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LONDON (Alliance News) - The FTSE 100 closed higher Wednesday after a late rally that was emulated in Europe's main equity indices, snapping a three-day losing streak amid a continued focus on full-year earnings from a large number of companies.
London's stock indices had spent most of the day lower after worse-than-expected services Purchasing Managers' Index readings from the eurozone and the UK, but they staged a late rally with no clear reason.
The FTSE 100 closed up 0.4% at 6,919.24, while the FTSE 250 also staged a late rally but still ended down 0.1% at 17,135.65. The AIM All-Share index closed up 0.4% at 712.20.
The CAC 40 in Paris and the DAX 30 were also in negative territory for a large portion of the session, but both ended up 1.0% after the rally late in the session.
The Eurozone private sector expanded at a slower-than-initially-estimated pace, according to data from Markit Economics. The composite output index rose to 53.3 in February, from 52.6 in January, slightly below the initial flash estimate of 53.5. Nonetheless, it signalled an expansion for the twentieth month in a row and the growth rate of economic output accelerated for the third straight month, rising to its highest since last July.
The services PMI rose to a seven-month high of 53.7 in February, from 52.7 in January. It was also below the 53.9 estimated on February 20.
Germany's private sector expanded at the fastest pace in four months. The composite PMI came in at 53.8 in February, compared with 53.5 in January, but that was again below the 54.3 initial reading. The final services PMI rose to a five-month high of 54.7 in February, from 54.0 in January, but well below the flash score of 55.5.
UK service sector expansion slowed unexpectedly in February. The PMI for the service sector decreased to 56.7 in February, from 57.2 in January. The score was forecast to rise to 57.5. The pound declined against other major currencies following the data, trading at USD1.5265 when the London equities markets closed.
In the US, the Services Purchasing Manager's Index for February rose to 57.1 from a previous reading of 54.2, and above economists' forecasts of 54.9. Meanwhile, The ISM non-manufacturing PMI inched up to 56.9 in February from 56.7 in January, with a reading above 50 indicating an expansion in service sector activity. The modest uptick by the index came as a surprise to economists, who had expected the index to edge down to 56.5.
However, US Payroll processor ADP said private sector employment increased by 212,000 jobs in February compared with an upwardly revised jump of 250,000 jobs in January. Economists had expected an increase of about 220,000 jobs compared with the addition of 213,000 jobs originally reported for the previous month.
At London close, Wall Street was trading down, with the DJIA down 0.6%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.3%.
In London, broadcaster and programme maker ITV and emerging markets bank Standard Chartered where amongst the best-performing stocks in the FTSE 100, while miner Fresnillo was the worst performer in the blue-chip index.
ITV closed up 5.0% after it proposed a GBP250 million special dividend at 6.25 pence per share and raised its total ordinary dividend for 2014, as it posted results ahead of expectations and 2013. The company proposed a final dividend of 3.3 pence, taking its total dividend for the year up to 4.7 pence from 3.5 pence. The company has committed to grow its full-year ordinary dividends by at least 20% per year over the three years to 2016.
ITV also posted a pretax profit of GBP605 million, up from GBP435 million, as revenue rose to GBP2.96 billion from GBP2.75 billion. Stripping out exceptional costs including acquisition, impairment, amortisation, net financing costs, restructuring and other tax adjustments, ITV posted a pretax profit of GBP712 million, up from GBP581 million, and earnings per share of 13.8 pence, up from 11.2 pence.
Analysts broadly cheered ITV's special dividend decision and said 2014 results were strong. Bernstein called the special dividend a "nice surprise" for shareholders, as it did not expected ITV to post one this year given its commitment to increase its ordinary dividend, while Numis upgraded ITV to Buy from Add, lifting its price target to 275 pence to 260p.
Standard Chartered ended up 5.1% after it reiterated that it has no plans to turn to the market to bolster its capital position, instead setting out plans to cut capital-intensive risk assets and to sell and exit under-performing businesses, as the emerging markets bank maintained its dividend despite a 30% drop in pretax profit in 2014.
The emerging markets bank said pretax profit fell to USD4.24 billion in 2014 from USD6.06 billion in 2013, hit by lower operating income, higher operating expenses, and an increase in impairment losses on bad loans.
Some analysts had expected the bank to turn to the markets to raise capital to bolster its creaking balance sheet, and they were divided on Wednesday about whether Standard Chartered's firm rebuff of the suggestion will bring the matter to a close given it is heading for a change at the helm.
Miner Fresnillo was by far the worst performer in the FTSE 100, closing down 8.5%. The gold and silver miner reported a steep drop in profit in 2014, as it was hit by a drop in gold production, falling precious metals prices, higher production costs, and the strengthening of the dollar against the Mexican peso.
Fresnillo reported a pretax profit of USD251.1 million for 2014, down 40% from USD418.7 million in 2013. However, the miner forecast that its production will improve in 2015 and pledged to continue investing in growth projects, increasing its capital expenditure budget in 2015, even though its focus this year will be on improving efficiency and productivity and maintaining its cost position and margins.
The results of the FTSE quarterly index review will be announced after the close of London stock trading, based on the closing market capitalisations on Tuesday. Tullow Oil is expected to drop out of the FTSE 100, replaced by Hikma Pharmaceuticals, while AA, Virgin Money Holdings and Imagination Technologies Group are expected to replace Afren, GAME Digital and Oxford Instruments in the FTSE 250.
In the corporate calendar Thursday, Aggreko, Schroders, Aviva, London Stock Exchange Group, Friends Life Group, Inmarsat, CSR, H&T Group, Cobham, Admiral Group, Spirax-Sarco Engineering and Hunting will release full-year results. Betfair Group will issue an interim management statement. Easyjet will publish its traffic statistics for February.
In the economic calendar, German factory orders are at 0700 GMT, while Italy's GDP is at 0900 GMT. The Bank of England releases its interest rate decision at 1200 GMT, while the ECB follows at 1245 GMT. In the US, initial jobless claims data is at 1330 GMT, while factory orders are at 1500 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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