue was down 56%, while like-for-like sales in its International operations were up 16%.
The Nordics business - part of the retailer's International operations - has performed "strongly" over the last decade, Dixons said.
"Against the backdrop of strong performance and liquidity across the group, the board is considering the best way to deliver value for all stakeholders from our Nordics business. As a result, the board has decided to explore the option of a partial IPO in 2021. A minority listing could further strengthen the capital structure whilst retaining the full benefits of Nordics staying firmly as part of the Dixons Carphone group," the firm said.
In Asia on Thursday, the Japanese Nikkei 225 index ended up 0.9%. In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong is down 0.1% in late trade.
Gold was quoted at USD1,944.93 an ounce early Thursday, soft on USD1,945.72 on Wednesday. Brent oil was trading at USD40.60 a barrel, higher than USD40.32 late Wednesday.
In addition to the ECB decision, the economic events calendar on Thursday has US producer prices and the latest initial jobless claims figures at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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