Glaxosmithkline Share News (GSK)

LONDON (Alliance News) - London stock indices were mixed Thursday midday, with the FTSE 100 being weighed by several hefty constituents going ex-dividend, while shares in the US were seen adding to gains achieved on Wednesday.

The FTSE 100 was down 0.3% at 6,011.80 points, giving back some of the gains from the last four sessions, which had seen London's leading stock index recover almost all the ground lost in February.

However, the mid-cap FTSE 250 was up 0.5% at 16,234.22 points and the AIM All-Share up 0.6% at 682.12. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 1.0% and 1.7%, respectively.

Stocks in New York were pointed higher, with the Dow Jones Industrial Average seen up 0.5%, the S&P 500 up 0.4% and the Nasdaq 100 up 0.6%.

US stocks ended higher on Wednesday, with the DJIA up 1.6%, the S&P 500 up 1.7% and the Nasdaq Composite up 2.2%, despite suffering some volatility after the release of the minutes from the US Federal Reserve's January meeting.

The minutes showed officials were concerned that January's stock market meltdown added to "downside risks" for the US economy. Policy makers took a wait-and-see approach at the January meeting, electing not to follow December's interest rate hike with further tightening.

Fed members in favour of maintaining rock-bottom interest rates want to see "clear evidence" of rising inflation before another rate hike, the minutes showed. However, inflation expectations have been damped by collapsing oil prices that recently reached 13-year lows and show few signs of a quick rebound.

Until then, the Fed will continue "closely monitoring global economic and financial developments," alluding to weakness in China and Europe.

Retail giant Wal-Mart Stores reported fourth-quarter results before the US open, saying revenue rose 2.2% on a constant currency basis. It said its financial 2017 earnings guidance remains unchanged and that net sales will be relatively flat.

In the US economic calendar, initial and continuing jobless claims are at 1330 GMT at the same time as the Philadelphia Fed manufacturing survey, while the US Energy Information Administration releases crude oil stocks at 1600 GMT.

But before that, investors will look forward to the release of the minutes from the European Central Bank's monetary policy meeting in January at 1230 GMT.

Lloyds Bank analyst Robin Wilkin said the minutes will be "scanned for clues on the appetite for additional measures at the next meeting in March 10".

"Since January the prospect of additional policy easing has increased following ECB President Draghi's commitment to 'review and possibly reconsider the monetary policy stance at the next meeting in early March'", said Wilkin. "The minutes could provide some clues as to whether further easing is likely to be focused on a lower deposit rate or whether it may include changes to the Quantitative Easing programme too".

Meanwhile, data from the ECB showed that the euro area current account surplus declined in December as the surplus on trade in goods and services dropped from the prior month. The current account surplus fell to EUR25.5 billion from EUR26.9 billion in November. The surplus on trade in goods dropped to EUR26.5 billion from EUR27.5 billion and that on services fell to EUR4.6 billion from EUR6 billion a month ago.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 2.3%. The Shanghai Composite ended down 0.2% but the Hang Seng index in Hong Kong closed up 2.0%.

China's inflation accelerated to a five-month high in January, and the producer price index declined at a slower pace, data from the National Bureau of Statistics revealed.

Consumer prices advanced 1.8% year-on-year in January, faster than December's 1.6% increase. This was the highest rate since August 2015, when inflation was 2%, but was slightly slower than the 1.9% rise forecast by economists.

Producer prices dropped 5.3%, but slower than the 5.9% decline seen in December. Prices were expected to fall 5.4%.

On the London Stock Exchange, gas distributor and producer Centrica was leading FTSE 100 gainers, up 4.9%, after it reported full-year results that significantly beat expectations, as the drag on earnings from its upstream unit was not as bad as expected. Centrica reported a 4% fall in net earnings to GBP863.0 million in 2015 from GBP903.0 million in 2014, but the figure was significantly higher than analyst expectations of GBP733.0 million.

Adjusted operating cashflow, which Centrica said would be a "major focus" back in December, came in ahead of the group's guidance at GBP2.25 billion, which was also up 2% from GBP2.20 billion last year. Revenue for 2015 fell 5% to GBP28.00 billion. The dividend for the year will be 12.0 pence per share, down from 13.5 pence in 2014.

Following the results, Jefferies reiterated its Buy rating on Centrica, saying that the full-year results suggest the group's cash flow will remain strong in the current low commodity price environment.

BAE Systems was another top performer, up 1.3%. The defence contractor provided a brighter outlook for 2016, as had been expected, indicating trading conditions for the group are starting to improve following years of squeezed defence budgets globally.

The defence contractor said its underlying earnings per share in 2016 should be around 5% to 10% higher than in 2015, helped by defence budgets increasing around the world and by growing sales in its cyber security and international sales, the latter of which should be boosted by higher Typhoon support service contract revenue.

This will offset declines in the US and UK, with the US to see a reduction in naval ship repair activity, while UK sales will fall due to lower planned Typhoon deliveries, though higher submarine programme activity should help to offset falling aircraft carrier sales.

Heavyweight stocks which went ex-dividend were dragging on the FTSE 100. Pharmaceutical giants GlaxoSmithKline and AstraZeneca were down 3.4% and 1.9% respectively, while Royal Dutch 'A' shares were down 1.8% and 'B' shares down 1.6%.

Mining stocks also were weak, as they gave up some of their gains from Wednesday. Anglo American was down 4.5%, Rio Tinto down 3.6% and Antofagasta down 1.3%.

Property developer Hammerson was down 0.7% after being downgraded to Neutral from Outperform by Exane BNP.

In the FTSE 250, drugmaker Indivior was the best performer, up 12%, as investors welcomed full year results from the group, which beat its previously lifted guidance, despite profit about halving in 2015 and the company saying it does not plan to pay further dividends in the "forseeable future".

Indivior has seen a better-than-expected first year as a public company following its spin-out from consumer goods giant Reckitt Benckiser Group in late 2014, despite the higher costs of operating on a standalone basis and increasing generic competition to its key product, Suboxone Film.

Indivior said its pretax profit for the year to the end of December was USD285.0 million, down from USD561.0 million a year earlier. It will pay a final dividend of 9.5 cents per share, taking its total dividend to 12.7 cents.

Transport company Go-Ahead Group was up 6.9% after it said its first-half results met its expectations and affirmed its outlook for the full year as it saw solid performances in its bus and rail divisions. Pretax profit for the half-year to December 26 was GBP52.1 million, up from GBP44.7 million a year earlier, helped by a big rise in profit from its rail division. Go-Ahead will pay an interim dividend of 28.33 pence per share, up from 26.60p a year earlier.

Shore Capital upgraded the stock to Buy from Hold. The broker noted the company's shares have fallen by 16% year-to-date, giving them an attractive set of multiple and yield metrics.

At the other end of the index, Tullow Oil was down 6.6%. The oil and gas company said it has implemented extra "operational procedures" on the floating production, storage and offloading vessel serving the Jubilee field offshore Ghana after identifying an potential issue in the turret area.

Tullow said an inspection of the turret area of the FPSO was carried out by SOFEC, the original manufacturer of the turret, which identified "a potential issue" with the turret bearing.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2016 Alliance News Limited. All Rights Reserved.