Johnson Matthey Share News (JMAT)

LONDON (Alliance News) - The FTSE 100 pushed fractionally higher Wednesday, buoyed by a lack of consensus among EU leaders to impose sector-wide sanctions on the Russian economy, but any material gains for the UK blue-chip index were thwarted after its fourth-largest constituent by market capitalisation, GlaxoSmithKline, fell sharply after it lowered its earnings guidance.

Meanwhile, the pound edged lower against its major rivals after minutes from the latest Bank of England policy meeting sounded a little less hawkish about the UK economy than expected.

The FTSE 100 closed fractionally higher, up 0.04% at 6,798.15, while the FTSE 250 closed up 0.5% at 15,725.96, and the AIM All-Share index closed up 0.1% at 773.09.

"Any chance the FTSE 100 had of easing itself away from the 6800 level have been anchored by the profit warning from GlaxoSmithKline’s second-quarter figures," said Alastair McCaig, a market analyst at IG.

Glaxo saw its shares fall steeply after it lowered its full-year earnings per share expectations, saying at midday that it now expects to record results broadly similar to 2013, as it reported that pretax profit declined in the half-year to the end of June.

At the time of its first quarter results in April, Glaxo had guided between 4% and 8% core earnings per share growth at constant exchange rates.

The pharmaceutical giant posted a pretax profit of GBP1.89 billion for the half year, down from GBP2.70 billion, as revenue declined to GBP11.17 billion from GBP13.10 billion, hit by falling sales in its pharmaceuticals and vaccines segment, and in its consumer healthcare segment. It said that its progress on newly launched products is being offset by pricing and contracting pressure in the US. Additionally, generic competition to its high-triglyceride treatment Lovaza has been more substantive and has hit earlier than expected, Glaxo said.

The company ended the day down 4.7%, making it the biggest faller in the blue-chip index.

In Europe, the DAX 30 in Frankfurt and CAC 40 in Paris closed up 0.2%. At the UK and European market close, US shares were mixed, with the DJIA down 0.1%, the S&P 500 up 0.2%, and the Nasdaq Composite up 0.4%.

"Markets have eased off after the gains of yesterday, content to consolidate around these levels after all the volatility of the past week," said Chris Beauchamp, a market analyst at IG, referring to the significant gains made on Tuesday on the growing expectation that EU leaders will shy away from imposing economic sanctions on Russia in response to its apparent role in the airline disaster in Ukraine.

"Signs of division in European capitals reduced the chance of further organised sanctions against Russia, but there is still a faint chance that they will pull something together at the last minute, applying some eurozone crisis management to the situation," Beauchamp added.

Capita ended the day as the biggest riser in the FTSE 100, closing up 4.8%. The outsourcing company's shares ended at a record high closing price, after it raised its interim dividend and expressed confidence in its full-year performance, even though it saw its pretax profit for the half year to June 30 hit by exceptional costs.

The company posted a pretax profit of GBP152.3 million, down from GBP157.5 million in the previous year, despite seeing revenue rise to GBP2.07 billion from GBP1.82 billion, as it was hit by GBP85.7 million in exceptional expenses, higher cost of sales, and higher administrative expenses.

Still, the company said its high level of revenue visibility, combined with the strength of its bid and acquisition pipelines, gives it confidence in its full-year performance and provides a good platform for growth in 2015. It proposed an interim dividend of 9.6 pence, up 10% from 8.7 pence in the previous year.

SSE and London Stock Exchange Group, closing down 2.8% and 1.3%, respectively, were two of the heaviest fallers in the blue-chip index after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payout.

Johnson Matthey was another big loser in the FTSE 100, closing down 1.2%, after it posted a drop in pretax profit in its first quarter. The chemicals and precious metals products company said pretax profit declined 10% during the quarter to June 30, coming in at GBP95.0 million, compared with the GBP106.09 million recorded in 2013. Operating profit also fell, down 11% to GBP103.6 million from GBP116.1 million last year.

The FTSE 250 was led higher by Renishaw and Kazakhmys.

Renishaw, closing up 23%, was the mid-cap index's biggest winner by far. Shares in the engineering company rose sharply after it reported an increase in profit for the recent full year, boosted in part by the sale of Declam PLC and a strong performance from Renishaw's metrology division.

The company, which designs, manufactures and sells advanced precision metrology and inspection equipment for the healthcare sector, posted pretax profit of GBP96.4 million for the year to end-June, up from GBP82.1 million a year earlier, boosted in part by a GBP26.3 million gain on the disposal of its 19.4% stake in Delcam. It also said that its metrology, or industrial measurement business, saw strong demand.

