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(Alliance News) - London stocks posted modest gains on Tuesday while counterparts in Europe pulled back, with a softer pound supporting the overseas earnings-heavy FTSE 100.
"A couple of polls showing a narrowing in the lead for the Conservatives over Labour has seen a little bit of downward pressure in the pound, as sellers step back in," said David Cheetham at XTB.
Support for the Conservatives fell one point to 41% while Labour was up two points to 34%, according to the ICM survey of 2,004 people online between Friday and Monday.
"The shift in the polls is far from dramatic and given their inherently volatile nature it would be presumptuous to believe that this is the beginning of a major shift, but it could at least start to raise a little doubt on the notion that a Conservative majority is a strong probability and in doing so weigh on the pound," Cheetham added.
The FTSE 100 index was 9.64 points higher, or 0.1%, at 7,406.48. The FTSE 250 was up 122.59 points, or 0.6%, at 20,825.76, and the AIM All-Share was up 0.2% at 911.42.
The Cboe UK 100 index was up 0.1% at 12,553.44. The Cboe UK 250 was up 0.7% at 18,709.50, and the Cboe UK Small Companies was down 0.1% at 11,293.73.
The pound was quoted at USD1.2855 at midday, down from USD1.2906 late Monday.
Jeremy Corbyn's election campaign has been struck by a significant intervention after the Chief Rabbi warned that the Labour leadership's handling of anti-Semitism was "incompatible" with British values.
He is due to face sustained questioning from Andrew Neil on Tuesday as part of the BBC's series of interviews with the leaders vying to be the next prime minister.
Prime Minister Boris Johnson, meanwhile, will visit Scotland and the east of England in campaign stops as he tries to keep his campaign on track after a a think-tank suggested the Tories' manifesto risks creating levels of child poverty not seen for 60 years.
In mainland Europe, the CAC 40 index in Paris was flat and the DAX 30 in Frankfurt down 0.2% in early afternoon trade.
In the US, stocks are called flat in a likely subdued start for Wall Street, with the Dow Jones, S&P 500 and Nasdaq all seen unchanged.
On Monday, Federal Reserve Chairman Jerome Powell said US monetary policy is set to continue the good times for workers while nudging inflation back to where officials would like to see it.
"Monetary policy is now well positioned to support a strong labour market and return inflation decisively to our symmetric 2% objective," Powell said in a speech to the Greater Providence Chamber of Commerce in Rhode Island.
The Fed is due to hold its final policy meeting of the year in a fortnight.
In London, CRH was helping the FTSE 100 overcome share price losses for Compass.
Building materials firm CRH, up 2.8% at midday, said its performance so far in 2019 has been "strong" with its outlook positive.
Revenue in the nine months to September climbed by 9% on the year before to EUR21.8 billion, with CRH delivering like-for-like growth of 4%. Ebitda rose 27%, and 7% like-for-like, to EUR3.2 billion.
CRH has guided for earnings before interest, taxes, depreciation, and amortisation for 2019 to be above EUR4.15 billion, which would mean at least 23% growth year-on-year.
The Dublin-based company credited "positive momentum" in all divisions, contributions from acquisitions, the impact of a new accounting treatment of leases, and currency tailwinds.
Contract caterer Compass, meanwhile, slid 5.2% after cautioning on the backdrop in Europe.
Revenue growth in the year to September was 8.8% to GBP24.88 billion, with organic revenue growth "strong" at 6.4% and above Compass's target of 4% to 6% growth. The market had expected organic revenue growth of 6%, according to company-compiled consensus figures.
Looking ahead, Chief Executive Dominic Blakemore said expectations for Compass's new financial year are positive, though it does remain "cautious" on conditions in Europe.
"Thanks to the group's geographic and sectoral diversity, we are nevertheless confident of continued progress. As such we expect organic growth to be around the mid-point of our 4% to 6% range whilst maintaining our strong margin as we mitigate the expected volume pressures through our cost actions," Blakemore said.
Meanwhile, Pets at Home and Greencore were bookending the FTSE 250.
Pets at Home shares bounded 10% after the retailer guided to an annual outturn at the top end of forecasts.
The firm's pretax profit for the 28 weeks ended October 10 was GBP34.0 million, more than four times its GBP8.0 million profit a year prior. This was due to a GBP16.2 million impairment loss on receivables the year before, which fell to only USD295,000 in financial 2019.
Another major contributor to the profit rise was a 9.4% increase in Pets at Home's revenue to GBP546.3 million from GBP499.3 million. This included an 8.1% rise in Retail revenue to GBP479.8 million from GBP443.7 million Vet Group revenue, meanwhile, increased 20% to GBP66.5 million from GBP55.6 million.
The firm is confident in its second half, expecting underlying profit growth and underlying pretax profit pre-IFRS16 to be near the top end of market consensus.
Greencore shares dipped 5.2% as it saw annual revenue slip.
For the financial year ended September 27, Greencore made a pretax profit of GBP56.4 million, more than tripled from GBP17.8 million the year before. This included an exceptional gain of GBP55.9 million in profit from the disposal of Greencore's US business.
Revenue however, declined by 3.5% to GBP1.45 billion from GBP1.50 billion the year before, the drop driven by the impact of site disposals such as in Hull and Evercreech in the UK, and the phasing out of manufacturing of longer-life ready meals at its Kiveton facility.
Elsewhere in London, De La Rue shares slumped 21% as the banknote printer warned on its debt position and axed its dividend.
De La Rue will not be returning any cash to shareholders for the six months to September 28, having paid out 8.3 pence per share the year before. Net debt at the end of the period was GBP170.5 million, far higher than GBP107.5 million six months earlier. De La Rue blamed the rise on adverse working capital movements, prior dividend payments, pension contributions, and capital expenditure.
This debt exceeds De La Rue's market capitalisation of GBP144.2 million, based on its current share price of 138.00 pence.
The company said its debt position, and the ratio of net debt to earnings before interest, taxes, depreciation, and amortisation, was significantly higher than expected, though it will remain within banking covenants. However, De La Rue warned further deterioration in trading, further costs, and lower-than-expected margins could put this at risk.
"In an increasingly cashless world one has to wonder just how long De La Rue can survive without a radical change to its business model. It has already restructured its operations into two divisions – authenticating goods as genuine and currency services – but one has to wonder if this is still enough to secure its future," commented Russ Mould at AJ Bell.
By Lucy Heming; lucyheming@alliancenews.com
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