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LONDON (Alliance News) - The FTSE 100 managed to cling on to gains on Wednesday despite a sell-off in the final hour of trade after data from the US Energy Information Administration showed crude oil stocks rose by more than expected last week, while drinks company SABMiller rejected the latest takeover approach by larger rival Anheuser-Busch InBev.
The FTSE 100 ended up 0.2% at 6,336.35, marking a sixth successive session of gains for the blue-chip index. The FTSE 250 closed down 0.6% at 17,031.22 and the AIM All-Share ended flat at 733.41.
In Europe, the French CAC 40 closed up 0.1% and the German DAX 30 closed up 0.7%.
US shares were trading down at the London close, with the DJIA down 0.1%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.4%.
Oil shares spent the day among the best performers due to a rise in the price of crude oil. However, the commodity's gains were stemmed towards the London close after the Energy Information Administration said its crude oil stocks rose by 3.07 million barrels in the week to October 2, ahead of expectations of a 2.2 million barrel increase.
"The continued build-up of US crude inventories undermines the idea that US producers are finally feeling the pinch and cutting back on production. Oil is and will remain in strong supply going forward. The question is whether demand will pick up at these lower prices," said IG market analyst Joshua Mahony.
The larger than expected increase in crude oil stocks hit the price of Brent oil and West Texas Intermediate, both of which traded well off their intraday highs after the data. Earlier, Brent oil had hit its highest price since September 1, while WTI traded at its highest level since late July.
The fall in oil prices also weighed on the FTSE 100, which gave up the majority of its gains in the last hour or trade.
Nevertheless, BP shares closed up 2.4% and Royal Dutch Shell 'B' shares ended up 2.5%. The higher oil price weighed on travel stocks, which are large consumers of the commodity. International Consolidated Airlines Group ended as the worst blue-chip performer, down 5.5%, while budget-airline easyJet closed down 5.1% and cruise operator Carnival closed down 4.3%.
Miners spent the day amongst the best performers in London's main stock indices. Anglo American closed as the best performer in the FTSE 100, up 10% after being upgraded by Morgan Stanley to Equal-Weight from Underweight. Peers Rio Tinto, up 6.1%, and BHP Billiton, up 4.9%, were also upgraded by the bank which said it expects an improvement in commodity prices in the near term, but warned that supply discipline is needed.
Antofagasta shares closed up 7.4% as it said its Chilean subsidiary is set to reduce its workforce by around 7% as part of its cost reduction programme aimed at making the copper miner more competitive in light of lower commodity prices.
SABMiller caused a stir in the market after the brewer's board rejected an increased takeover offer by AB InBev, despite the deal having secured the support of its largest shareholder.
Early Wednesday, AB InBev said it has made a bid valuing Anglo-South African SABMiller at 4,215p per share, valuing SABMiller at GBP68.2 billion overall. AB InBev said it has had two informal offers for SABMiller, of 3,800p and 4,000p, rejected. It added that it was "disappointed" SABMiller's board had rejected the two previous approaches "without any meaningful engagement".
The deal from AB InBev included a partial share alternative for up to 41% of SABMiller's shares. It secured the support of Altria Group Inc, the US tobacco group, which owns a large stake in SABMiller.
SABMiller responded that its board would meet to consider the new offer but later Wednesday rejected the bid, saying it "still very substantially undervalues SABMiller". Shares in SABMiller closed up 0.6% at 3,642.9148p.
Elsewhere, Tesco continued to make progress with its turnaround strategy, swinging back to profit in the first half of its financial year.
The UK's largest retailer is trying to pick itself up after a terrible year which saw it make a pretax loss of GBP6.38 billion in the 12 months to February 28, as it booked a staggering GBP7.0 billion of impairments, writedowns and restructuring charges.
On Wednesday, the supermarket chain reported a GBP74 million pretax profit in the 26 weeks ended August 29, an improvement on the GBP19 million pretax loss a year before. Revenue, however, fell 1.9% to GBP23.94 billion from GBP24.27 billion.
Chief Executive Dave Lewis told journalists that Tesco had decided to retain its customer data business Dunnhumby, which had been up for sale, as improving cash generation means the sale was not necessary and that keeping it creates more value for shareholders, although he also said that he did not want to sell the business for less than the company believed it was worth.
Lewis added that Tesco does not intend to dispose of any more major assets. Tesco shares closed up 2.7% at 197.41724p.
Sporting retailer Sports Direct International ended as one of the worst performers in the FTSE 100, down 4.3% after the company said it reached an agreement to acquire Irish clothing retailer Warrnambool, which trades as Heatons, for EUR47.5 million.
Sports Direct said it has agreed a deal with Sandra Minor, a minority shareholder in Warrnambool, to acquire her stake in the business and increase Sports Direct's holding to just over 50%. In addition, it has agreed a conditional put and call option agreement with the remaining shareholders in the company to buy the remainder of the business.
Shares of UK housebuilders closed lower after the UK Financial Conduct Authority said it launched a call for input into the mortgage sector to identify potential areas of the market where competition could be improved.
A number of constituents of the FTSE 350 Household Sector Index traded in the red, with Berkeley Group Holdings down 3.3%, Bellway down 3.4%, and Persimmon down 2.9%.
The FTSE 350 Household Sector Index closed down 2.0%, one the worst performing sectors.
The City regulator said it is seeking views on the regulatory regime for the mortgage market, including any changes made following the Mortgage Market Review and any other barriers to entry, expansion or innovation.
It also will look for input on the ability of consumers to effectively access and act on information about mortgage products, and it will be asking for views on the conduct of companies operating in the sector and the relationships between mortgage providers.
The FCA said the call for inputs will close on December 18.
In the economic calendar Thursday, Japanese trade balances and machinery orders will be at 0050 BST, German trade balances is at 0700 BST before the Bank of England's policy decision and minutes at 1200 BST. The European Central Bank's monetary policy meeting accounts are at 1230 BST and US initial and continuing jobless claims are at 1330 BST. After the close of London's equity market, US Federal Reserve minutes are released at 1900 BST.
In the UK corporate calendar, FTSE 100 packaging company Mondi issues an interim management statement as does FTSE 250 recruitment company Hays. There are also trading updates from sugar and sweeteners company Tate & Lyle, homewares retailer Dunelm Group and specialty chemicals company Victrex. DFS Furniture reports full-year results, while and miner Centamin reports third quarter production results.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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