Glaxosmithkline Share News (GSK)

LONDON (Alliance News) - UK stock indices crept higher throughout trading Wednesday to end modestly higher after a mixed start.

Support came from a doveish set of minutes from the latest Bank of England rate-setting meeting and also from some reasonable US inflation data. With earnings season in full swing in both the UK and US, corporate updates drove a number of stand-out stock movers.

The FTSE 100 closed up 0.4% at 6,399.73, the FTSE 250 up 1.0% at 15,170.06, and the AIM All-Share up 0.6% at 709.30.

Major European markets also made gains, with the French CAC 40 up 0.6%, and the German DAX up 0.6%, while US stocks continued to trade higher at the London close, with the DJIA up 0.2%, the S&P 500 up 0.4%, and the Nasdaq Composite up 0.3%.

UK stock indices found a little support, while the pound fell against other major currencies, after the minutes of the Bank of England's October Monetary Policy Committee meeting struck a tone of increased caution over economic slowdown, particularly in Europe, leading investors to expect monetary policy to remain accommodative for some time to come.

"Once again, the news on global activity and inflation had, on balance, been modestly to the downside, particularly in the euro area," the minutes read. "There were increasing indications that the slight slowing in the pace of (UK) expansion towards the end of the year that the Committee had been expecting for some time would indeed occur."

The notes showed the Bank of England rate setters voted 7-2 to keep the UK's base interest rate on hold at 0.5%, in line with expectations. The same two members as in the previous two meetings, Martin Weale and Ian McCafferty, voted for a rate hike. The MPC members voted unanimously to maintain the BoE's stock of purchased assets at GBP375 billion, also in line with expectations.

Further thoughts from Weale might be revealed when he speaks on Cambridge on Wednesday evening at 2000 BST.

The pound fell to a four-day low against the dollar at USD1.6010. It hit an intra-day low against the euro of EUR1.2613, although by the time of the European close, the pound had returned to EUR1.2672, about flat on the day. The euro also remains under pressure amid concerns about the upcoming eurozone bank stress test results.

Spanish news agency Efe reported Wednesday that at least 11 of the 130 eurozone banks have failed the tests. European Central Bank officials responded by saying that the news report was pure speculation at this stage. The test results are due to be released on Sunday.

US consumer price inflation came came in fractionally higher than expected at 1.7% year-on-year in September, unchanged from August. That came as a relief to investors given the environment of slowing growth in other regions and given that the consensus expectation was for an easing to 1.6%.

Within the London equity movers, UK motor insurers were amongst the best performers after a report from the Automobile Association indicated that premiums in the industry are on the rise for the first time in more than two years. The AA said its index tracking the cheapest comprehensive cover available edged up by GBP6, or 1.2%, in the three months to September 30 to GBP531 per annum. For the overall market, premiums were up 4.2% over the same period to an average of GBP891 per annum.

Shore Capital questioned the use of the report as an indicator of things to come, given that the AA said "claims pressure is pushing premiums up". Even so, Admiral closed up 3.3%, Direct Line gained 3.2%, and esure Group rose 6.7%.

Otherwise it was corporate updates that drove London's moving stocks. GlaxoSmithKline was amongst the best blue-chip performers, up 3.2%, after launching a restructuring of its global pharmaceuticals business with the aim of saving about GBP1 billion a year and saying it will return GBP4 billion to shareholders in 2015 on top of its usual dividend payouts. Glaxo posted a pretax profit of GBP548 million for the third quarter of 2014, down from GBP1.40 billion a year before, as revenue fell to GBP5.65 billion from GBP6.51 billion.

British American Tobacco weighed at the other end of the blue chip index, down 2.8%, after saying that its profitability has been hit by the relative strength of the pound. Its nine-month revenue was up 2.4% at constant exchange rates but down 9.6% at actual rates.

Zoopla ended as one of the best FTSE 250 performers, up 7.2%. The property search company received a vote of confidence from Jefferies. The brokerage sees a huge 60% upside to the stock and is unconcerned about the threat posed by soon-to-be launched rival search site Agents Mutual.

Gaming company Playtech gained 5.1% after reporting faster-than-expected revenue growth. Revenue was EUR116.5 million in the three months to end-September, up from EUR90.6 million a year earlier, as casino software sales rose by a third to EUR62.4 million.

International Personal Finance rose 5.0% after the home credit business reported a 5% rise in pretax profit in the third quarter to GBP34.0 million, up from GBP32.5 million a year earlier. Revenue rose to GBP245.5 million from GBP264.4 million, helped by a 4.8% increase in customer numbers to 2.6 million.

Clothing retailer SuperGroup was the worst performer in the FTSE 250, ending down 5.3% after announcing a management reshuffle. The retailer has appointed Non-Executive Director Euan Sutherland as its new chief executive, with founder Julian Dunkerton moving to the newly created role of founder and product and brand director, a move the company said would assist an accelerated expansion overseas. That move has been welcomed by most analysts, but they have also trimmed full-year estimates for the company due to the warm UK weather that has hit the clothing retail sector in general over September and early October.

Aerospace and defence company Senior lost 2.4% after saying that its adjusted pretax profit in the period since July 1 has been in line with its expectations and that it expects its full-year results to meet forecasts. Analysts have sounded a note of caution, however, over uncertainty on the level of additional costs to the business into 2015. Following a strong run in the shares ahead of the update, Numis Securities has downgraded the stock to Add from Buy.

Another busy day of corporate releases Thursday brings the much-anticipated interim results of troubled supermarket chain Tesco, from which investors will be keen to find out what happened to the GBP250 million it said it couldn't account for a few weeks ago.

Full year numbers are are due from Britvic and Debenhams. Third quarter numbers are scheduled from Ladbrokes, Hochschild Mining, Anglo American, Unilever, African Barrick Gold, and Premier Foods.

Preliminary PMI data for October from across the eurozone will be key on Thursday, given the focus on eurozone growth. Domestically, retail sales data will be in focus, while the Chinese HSBC manufacturing PMI released ahead of the market open may provide an early driver.

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

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