International Airlines Share News (IAG)

LONDON (Alliance News) - Stocks in London ended down Friday ahead of a long weekend in the UK, amid a raft of economic data and UK corporate news and with lender Royal Bank of Scotland Group and air carrier International Consolidated Airlines Group leading the blue-chip decliners following first-quarter updates.

The FTSE 100 ended down 1.3%, or 80.51 points, at 6,241.89. The blue-chip index fell 1.1% for the week as a whole, but rose 2.2% in April.

RBS ended as the worst blue-chip performer, down 6.1%. The lender said its first-quarter net loss widened after paying a fee to the UK government that will eventually allow the state-backed lender to return capital to shareholders, though dividends or share buybacks look further away than previously anticipated.

The results come the lender had warned on Thursday there is a significant risk it will miss a deadline by which it must sell the UK retail branch network known as Williams & Glyn. A lengthier separation of the 300-branch network from the rest of RBS raises the prospect of higher costs and further delays in returning capital to shareholders.

RBS was closely followed by IAG, down 4.7%. The carrier warned the terrorist attacks in Brussels in March have had a negative effect on revenue trends so far in the second quarter of 2016.

The fall in the company's shares came despite it swung to a pretax profit in the first quarter of 2016, boosted by growth in traffic, passenger numbers and revenue. The first quarter of the year is traditionally quiet for airlines.

The read-across from IAG's warning hit shares in peers easyJet and Wizz Air Holdings, ending down 2.8% and 1.0%, respectively.

Meanwhile, Dublin-based drugmaker Shire rose 1.8% after it reiterated its guidance for 2016, citing a strong start to the year as it saw pretax profit rise in its first quarter. Shire said it continues to expect product sales to increase 11% to 14% on a reported basis for 2016, and between 13% and 17% on a non-generally accepted accounting principles, constant currency basis, as part of its longer term efforts to reach a targeted USD20 billion in product sales by 2020.

However, this guidance does not incorporate the USD32 billion acquisition of Baxalta and Chief Executive Flemming Ornskov told journalists that Shire will be updating its forecasts once the deal has closed. This deal is subject to shareholder approval, to be decided at a general meeting later next month, and if it is approved closing is expected in early June.

Telecommunications giant BT Group also ended in the green, up 2.1%, benefiting from an upgrade by UBS to Neutral from Sell. UBS said that if the merger of Three and O2 in the UK is blocked by regulators, this will reduce the risk of an aggressive push into the mobile market by Sky, a major rival to BT on television and broadband services. In addition, the Swiss bank sees potential for upgrades on BT estimates when it updates on its acquisition of mobile company EE.

Among the few blue-chip risers also were gold miners Randgold Resources and Fresnillo, whose shares rose 3.8% and 1.6%, after the precious metal's price increased to USD1,296.60 an ounce, its highest level since January 2015. Gold was at USD1,293.27 at the London equities close, compared to USD1,264.30 at the same time on Thursday. In the FTSE 250, gold miner Centamin rose 7.5%, the best mid-cap performer.

Some weakness in the dollar also helped Brent oil continue its 2016 rally, reaching its highest level since November 2015 at USD48.25 a barrel during trade on Friday. The North Sea benchmark was quoted at USD47.68 at the London close, marginally up on the USD47.60 close on Thursday.

The FTSE 250 ended down 1.6%, or 264.90 points, at 16,801.55 and the AIM All-Share fell 0.4%, or 2.70 points, at 727.71.

Restaurant Group sank 27% to the bottom of the mid-cap index, after it warned on profit for its full financial year, ending a long run of consistent profit growth, and as it revealed the resignation of its chief financial officer. The restaurant operator, which runs the Frankie & Benny's, Chiquito and Garfunkel's chains, said in the 17 weeks to April 24, total sales grew by 4.7% but like-for-like sales fell by 2.7%.

Restaurant Group said it doesn't expect any improvement in underlying like-for-like trends in the short term, which will lead to a fall in full-year sales of between 2.5% and 5.0%.

Shares in Ophir Energy plummeted 18% after the deal which would have led to US oil services group Schlumberger investing in the company's Fortuna floating liquefied natural gas project in Equatorial Guinea collapsed, putting a considerable delay to the development on the horizon.