The company's revenue rose to GBP355.5 million from GBP346.9 million.

Encouragingly, Renishaw's final results highlight a "sharp improvement" in trading in the final quarter, said Scott Cagehin, an analyst at Numis. Despite a negative forex impact, this drove pretax profit 12% ahead of Numis' forecast and 14% ahead of consensus estimates, he added.

Mining company Kazakhmys, closing up 8.2%, was the second biggest riser in the FTSE 250. The copper producer's shares rose after it unveiled an agreement to dispose of some of its mature mining assets in the Zhezkazgan and Central Regions of Kazakhstan, as it looks to restructure, strengthen its financial position, and focus on production from a small group of large-scale, low-cost open-pit mines.

Kazakhmys also said it wants to rename itself as KAZ Minerals PLC following the disposals, which will leave it as the owner of the mining and producing assets in the East Region and the Bozymchak mine in Kyrgyzstan.

The company said that it has agreed to transfer the companies owning the disposal assets to Cuprum Holding, which is owned by board members Vladimir Kim and Eduard Ogay. Ogay will step down from the Kazakhmys board as he will become the chief executive of Cuprum, though Kim, a former Kazakhmys chairman, will remain on the board.

In the forex market, the pound moved lower against its major rivals Wednesday, following the release of the minutes from Bank of England's latest Monetary Policy Committee meeting.

At the meeting on July 9 and 10, BoE policymakers unanimously decided to keep the UK base rate unchanged at 0.5%, and to maintain the central bank's stock of purchased assets at GBP375 billion, the minutes revealed.

The policymakers broadly maintained a balanced perspective of the UK economy and the potential for the first interest rate rise, noting that "sustained economic momentum was looking more assured," but also that "it remained unclear whether growth would slow modestly in the second half of the year, as envisaged in the May Inflation Report."

"Carney doesn’t want the market to rest on its laurels, but equally, he doesn’t want the market to get too ahead of itself, as it invariably will try to do," said Kathleen Brooks, research director at Forex.com. "If the market gets too focused on rate hikes then the BoE (alongside other central banks that are preparing to hike rates) will rein them back in. The rest of the year could be volatile," she said.

The results of the vote came as little surprise to most, but sterling fell from its morning highs against its rivals, as there had been an expectation from some quarters that one or more of the MPC members would have voted for a rate rise, given the apparent strength of the UK economic recovery.

"The long-awaited results of the Monetary Policy Committee voting has left currency markets rather underwhelmed as the continuation of the 9-0 has shown that none of the voting members have decided to stick their heads above the parapet," said IG's Alastair McCaig.

At the UK equity market close, the pound trades at USD1.7034, EUR1.2652, CHF1.5374, and JPY172.899.

In data released at the same time as the BoE minutes, the British Bankers Association said it approved 43,300 mortgages in June, which is up a little from the 41,800 it approved in May and just fractionally below the expectation of 43,400.

In the data calendar Thursday, the preliminary reading of Japan's Nomura/JMMA manufacturing PMI is released at 0235 BST, shortly ahead of Markit Economics' preliminary reading of Chinese manufacturing PMI at 0245 BST. Preliminary Markit manufacturing and services data for France are released at 0800 BST, with the equivalent German data due at 0830 BST. The flash readings of Markit manufacturing, services, and composite PMI for the eurozone are all scheduled for 0900 BST.

Italian retail sales figures also are released at 0900 BST, with UK retail sales data due shortly after at 0930 BST.

In the US, jobless claims information is released at 1330 BST. The preliminary reading of US Markit manufacturing PMI is expected at 1445 BST, shortly before home sales data at 1500 BST. The Federal Reserve Bank of Kansas' manufacturing activity reading is published at 1600 BST.

In a busy day in the UK corporate calendar, FTSE 100-listed Reed Elsevier, Unilever and Hammerson are joined by FTSE 250-listed Rathbone Brothers, Howden Joinery and CSR in releasing half-year results Thursday. Blue-chips SABMiller and easyJet are scheduled to provide trading updates, as are mid-caps Close Brothers Group, Electrocomponents, Shaftesbury, Kingfisher Group, Tate & Lyle, Britvic, De La Rue, Halma, Lancashire Holdings, Marston's, and Paragon Group of Companies.

FTSE 250-constituent Polymetal International is scheduled to release production results.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

Copyright 2014 Alliance News Limited. All Rights Reserved.