(Alliance News) -Â The week's rally ran out of steam on Thursday as attention turned to the European Central Bank and a likely EUR500 billion top-up to its pandemic bond-buying programme.
The euro remained soft ahead of the decision, while the pound failed to get a lift from an improved UK construction PMI reading.
The FTSE 100 index was down 16.16 points, or 0.3%, at 6,366.25 midday Thursday. The mid-cap FTSE 250 index was down 59.23 points, or again 0.3%, at 17,837.85. The AIM All-Share index was flat at 895.35.
The Cboe UK 100 index was down 0.3% at 10,764.49. The Cboe 250 was down 0.2% at 15,344.61, but the Cboe Small Companies was up 0.2% at 9,636.75.
"Markets are edging lower of an ECB meeting that is expected to deliver fresh stimulus for the struggling eurozone economy," said Chris Beauchamp, chief market analyst at IG.
"The actual market impact today of a fresh boost may be limited, given how widely expected the move is, but it signals the continued willingness of central banks to act, and investors should be reassured by this," said Beauchamp. "Additional support from the German and Australian governments has also provided reason for optimism, as politicians look to bolster their respective economies in the face of an uncertain future."
The European Central Bank will announce its latest monetary policy decision at 1245 BST, followed by a press conference with President Christine Lagarde at 1330 BST.
The euro traded at USD1.1206 ahead of the meeting, down against USD1.1223 late Wednesday.
Ahead of the central bank decision, Germany's governing parties late Wednesday agreed to a stimulus package worth EUR130 billion to help the country's economy recover from the coronavirus pandemic.
The raft of measures include billions in aid for struggling industries; additional funding for municipalities as they deal with growing unemployment and lost tax revenue; and a one-time EUR300 per child bonus, to be paid out along with other child benefits.
German Chancellor Angela Merkel said drastic spending was needed in order to "to give the next generations a future". The total value agreed in the 21 hours of talks exceeded expectations. Previous reporting said the parties were looking at measures totalling around EUR80 billion.
In mainland Europe, the CAC 40 in Paris was down 0.7% while the DAX 30 in Frankfurt was down 0.8% Thursday afternoon.
In the UK, data from IHS Markit showed a restart of work on site helped the construction sector's downturn to ease in May.
The IHS Markit/Chartered Institute of Procurement & Supply UK construction total activity index picked up to 28.9 in May from just 8.2 in April. While an improvement, the figure remained well below the no-change mark of 50, indicating the sector is still contracting at pace. It was the second-lowest reading since February 2009.
Construction firms remained downbeat over their prospects for the next year, with sentiment holding close to April's low.
Sterling was quoted at USD1.2539 on Thursday, lower than USD1.2604 at the London equities close on Wednesday.
Against the yen, the dollar was quoted at JPY108.90, firm versus JPY108.95 on Wednesday.
Gold was priced at USD1,709.15 an ounce early Thursday, higher than USD1,697.55 on Wednesday. Brent oil was trading at USD39.50 a barrel, flat on USD39.52 late Wednesday.
Wall Street is pointed to a lower open. The Dow Jones and S&P 500 are both called down 0.5% while the Nasdaq is on course to shed 0.2%.
The economic calendar on Thursday has US initial jobless claims at 1330 BST with the trade balance due at the same time.
"Ahead of the US NFP data due tomorrow, the weekly jobless claims economic number is the last piece of information that is going to provide more information about the health of the US labor force," said Naeem Aslam, chief market analyst at AvaTrade.
"The weekly jobless claims number already shows that the worst may be behind, and Trump is likely to take the credit of this tomorrow when the US NFP number echos the same message," Aslam said. "The forecast for the unemployment claims data is for 1820K while the previous reading was 2123K."
In London, Carnival was among the losers in the FTSE 100, down 3.2%, after saying its Princess Cruises brand has extended the pause in some voyages in and out of the US, Australia and Taiwan.
The pause in operations has been extended to Princess Cruises voyages in Australia through to mid-September and in Vancouver and Seattle in September and October. The Pacific and California coast seven-day round trip cruises planned for September and October also will stay in port, as will planned round trip cruises in Taiwan in August.
On Tuesday, Carnival's P&O Cruises had extended the suspension of sailings until mid-October as it seeks approval for enhanced safety and hygiene measures. The UK's biggest cruise line had previously cancelled trips up to the end of July.
Intermediate Capital Group was down 3.5% as the asset management company reported a decline in profit in its recently ended financial year, but lifted its payout amid "good visibility" on future management fees.
ICG reported a pretax profit of GBP114.5 million for the year to the end of March, down 37% from GBP182.9 million reported a year earlier. This was due to lower gains on investments, which fell to GBP117.4 million from GBP225.9 million year-on-year. In addition, ICG said its administrative expenses grew to GBP241.4 million from GBP227.9 million a year prior.
More positively, ICG said assets under management were up 22% on March 31 to EUR45.3 billion, with EUR10.2 billion of new money raised.
The company upped its final ordinary dividend by 2% to 35.8p per share, taking total dividends in the year up 13% to 50.8p per share.
Pennon Group fell 3.2% after the water firm declared a higher dividend for financial 2020 but said it expects revenue for financial 2021 to be hurt by the Covid-19 pandemic.
For its financial year ended March 31, Pennon posted revenue of GBP636.7 million, up 0.6% from GBP632.6 million the year before. However, pretax profit declined 4.1% to GBP193.1 million from GBP201.4 million.
Pennon declared a final dividend of 30.11p, taking the total annual payout to 43.77p, up 6.6% from 41.06p the year before.
Looking ahead, Pennon said it expects non-household revenue to reduce in financial 2021 due to Covid-19, highlighting a risk from expected credit losses for businesses, retailers and households. It added that the sale of Viridor is expected to complete in early summer.
Euromoney Institutional Investor was up 11% in the FTSE 250. The business information publisher and event organiser expressed confidence going forward despite a profit drop in the first half of its current financial year.
Euromoney reported revenue growth of 1% for the six months to the end of March to GBP186.3 million from GBP184.9 million a year earlier.
Adjusted pretax profit declined 15% to GBP39.3 million, primarily hurt by events cancelled due to Covid-19 and a 5% revenue decline in Asset Management. Statutory pretax profit was down 24% to GBP37.4 million year-on-year.
Euromoney said it has implemented a robust plan to return the Asset Management segment to growth, which is already showing promising early signs.
Aston Martin Lagonda Global Holdings fell 5.2% amid plans to cut up to 500 jobs as part of a massive cost-reduction programme in the wake of the coronavirus crisis.
The luxury car manufacturer confirmed its planned reduction in front-engined sports car production to rebalance supply to demand, but noted that its first sports utility vehicle, the DBX, remains on track for deliveries in the summer and has a strong order book.
Turning back to the job cuts, Aston Martin said it will launch a consultation process of proposals to reduce the workforce, reflecting lower than originally planned production volumes and improved productivity across the business.
By Lucy Heming;Â lucyheming@alliancenews.com
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