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LONDON (Alliance News) - London share prices opened higher Thursday, with easyJet pushing higher after it upgraded its full-year profit guidance and oil-related stocks benefiting from a rise in crude prices overnight.
The FTSE 100 was up 1.5% at 6,172.28, the FTSE 250 up 0.7% at 17.008.12, and the AIM All-Share up 0.5% at 734.07. European major indices also opened higher, with the CAC 40 in Paris up 0.8% and the DAX 30 in Frankfurt up 1.0%.
EasyJet was the best performer in the FTSE 100 at the open, up 5.9%, after it upgraded its full-year profit guidance following a strong summer trading season. The airline said its pretax profit for the financial year to the end of September is now expected to be GBP675 million to GBP700 million, up from its previous guidance of GBP620 million to GBP660 million.
EasyJet said its strong revenue performance over the summer has more than offset any cost challenges it has faced this year, including the disruption across its network back in April, the fires which hit Rome Fiumicino airport, its GBP8.0 million one-off settlement with Eurocontrol, and costs associated with its higher load factors.
Easyjet's peer International Consolidated Airlines Group also was trading higher, up 4.3%. HSBC raised IAG's share price target to 700 pence from 660p. The British Airways owner trades at 565.50p early Thursday.
Wm Morrison Supermarkets was up 3.9% after being upgraded to Neutral from Sell by UBS. Reckitt Benckiser also was amongst the biggest gainers after JPMorgan lifted the consumer goods company price target to 6,300 pence from 6,025p. Shares in Reckitt Benckiser were up 2.1% at 5,793p.
Meanwhile, oil-related companies were rebounding from Wednesday's losses as crude prices recovered overnight. Brent oil price is at USD50.23 a barrel, standing at USD47.96 at the London close Wednesday. Similarly, West Texas Intermediate was at USD46.00 a barrel, having traded at USD43.49 when the European market closed Wednesday.
BP was up 1.6%, Royal Dutch Shell 'A' was up 1.4% and BG Group was up 1.6%.
Shell and BG Group said Wednesday the European Commission has given its unconditional approval for Shell's takeover of BG. Shell agreed a GBP47.0 billion deal to acquire BG back in April, and the deal has already secured approval from Brazilian competition authorities. It still has to get approvals from Australia and China for the deal.
In the FTSE 250, Lookers was the biggest gainer, up 5.7% after it said it has struck an GBP87.5 million cash deal to acquire Addison Motors, which trades as Benfield Motor Group. The acquisition is to be funded by new banking facilities Lookers has secured, which will be provided by Bank of Ireland, Barclays, HSBC, Lloyds, Royal Bank of Scotland and Yorkshire Bank.
Benfield is based in Newcastle-upon-Tyne and operates 30 car dealerships across the UK, offering sales, service, parts and bodyshop facilities for new and used cars and commercial vehicles, Lookers said. For the year to the end of December 2014, the company posted a GBP7.0 million pretax profit on revenue of GBP699.7 million. Lookers expects the deal to be immediately earnings accretive.
Meanwhile, Go-Ahead Group led mid-cap fallers, down 4.3%, after it said its annual pretax profit was pulled lower by exceptional costs, but said its underlying performance was strong and its revenue surged higher thanks to stronger-than-expected trading in its rail unit.
The FTSE 250-listed company said its pretax profit for the year to June 27 was GBP78.7 million, down from GBP91.2 million a year earlier, as the group booked GBP8.8 million in exceptional costs, having booked a GBP12.1 million gain a year earlier. Stripping out exceptional costs, Go-Ahead's pretax profit was up to GBP96.6 million from GBP84.9 million.
Outside UK stocks, the market focus will be Thursday on the European Central Bank rate decision due at 1245 BST and purchasing managers indices from several European countries and the US.
Markit services and composite PMIs for France and Germany are expected at 0850 BST and 0855 BST, respectively. The same for the eurozone are due at 0900 BST, while UK Markit services PMI is expected at 0930 BST.
According to FXStreet.com, economists expect the readings for France and Germany to come in unchanged at 51.8 and 53.6, respectively. While for the UK, with the services PMI having fallen by more than expected in July to 57.4, it is called for a slight recovery to 57.6 in August.
However, Lloyds Bank says that, given the recent increase in global economic uncertainties, "we think the risks are slightly to the downside and have pencilled in a marginal fall to 57.3."
The ECB is expected to announce Thursday that it has left interest rates on hold at their historic low, with the ECB's 25-member governing council expected to have kept the benchmark refinancing rate unchanged at 0.05%. However, weak inflation, renewed economic and market tensions have increased the pressure on the ECB to consider more action to shore up the eurozone economy, amid concerns about continued weakness in commodity prices.
But CMC Markets Chief market analyst Michael Hewson believes that further measures are unlikely given the central bank's current QE program has been underway just for six months and has another twelve months ahead.
"There isn?t much central bank policy can do about falling commodity prices, which suggests that ECB President Mario Draghi will try to talk the euro lower simply because he can?t do much else," writes the analyst.
Wall Street ended higher Wednesday. The DJIA closed up 1.8%, the S&P 500 ended up 1.8% and the Nasdaq Composite finished up 2.5%.
In Asia on Thursday, the Japanese Nikkei 225 closed up 0.5%, while Chinese stock markets are closed to mark the 70th anniversary of China's victory over Japan in World War II.
Also in a busy economic calendar, eurozone retail sales are due at 1000 BST. In the US, Challenger job cuts data are due at 1230 BST, while continuing and initial jobless claims are expected at 1330 BST. US Markit services and composite PMIs are due at 1445 BST, while US ISM non-manufacturing PMI is expected at 1500 BST. EIA natural gas storage is due at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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