(Alliance News) - The FTSE 100 ended Wednesday's session firmly in the red as the pound continued to trade around five-month highs on hopes of a Brexit breakthrough in the coming hours ahead of the EU summit.
The FTSE 100 index closed down 43.69 points, or 0.6%, at 7,167.95. The FTSE 250 ended just 9.01 points lower at 20,187.96, and the AIM All-Share closed up 7.78 points, or 0.9%, at 879.61.
The Cboe UK 100 ended down 0.7% at 12,164.6, the Cboe UK 250 closed flat at 18,162.63, and the Cboe Small Companies was also unchanged, at 11,064.39.
"From fretting at the start of the session the pound swung positive on Wednesday afternoon, as signs started to build that the UK and EU are closing in on a Brexit deal," said Connor Campbell at Spreadex. "The pound's switch-up, alongside issues in its commodity sector, meant the FTSE was once against the black sheep of its index peers."
In European equities on Wednesday, the CAC 40 in Paris ended down 0.1%, while the DAX 30 in Frankfurt gained 0.3%.
Stocks in New York were slightly lower at the London equities close, with the Dow Jones down 0.1%, the S&P 500 index flat, and the Nasdaq Composite 0.3% lower.
The pound was quoted at USD1.2834 at the London equities close Wednesday, trading around its best levels in five months, compared to USD1.2739 at the close on Tuesday.
As crunch Brexit talks continued on Wednesday just a day ahead of the EU summit, European Council President Donald Tusk said the core elements of a divorce deal have been negotiated.
He added that things should become clearer in the next seven to eight hours.
"The main foundations of the agreement are ready. Theoretically we could accept this deal with Britain tomorrow and avert chaos and all the disasters linked to an uncontrolled and chaotic exit," Tusk told reporters from his native Poland in a live television interview.
"Negotiations are ongoing," Tusk added, noting that "everything is going in the right direction."
Hopes a Brexit agreement could be reached before Thursday's summit overshadowed some disappointing UK inflation data on Wednesday.
The UK consumer price index rose 1.7% on an annual basis in September, a pace unchanged from August. September's inflation reading missed the market consensus estimate of 1.8%.
The core inflation gauge - excluding volatile food and energy items - came in at 1.7% on an annual basis, up from 1.5% recorded in August.
The eurozone's inflation data also came in below expectations in September, with consumer prices rising 0.8%, slower than the 1.0% recorded in August. The September reading fell short of market expectations of 0.9%.
The reading was also below the European Central Bank's target of "below, but close" to 2%. The ECB meets next week.
The euro stood at USD1.1063 at the European equities close Wednesday, firm against USD1.1036 at the same time on Tuesday.
Against the yen, the dollar was trading at JPY108.73, flat versus JPY108.79 late Tuesday.
In commodities, Brent oil was quoted at USD59.33 a barrel at the London equities close Wednesday from USD59.38 late Tuesday.
Gold was quoted at USD1,487.79 an ounce at the London equities close Wednesday against USD1,481.99 at the close on Tuesday.
In London, Rio Tinto closed down 1.4% after reporting a mixed operational performance in the third quarter.
The Anglo-Australian miner said Pilbara iron ore shipments of 86.1 million tonnes in the three months to the end of September were 5% higher than in the third quarter of 2018. Pilbara iron ore production of 87.3 million tonnes was 6% higher year-on-year and 10% higher quarter-on-quarter, while aluminium production of 789,000 tonnes was 3% lower than the third quarter of 2018.
Rio Tinto kept its guidance for 2019 unchanged, with the exception of bauxite production, which has been revised to around 54 million tonnes from a previously estimated range of 56 million to 59 million tonnes. Aluminium production guidance was revised downwards to around 7.7 million tonnes from 8.1 million to 8.4 million tonnes.
Reckitt Benckiser - which releases a trading statement next week - closed up 0.9% after Berenberg started the stock with a Buy rating.
In the FTSE 250, Go-Ahead group closed up 3.5% after HSBC raised the transport operator to Buy from Hold.
Mediclinic International shares gained 3.3% after indicating earnings will rise in the first half of its financial year.
For the six months to the end of September, the private hospital group said adjusted earnings before interest, taxes, depreciation and amortisation will increase by around 3.5% from GBP213 million the year before.
This is on revenue that is to grow by 9.0% on a reported basis from GBP1.39 billion the prior year. On a constant currency basis, revenue will increase by 6.5% year-on-year.
On London's junior AIM market, ASOS shares were back in fashion, leaping 26% despite the online retailer posting a sharp decline in annual profit.
Pretax profit for the 12 months to August 31 fell 68% to GBP33.1 million, despite revenue rising 13% to GBP2.73 billion. At constant currency, revenue was up 12%.
ASOS's UK retail sales climbed 15% to GBP993.4 million, with international climbing 11%, or 10% constant currency, to GBP1.66 billion.
ASOS issued two profit warnings during the year, the first in December after a "significant downturn" in performance during November 2018, and then another in July after warehouse problems in Atlanta, US, and in Berlin.
ASOS said Wednesday the financial and operating performance was "disappointing", with the "huge" investment made more challenging than predicted.
Richard Hunter, head of markets at Interactive Investor, said the year was probably one "which the company would rather forget".
"Investors will be hoping that these numbers represent a line in the sand. The initial share price reaction to the results reflect a leap of faith, after management assurances that the latter part of the year was rather more positive, to the extent that it can look forward to the next period with confidence," said Hunter.
Turning to Wall Street, and shares in Bank of America were 2.2% higher as the lender boosted its third quarter dividend.
For the three months ended September 30, pretax profit narrowed 24% to USD6.86 billion from USD8.99 billion the year prior. This was despite revenue improving 0.4% to USD22.81 billion from USD22.72 billion the year before. Profit was hurt by non-interest expenses rising 17% to USD15.17 billion from USD13.01 billion the year prior.
Bank of America proposed a 18.0 US cents per share dividend, up 20% from 15.0 cents the year prior.
In Thursday's corporate calendar in the UK, there are third quarter results from Marmite maker Unilever, hygiene firm Rentokil Initial, transport operator National Express and Domino's Pizza Group. In addition, there are annual results from books and stationery retailer WH Smith.
In the economic calendar on Thursday, there are UK retail sales at 0930 BST while eurozone construction output is at 1000 BST and US industrial production at 1415 BST. Meanwhile, the EU's two-day summit kicks off in Brussels.
By Lucy Heming; lucyheming@alliancenews.com
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