International Airlines Share News (IAG)

LONDON (Alliance News) - Shares in London were lower midday Friday, amid a flurry of economic data and corporate news ahead of a long weekend in the UK and following a late-session decline by Wall Street.

The FTSE 100 index was down 0.9%, or 55.16 points, at 6,267.24. The FTSE 250 was down 0.6% at 16,966.16 and the AIM All-Share down 0.2% at 728.96.

The CAC 40 index in Paris was down 1.3% and the DAX 30 in Frankfurt was down 0.8%.

"Yet another fall in European equities greeted investors this morning, as month-end and a long weekend in the UK loomed," said IG analyst Chris Beauchamp. Markets in both the UK and Ireland are closed on Monday for the first May bank holiday.

The analyst highlighted the raft of economic data on the schedule Friday, which could still change the mood among investors. However, IG's Beauchamp said "the ongoing disappointment from the Bank of Japan, has made it difficult for bulls to gain much traction".

In addition to the lingering negative sentiment after the Bank of Japan on Thursday refrained from further easing monetary policy, the decline in European stocks has been due to a negative close in Wall Street Thursday. A fall in technology giant Apple's shares was the main culprit, after billionaire investor Carl Icahn told CNBC that he sold his stake in the iPhone maker. Apple shares fell 3.1%, after losing 6.6% on Wednesday following its report of disappointing iPhone sales.

US main indices were expected to add to their losses on Thursday at the open on Friday, with the Dow Jones Industrial Average and the S&P 500 both seen down 0.1% and the Nasdaq 100 pointed down 0.2%.

In the US corporate calendar, oil and gas company Exxon Mobil release first-quarter results before the Wall Street open.

Ahead in the economic calendar, US personal consumption expenditure is at 1330 BST, the Chicago Purchasing Managers Index at 1445 BST, and the Reuters/Michigan Consumer Sentiment Index at 1500 BST.

In Asia, the Shanghai Composite ended down 0.3% and the Hang Seng in Hong Kong fell 1.5%. The Tokyo market was closed for Showa Day.

Already released were eurozone gross domestic product, inflation and unemployment data.

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 harmonized 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%.

"A return to slightly negative inflation was anticipated by European Central Bank President Draghi in his press conference last week and is therefore not a surprise to policymakers," said analysts at Lloyds Bank.

"It is expected to remain around current levels before picking up in the second half of the year, but the path towards the ECB's target [of 'close to, but below 2%'] is likely to be very gradual, given that significant spare capacity in the economy is likely to persist, even after the firm first-quarter GDP figures," Lloyds added.

Meanwhile, a third report from Eurostat showed eurozone jobless rate declined for the first time in three months in March to its lowest level in four-and-a-half years. The seasonally adjusted unemployment rate dropped to 10.2%, the lowest figure since August 2011, when it was the same. In July that year, the rate was 10.1%. The February jobless rate was revised up to 10.4% from 10.3%. In January, the figure was 10.4%.

The euro stood at USD1.1392 at midday, compared to USD1.1318 at the London equities close on Thursday.

German retail sales dropped unexpectedly in March, figures published by Destatis revealed. Sales slid by real 1.1% from February, when they remained flat. This was the first decline in seven months. Economists had forecast a 0.4% increase. On a yearly basis, growth in retail sales eased notably to 0.7% from 5.5% in February. This was slower than the expected 2.7% growth.

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 USD1.4608 at midday, higher than USD1.4586 on Thursday at the close. The pound reached USD1.4664 in early trade, its highest level since early-February.

On the London Stock Exchange, International Consolidated Airlines Group was the worst blue-chip performer, down 3.8%. The owner of British Airways, Iberia and Aer Lingus said it swung to a pretax profit in the first quarter of 2016, boosted by growth in traffic, passenger numbers and revenue. However, IAG warned that impact on travel of the Brussels terror attack has continued into the second quarter.

IAG said it made a pretax profit of EUR124 million in the three months to March 31, having suffered a EUR37 million pretax loss in the first quarter of 2015. Revenue grew to EUR5.08 billion from EUR4.71 billion, boosted by 14% growth in traffic measured in revenue passenger kilometres, and a 22% rise in passenger numbers.

Air carrier peer easyJet was down 2.0%, while in the FTSE 250 Wizz Air Holdings was down 0.6%.

Royal Bank of Scotland Group was another decliner, down 2.6%. RBS said its first-quarter net loss widened after paying a fee to the UK government that will eventually allow the state-backed lender to resume dividends.

RBS's net loss, which included a GBP1.19 billion payment to the government to retire the so-called dividend access share, amounted to GBP968 million in the three months ended March 31, the lender said in a statement, widening from the GBP459 million net loss the corresponding quarter a year earlier.

First-quarter pretax profit jumped to GBP421 million from GBP37 million. The results come after RBS on Thursday warned there is a significant risk it will miss a deadline by which it must sell the UK retail branch network known as Williams & Glyn.

At the other end of the index, telecommunications giant BT Group was up 1.7%, the biggest blue-chip gainer, 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.

Shares in drugmaker AstraZeneca were up 0.1%. The group reiterated its full-year guidance for 2016 at constant currency, as it said revenue rose 5% in the first quarter on a constant currency basis, driven by a significant increase in externalisation revenue. At actual exchange rates, revenue grew by 1.0% to USD6.12 billion in the first quarter of 2016 from USD6.06 billion a year before.

Pharmaceutical peer Shire released its own first quarter results at midday Friday, saying pretax profit rose to USD491.7 million from USD471.3 million a year before, as revenue increased to USD1.71 billion from USD1.49 billion. The stock was up 0.1% immediately after the announcement.

In the FTSE 250, Restaurant Group was the worst mid-cap performer, down 23%, after it warned on profit for its full financial year. It said it was experiencing a "deterioration in trading conditions" which will lead to a fall in full-year like-for-like sales. It also revealed the resignation of its chief financial officer.

Ophir Energy shares were down 17% after the oil and gas company said that talks with US oil services giant Schlumberger over the Fortuna floating liquefied natural gas project in Equatorial Guinea have been terminated.

Ophir said that despite Schlumberger completing technical due diligence, the two companies were unable to complete the transaction on terms agreed in the heads of terms, and as such, talks between the two were terminated. The company remains in "active discussions" with a number of other parties in regards to participation in and funding of Fortuna, it said.

Actuators maker Rotork was biggest gainer in the FTSE 250, up 5.9%. Rotork said favourable exchange rates and acquisition contributions drove up revenue and order intake in its first quarter, and it announced the purchase of valve gearbox manufacturer Mastergear for USD25.0 million.

Investec put Under Review its Sell recommendation on Rotork, after the actuators manufacturer's results were better than the broker expected, providing "a sigh of relief" for the company.

By Daniel Ruiz; danielruiz@alliancenews.com

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