Johnson Matthey Share News (JMAT)

LONDON (Alliance News) - The FTSE 100 continued its anaemic start to June, closing slightly lower on Thursday, after oil cartel OPEC failed to agree on a supply limit and the European Central Bank decided against any changes to monetary policy.

The FTSE 100 closed down 0.1%, or 6.32 points, at 6,185.61, falling from a high of 6,220.27 earlier in the session. The FTSE 250 closed up 0.1%, or 14.79 points, at 17,076.26. In mainland Europe, the CAC 40 in Paris closed down 0.2%, and the DAX in Frankfurt closed flat.

In the US at the London equities close, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite were all down 0.1%.

Brent crude was trading at USD49.77 at the London equities close, up from USD49.62 at Wednesday's close, after the Organization of the Petroleum Exporting Countries made no agreement for an oil production ceiling and picked Nigerian oil official Mohammed Barkindo as its next leader.

Brent erased its earlier losses after the Energy Information Administration said US crude inventories fell by 1.4 million barrels in the week ended May 27, which was lower than the 2.5 million fall that had been expected. Brent had fallen as low as USD48.825 earlier in the session.

At a meeting in Vienna, outgoing OPEC Secretary General Abdalla Salem El-Badri said there was no need to act now because prices have risen over the past months to around 50 dollars per barrel.

"The numbers we are producing are reasonable for the market. The market is accepting it," he told reporters.

Michael Hewson, chief market analyst at CMC Markets UK, said equity markets in Europe struggled for traction, continuing a "disappointing start" to the month, even though the FTSE 100 had performed well as Brent rose above the USD50 mark in the morning.

"These gains on the UK market soon unwound in the afternoon session as the news came out that oil ministers had failed to come to an agreement at today's OPEC meeting in Vienna," Hewson said.

Also from Vienna, the European Central Bank kept interest rates at record lows, as expected, maintaining the refinancing rate at 0%, the deposit rate at -0.4% and marginal lending rate at 0.25%, and increasing its growth and inflation forecasts for the eurozone this year.

"The risks to the euro area growth outlook remain tilted to the downside, but the balance of risks has improved on the back of the monetary policy measures taken and the stimulus still in the pipeline," ECB President Mario Draghi said at a press conference in Vienna.

Some of the downside risk relates to the UK's June 23 referendum on whether to remain a member of the EU or leave, Draghi said, as well as broader "developments" in the global economy and "other" geopolitical risks.

The ECB now expects 1.6% growth this year, revised up from the 1.4% forecast in March. Its inflation forecast for the year rose to 0.2% from 0.1%, and unchanged at 1.3% for 2017 and 1.6% the following year, remaining below the central bank's target of below but close to 2%.

"Upward revisions to growth and inflation for 2016 certainly made a change from the usual fare, potentially marking a turning point after a sustained period of pain. Now that the tide is slowly turning, it will be interesting consider the fate of the single currency in a world where Super Mario one day doesn't come offering his token dovish gift to the markets," Joshua Mahony, market analyst at IG, said.

The euro was trading at USD1.1157 at the London equities close, down from USD1.1172 at the same stage on Wednesday, and the pound rose to USD1.4432 from USD1.4404 over the same time period. Gold was trading at USD1,212.02, up from USD1,210.03 at the close on Wednesday.

The ECB's corporate bond purchase programme will start on June 8, with a new series of targeted longer-term refinancing operations, or TLTRO, to follow on June 22, the day before the UK's referendum, putting into action stimulus measures first announced in March.

"As we expected, the ECB held to their current set of policies and did not offer much new in the way of future policy guidance," said Tim Graf, head of macro strategy - Europe at State Street Global Markets. "With so many of the announced programmes still to really get underway and the impact of past policy measures still unclear, we suspect they will be standing pat on major innovations for several more months."

In London Johnson Matthey, the platinum and chemicals company, was the best performer in the UK's blue-chip index, up 2.1%, after increasing its annual dividend by 5.0% to 71.5p and pointing to a better year ahead. The company's annual results showed that pretax profit fell to GBP386.3 million in the year ended March 31, from GBP495.8 million a year earlier.

Process Technologies, one of the divisions which weighed on pretax profit, should perform better in the new financial year, Johnson Matthey said, helped by cost cuts made to offset continued softness in its markets.

Precious Metals Products, however, is likely to deliver a weaker performance due to continued problems facing the group's platinum group metals refining and recycling operations.

"Johnson Matthey has delivered a robust performance overall in a year where conditions have been particularly tough in some of our markets," Chief Executive Robert MacLeod said.

Turning to the current year, MacLeod said that Johnson Matthey "remains well positioned in markets with strong growth drivers".

The increase in Johnson Matthey's share price helped to drive the FTSE 350 Chemicals Sector up 2.9%. Croda International, up 0.4%, Victrex, up 1.7%, and Elementis, up 0.8%, also helped the sector to rise, more than offsetting a 0.5% fall in Synthomer's shares.

Marks & Spencer Group, down 3.9% to 356.6p, fell after analysts at UBS cut their price target to 440p from 490p and maintained a Buy rating on the stock.

UBS said the "sensible" new strategy tabled by M&S means the risk-reward balance for the shares of the clothing, homewares and food retailer is to the upside.

Steve Rowe, the retailer's new chief executive, last week set out plans to revive M&S's struggling Clothing & Home division. There will be a push to re-establish an advantage by cutting prices, enhancing the retailer's service offering and improving the style of its products.

The CEO set out his strategy as M&S reported a fall in full-year pretax profit and said the actions it will take to improve its performance will have a short-term impact on earnings.

Research by the UBS Evidence Lab indicates price perception is the biggest problem facing M&S, yet is the quickest issue to fix, according to analysts Adam Cochrane and Andrew Hughes.

In the FTSE 250, Moneysupermarket.com Group, the price comparison website, fell by 6.4% to 309.8p, after analysts at Jefferies cut the stock to Hold from Buy and reduced their price target to 312p from 440p.

On AIM, London's market for smaller companies, Conroy Gold & Natural Resources soared by 18%, after kick-starting a drilling programme in Ireland in a search for more gold.

"I am very pleased that we have commenced our current drilling programme. I look forward to the results of the drilling on our Glenish gold target and on the combined Clay Lake-Clontibret gold project," said Chairman Richard Conroy.

The AIM All-Share closed up 0.4%, or 2.78 points, to 739.94.

On the economic front on Friday, look out for Caixin China Services PMI at 0245 BST. Markit Services PMI and Markit PMI Composite data are due from 0845 BST to 0930 for the likes of Italy, France, Germany, the UK and the EU as a whole.

EU retail sales data follow at 1000 BST. In the US, expect data for earnings, labor force participation, unemployment rate, nonfarm payrolls, and trade balance at 1330 BST, followed by US Markit Services PMI and Markit PMI Composite at 1445 BST, ISM Non-Manufacturing PMI and factory orders at 1500 BST.

In the UK corporate calendar, get ready for May traffic statistics from International Consolidated Airlines Group, the owner of Aer Lingus, British Airways, Iberia and Vueling. IAG's update comes ahead of May traffic statistics due on Monday from budget airline easyJet.

Friday also brings full-year results from Verona Pharma and Lindsell Train Investment Trust.

By Samuel Agini; samagini@alliancenews.com; @SamuelAgini

Copyright 2016 Alliance News Limited. All Rights Reserved.