Findel Share News (FDL)

LONDON (Alliance News) - The UK's major stock indices all closed lower Tuesday, reversing early gains that saw the FTSE 100 reach within 10 points of its 2013 high and then tracking declines in the US indices when Wall Street opened.

However, the pound got another boost from the latest International Monetary Fund growth forecasts.

The IMF raised its global growth forecast to 3.7% for 2014, from 3.0% previously, and to 3.9% in 2015. The UK's 2014 forecast was raised by more than for any other major economy, to 2.4% from 1.8% previously, while the IMF raised its 2015 forecast to 2.2%, from 2.0%.

The report said that "activity in the UK has been buoyed by easier credit conditions and increased confidence".

Against the dollar, the pound pushed to a 8-day high of USD1.6486, while against the euro, it made a 12-month high of EUR0.8211. Against the Swiss Franc, the pound reached a high of CHF1.5035, a level not seen since December 2012.

The pound's latest rise came as several more companies warned of the impact recent currency fluctuations are having on their financial results.

Brewing giant SABMiller reported higher sales for its fiscal third quarter that met analysts' expectations, as volumes rose and it managed to raise prices. Growth continued to be driven by emerging markets like Africa, Latin America and China. However, "depreciation of key currencies against the US dollar will adversely impact reported results," it warned.

Unilever's 2013 operating profit came in at EUR7.51 billion, up 8% from EUR7.0 billion in 2012. However, it said the increase would have been 15% is currencies had stayed constant during the year.

Next Fifteen, meanwhile, said the current strength of sterling against both the US dollar and the Euro will hold back its revenues and profits, even though trading was off to a strong start in the financial year.

Anglot-Dutch consumers goods and food producer Unilever kicked off the latest UK earnings season, reporting lower revenues for the fourth quarter and whole of 2013, but its earnings beat expectations as margins were supported by price increases and cost cutting.

Unilever ended up 1.8%, but its report also buoyed peer stocks, and Food Producers was the biggest gaining FTSE 350 sector index Tuesday, up about 2.2%. FTSE 250-listed Greencore closed up 1.9%, with Jefferies initiating coverage with a Buy rating, saying the stock was attractively valued at a 22% discount to the sector.

African Barrick Gold was one of the top performing FTSE 250 companies, closing up 2.6%. Its 2013 gold production of 641,931 ounces was 3% higher than in 2012 and significantly exceeded guidance of between 540,000 and 600,000 ounces. It also continued to cut costs, with its so-called all-in sustaining cost down 30% on the year in the fourth quarter.

However, Mining and Metal sector index stocks fared worst Tuesday, with Goldman Sachs reported to have revised down its outlook for 2014 platinum prices. Rio Tinto and Anglo American were among the heaviest falling blue chip stocks, down 3.1% and 3.0% respectively.

The miners were not helped by the gold price. The yellow metal has risen in recent weeks, but fell almost 1% against the dollar Tuesday to USD1,241.20 per ounce.

Overall, the FTSE 100 closed marginally lower at 6,834.26, the FTSE 250 closed down 0.5% at 16,144.20 and the AIM All-Share closed down 0.1% at 881.59.

After the European close, the DJIA was down 0.7% and the S&P500 down 0.2%. The Nasdaq Composite was up 0.1%.

In Europe, the CAC 40 closed flat, while the Dax outperformed, ending up 0.1%, despite a weaker-than-expected economic sentiment indicator.

The German ZEW survey of economic sentiment recorded 61.7 in January, down slightly from 62.0 in December and missing economists' expectations for an improved 64.0 reading. However, the German assessment of the current economic situation, which is generally seen as less significant, climbed 8.8 points to 41.2, its highest mark since May 2012.

In the UK corporate calendar Wednesday, exploration and production reports are expected from miners BHP Billiton, Hochschild and London Mining. A trading statement is also expected from pub chain JD Weatherspoon, as well as interim management statements from Land Securities, Sage Group and Findel.

The UK economic calendar is much more busy, and should give pointers to future Bank of England policy. The latest update on UK unemployment is due along with the minutes from the central bank's last Monetary Policy Committee meeting, both at 0930 GMT.

Economists expect the headline rate of unemployment to have fallen to 7.3% in November, from 7.4% in October, moving closer to the Bank of England's 7% threshold for starting discussions on whether to raise interest rates.

The IMF Tuesday warned the bank not to move too fast or risk choking the still-fragile recovery. "With prospects improving, it will be critical to avoid a premature withdrawal of monetary policy accommodation, as output gaps are still large while inflation is low and fiscal consolidation continues," it said.

By Jon Darby; jondarby@alliancenews.com; @jondarby100

Copyright © 2014 Alliance News Limited. All Rights Reserved.