Kingfisher Share News (KGF)

LONDON (Alliance News) - London stock prices continued to track movements in oil prices Tuesday, coming off their lows as Brent oil rose above the USD30 a barrel mark.

Oil prices were hit overnight after Iraq announced record-high oil production, feeding into an already heavily oversupplied market. Iraq's oil ministry told Reuters that oil output had reached a record high in December, with its fields in the central and southern regions producing as much as 4.13 million barrels a day.

"News of record high oil production in Iraq, coupled with the Russians pumping at the highest post-Soviet rate compounded the already bearish sentiment that is evident within the crude oil market," said Joshua Mahony, market analyst at IG.

Brent crude fell to a low of USD29.25 a barrel earlier Tuesday, but has since rallied to trade at USD31.00 at midday in London. Meanwhile, US benchmark West Texas Intermediate is quoted at USD30.64 a barrel, above an earlier low of USD29.23.

"Interestingly, while we are still seeing crude prices continue to influence European sentiment, the correlation between the size of moves within Asia and Europe appears to be on the wane, as a circa 6% drop in Shanghai led to considerably smaller percentage moves in the likes of the FTSE, DAX and CAC," Mahony added.

The FTSE 100 index traded down 0.5% at 5,850.65 points, the FTSE 250 was off 0.4% at 16,089.99 and the AIM All-Share was down 0.7% at 683.73. In Europe, the French CAC 40 was down 0.4%, as was the DAX 30 in Germany.

The losses in Europe were dwarfed by earlier declines in Asia. The Japanese Nikkei 225 index ended down 2.4%, the Shanghai Composite down 6.4% and the Hang Seng index in Hong Kong down 2.5%.

Ahead of the US open, futures pointed Wall Street for a slightly higher open. The Dow Jones Industrial Average was pointed flat while the Nasdaq 100 and S&P 500 were both indicated up 0.1%.

There are a number of earnings releases from bellwether US companies on Tuesday, including Apple, Johnson & Johnson, Proctor & Gamble, Lockhead Martin, 3M and AT&T.

On the London Stock Exchange, easyJet was one of the biggest fallers in the FTSE 100, down 2.2%. The budget airline reported growth in passengers carried and load factor in the first quarter of its financial year, although revenue per seat and total revenue fell following the terrorist attacks in Egypt and Paris.

easyJet said the number of passengers carried in the quarter ended December 31 increased by 8.1% to 16.1 million, as the load factor rose by 0.6 percentage point to 90.3%.

Kingfisher remained one of biggest blue-chip fallers, down 2.5% midday Tuesday after losing 6.1% on Monday. The DIY retailer on Monday outlined its restructuring plans for the next five years, warning the cost of the changes will constrain its profit and sparking warnings from analysts that the potential benefits of the plan may be outweighed by its risks.

Numis downgraded its rating on Kingfisher shares to Reduce from Neutral, saying the market is right to be sceptical of the financial aspects of the 'ONE' Kingfisher initiative.

Miners were leading the FTSE 100 gainers. Anglo American traded up 7.8% after it said its first sales cycle for its De Beers diamond business delivered a big increase in revenue compared to the final cycle it handled in 2015. The value of the rough diamonds sold in the first cycle improved to USD540.0 million, up from USD248.0 million for the final sales cycle of 2015.

Anglo said the holiday season in the UK was positive from a sales perspective, and the group was boosted by a manufacturing reduction which resulted in polished diamond stocks feeding through the sales pipeline, with the resulting reduction in stocks in turn driving firmer polished prices.

Fresnillo, up 3.2%, and Randgold Resources, up 2.1%, were benefiting as safe haven demand pushed the price of gold higher. The metal was trading at USD1,111.42 an ounce, having hit a high of USD1,117.60, its highest level since the beginning of November.

In the FTSE 250, PZ Cussons was by far the worst performer, down 11%. The consumer products company said pretax profit edged slightly higher in the first half despite a dip in revenue, as it dealt with a drag on its results from a tough trading environment in Nigeria and a hit from currency weakness in Asia and Africa.

The company, which makes Imperial Leather and Carex amongst a range of personal care, homecare, food and electricals products, said its pretax profit for the six months to the end of November rose to GBP40.0 million from GBP39.7 million. The group will pay a flat interim dividend of 2.61 pence per share.

Pub operator and brewer Marston's, up 6.0%, said its trading has been encouraging thus far in its current financial year, with a solid Christmas and New Year period.

The company's Destination and Premium restaurant outlets saw like-for-like sales grow 3.0% over the 16 weeks to January 23, with food sales up 2.5% and drink sales rising 3.4%. For the two-weeks Christmas trading period to January 2, trading was good for the group, with like-for-like sales growth overall hitting 4.9%, despite tough comparatives for the year before.

The good Christmas trading helped push shares in other pub companies higher, with Mitchells & Butlers up 3.8% and JD Wetherspoon up 2.2%.

Central European branded-spirits producer Stock Spirits Group said group earnings before interest, tax, depreciation and amortisation for 2015 will be in the upper half of its guided range of EUR50 million to EUR54 million.

The company said trading in the fourth quarter of 2015 and in the full year was in line with guidance, both in Poland and in its other core markets. Stock Spirits traded up 10%.

Avon Rubber was the worst performer in the FTSE All-Share, down 13%, after the rubber products manufacturer said market conditions have continued to prove soft in the first quarter of its financial year.

Avon said conditions in dairy markets, for which Avon makes milking equipment, have remained tough in the quarter to the end of December. It said it remained confident it would be able to deliver against its long-term targets, though also cautioned this would be dependent on the timing of orders for its Protection & Defence division, which makes gas masks, where it said order timings remain unpredictable.

Still ahead in the economic calendar, the US Redbook index is due at 1355 GMT, while the US Housing Price Index is at 1400 GMT. US Markit Services and Composite Purchasing Manager's Index readings are due at 1445 GMT, while US consumer confidence data are due at 1500 GMT. The US Federal Reserve will start its two-day monetary policy meeting later Tuesday.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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