The deal was significant as Schlumberger was due to partly-cover Ophir's costs on the project up until first gas, meaning substantial sums needed to get the project up and running have fallen back to Ophir.

Meanwhile, actuators manufacturer Rotork added to the marginally brighter picture for companies servicing the oil and gas industry on Friday as it said order intake increased in the first quarter and revenue edged higher thanks to acquisitions and favourable currency translation. Rotork shares ended up 4.2%.

The CAC 40 in Paris and the DAX 30 in Frankfurt ended down 2.7% and 2.5%, respectively.

Stocks in New York were lower at the London equities close, adding to the losses on Thursday. The Dow 30 was down 0.8%, the S&P 500 down 0.9%, and the Nasdaq Composite was down 1.1%.

There was a heavy economic calendar Friday, with consumer sentiment data from the US and eurozone gross domestic product, inflation and unemployment data.

The University of Michigan said in a report that US consumer sentiment deteriorated by more than previously estimated in April, reflecting weakening expectations for future growth. The final reading on the consumer sentiment index for April came in at 89.0, reflecting a downward revision from the mid-month reading of 89.7. Economists expected it to be upwardly revised to 90.4.

Euro area economic growth accelerated by more than expected in the first quarter, according to Eurostat preliminary data. GDP climbed 0.6% quarter-on-quarter, following a 0.3% rise in the fourth quarter. Economists had forecast the growth rate to improve marginally to 0.4%. On a yearly basis, GDP growth remained at 1.6%, while it was forecast to ease to 1.5%.

Another report from Eurostat showed consumer prices dropped in April on falling energy prices and a slowdown in service costs. The harmonised consumer price index fell 0.2% annually, after staying flat in March. Prices had declined by 0.2% in February. Economists had forecast a 0.1% drop for April. Excluding energy, food, alcohol and tobacco, core inflation eased to 0.8% from 1% in March. This was also below the expected rate of 0.9%.

"Good news from the eurozone. One by one, the pieces are falling into place," said Berenberg analyst Holger Schmieding. "After a soft patch in the second half of 2015, the eurozone is returning to trend growth of roughly 1.6% year-on-year."

"Whereas the surprisingly strong GDP increase of 0.6% quarter-on-quarter in the first period probably overstates the recent momentum a little, economic fundamentals as well as leading indicators point to a sustained upswing in the second half of this year after a likely temporary lull in the second-quarter", Schmieding added.

The euro stood at USD1.1445 at the London equities close, compared to USD1.1318 at the same time Thursday.

Meanwhile, the Bank of England released a report showing that UK mortgage approvals declined to a three-month low in March, while secured lending and consumer credit expanded strongly. The number of mortgages approved in March fell unexpectedly to 71,357 from 73,195 in February. It was forecast to rise to 74,200.

Total lending to individuals increased by GBP9.3 billion in March, much more than a GBP5 billion rise seen in February. Net consumer credit grew GBP1.9 billion in March versus a GBP1.4 billion rise in February and the GBP1.3 billion increase forecast by economists.

The pound dropped against the dollar following the data, but sterling stood at USD1.4630 at the London close, higher than USD1.4586 on Thursday. The pound reached USD1.4671 in early trade, its highest level since early-February.

In the corporate calendar Monday, Japan's Nikkei manufacturing Purchasing Manager's Index is due at 0300 BST. Markit manufacturing PMIs from France, Germany, the eurozone and the UK are due at 0850 BST, 0855 BST, 0900 BST and 0930 BST, respectively. The same from the US is due at 1445 BST, while US ISM manufacturing PMI is at 1500 BST.

On Tuesday, China's Caixin manufacturing PMI is due at 0245 BST, while eurozone producer price index is at 1000 BST. The European Commission releases its economic growth forecasts for the eurozone. In the US, the Redbook index is due at 1355 BST while the ISM New York index is due at 1445 BST. The American Petroleum Association weekly crude oil stock data are due at 2130 BST.

The Tokyo equity market will be closed Tuesday due to the Constitution Day.

In the UK corporate calendar Tuesday, fund manager Aberdeen Asset Management releases half-year results and online takeway company Just Eat publishes a first-quarter order update. Drugmaker Indivior releases its first-quarter results at 1200 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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