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(Alliance News) - Stock prices in Europe ended mixed on Thursday, with the FTSE 100 outperforming despite some pressure on its banking shares, which suffered in a negative read-across amid worries for Metro Bank.
A calmer day on the bond market helped support equities in Europe, but shares ended off session highs after a less-than-stellar start to trading in New York.
US bond yields could spike again if Friday's jobs report comes in hotter-than-expected and increases Federal Reserve interest rate expectations, which could mean further turbulence for equities.
In the UK, meanwhile, a Bank of England policymaker said there are signs that rate hikes are weighing on the economy.
The FTSE 100 index added 39.09 points, or 0.5%, at 7,451.54. The FTSE 250 climbed 107.08 points, or 0.6%, at 17,599.98. The AIM All-Share ended down just 0.47 of a point at 694.74.
The Cboe UK 100 rose 0.6% at 743.75, the Cboe UK 250 added 0.7% at 15,324.39, and the Cboe Small Companies edged up 0.1% to 13,246.48.
In European equities on Thursday, the CAC 40 in Paris closed fractionally higher, while the DAX 40 in Frankfurt fell 0.2%.
In New York, stocks were lower. The Dow Jones Industrial Average fell 0.5%, the S&P 500 lost 0.7% and the Nasdaq Composite gave back 0.9%.
The pound was quoted at USD1.2164 late Thursday in London, up from USD1.2144 at the London equities close on Wednesday. The euro stood at USD1.0526, higher against USD1.0515. Against the yen, the dollar was trading at JPY148.58, lower compared to JPY148.83.
Numbers on Thursday showed US initial jobless claims picked up, but were slightly lower than expected.
According to the US Department of Labor, initial claims for unemployment support rose to 207,000 in the week ended September 30, from 205,000 a week prior. The previous reading was upwardly revised by 1,000 from 204,000.
The latest figure fell sort of the FXStreet cited consensus, which predicted claims would rise to 210,000.
Focus now turns to Friday's nonfarm payrolls data, the official employment report. The reading is expected to show jobs growth of 170,000 in September, easing from 187,000 in August. The data is released at 1330 BST.
Bank of England Deputy Governor Ben Broadbent said there are "clear signs" that the Threadneedle Street's rate hikes are hurting the UK economy, Bloomberg reported.
At a European Central Bank event, Broadbent said economic indicators more sensitive to rate hikes have "weakened quite a lot".
The Bank of England last month decided against enacting another lift to UK interest rates in a split decision after a cooler than expected inflation reading took some pressure off the central bank.
The BoE maintained bank rate at 5.25%, a more than 15-year high, in what was somewhat of a surprise move. According to FXStreet cited consensus, a 25 basis point hike was expected, though a tamer UK inflation reading earlier this week meant some investors dialled back their rate hike bets.
It ended a streak of 14 successive hikes since December 2021, which have shot up the bank rate from a Covid-19-induced low of 0.10%. It is the BoE's first pause since November 2021.
In London, all eyes continued to be on Metro Bank shares. The stock plunged 26%. It confirmed that it is continuing to evaluate the best ways to enhance its capital resources.
The UK challenger bank was responding to a Financial Times report on Wednesday which said that Metro Bank is seeking to raise up to GBP600 million, citing people with knowledge of the plan.
The talks came after regulators last month failed to approve a request from Metro to lower the capital requirements attached to its mortgage business.
Analysts at Shore Capital Markets commented: "Although, according to a statement released by Metro Bank today, the group continues to meet its minimum regulatory capital requirements. Either way, it is clear that the group is operating very close to the line."
In a negative read across, NatWest lost 0.8%, Lloyds fell 0.4% and Barclays ended down 0.9%.
Imperial Brands climbed 3.9% after the cigarette maker announced a GBP1.1 billion buyback and said that it expects to deliver full-year trading in line with expectations.
The company said that, on a constant currency basis and including Russia, tobacco and next-generation products net revenue grew by a low single-digit percentage in the financial year that ended September 30.
Meanwhile, Imperial said its adjusted operating profit growth is expected to have accelerated to the "lower end" of its mid-single digit range.
Imperials Brands shares had suffered on Wednesday after UK Prime Minister Rishi Sunak announced smoking crackdown plans.
Sunak said that the legal age for buying tobacco in the UK should rise every year to stop youngsters taking up smoking, as he also pledged to crack down on the sale of disposable vapes to children.
He told the Conservative party conference in Manchester that "a 14-year-old today will never legally be sold a cigarette" under new legislation for England.
In the FTSE 250, Volution rose 8.4%.
The designer and manufacturer of energy-efficient indoor air quality solutions hailed "ever tightening regulations" as boosting demand for its business, as it declared a higher payout after its annual profit rose.
For the year ended July 31, Volution reported a pretax profit of GBP48.8 million, up 3.4% from GBP47.2 million a year prior. Revenue climbed 6.6% to GBP328.0 million from GBP307.7 million.
The company noted that demand in the refurbishment market has been "supportive" during the year, particularly in the UK where it saw demand in public refurbishment, maintenance and improvement market benefiting from the "heightened awareness of health risks associated with mould and condensation."
On the back of its robust annual results, Volution declared a final dividend of 5.5 pence per share, up from 5.0p a year prior. This brought the total dividend to 8.0p, which is 9.6% higher than 7.3p a year prior.
Hitting the buffers in Paris, train manufacturer Alstom slumped 37%. A key metric of its financial health turned negative due to higher inventories and delays in completing a UK deal.
Alstom released preliminary financial information on Wednesday showing negative free cash flow of EUR1.15 billion for the six months that ended September 30, the first half of its financial 2024, compared to EUR45 million a year earlier.
As a result, it now expects the full-year figure to reach as much as negative EUR750 million, after previously forecasting it to be "significantly positive".
Alstom has a "seemingly never-ending free cash flow problem", according to Deutsche Bank.
"The group's investment grade rating now looks at risk, with a capital increase becoming increasingly likely," analysts at the German bank added.
Brent oil fetched USD84.56 a barrel late Thursday in London, down markedly from USD87.91 at the London equities close on Wednesday. Gold was quoted at USD1,815.53 an ounce, lower against USD1,826.09.
Before the US jobs report in the afternoon, Friday's economic calendar has a Halifax UK house price index reading at 0700 BST and Irish gross domestic product data at 1100 BST.
The local corporate calendar has full-year results from JD Wetherspoon.
By Eric Cunha, Alliance News news editor
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