LONDON (Alliance News) - Stocks in London ended lower on Thursday with tobacco and oil companies among the worst blue chip performers, while the pound gained after the Bank of England's monetary policy decision and the weaker dollar.The FTSE 100 index closed down 0.4%, or 31.79 points at 7,281.57. The FTSE 250 ended down 0.7%, or 136.92 points, at 20,243.61, and the AIM All-Share closed flat, or up 0.26 points, at 1,097.18.The Cboe UK 100 closed down 0.4% at 12,331.36, the Cboe UK 250 closed down 0.75 at 18,395.22, and the Cboe UK Small Companies closed up 0.2% at 12,207.75."The FTSE 100 underperformed the rest of Europe as a sell-off in tobacco and oil stocks are weighing on the index. British American Tobacco and Imperial Brands have given back some of yesterday's gains, and Royal Dutch Shell and BP are in the red on account of the weaker oil price, as Hurricane Florence has been downgraded to a category two storm," said David Madden, market analyst at CMC Markets.On the London Stock Exchange,
Antofagasta ended as the best blue chip performer, up 1.7% after HSBC raised the Chilean copper miner to Hold from Reduce.
Royal Bank of Scotland closed up 1.1% after The Times newspaper reported that the state-backed lender could use up to GBP4 billion of extra capital to pay out a special dividends to shareholders. RBS Chairman Howard Davies told the newspaper that, despite wanting to use the spare cash to buy the bank's shares from the government, if shareholders wanted the special dividend it was a possible option. The special dividend could be up to 33 pence per share to investors, who have not received a payout from the bank in more than 10 years, the newspaper reported. "If there are a lot of shareholders pressing for a special dividend, that is something we would consider," Davies told the Times.
Legal & General closed up 1.0% after the financial services group finalised a GBP4.40 billion buy-in for the British Airways pension scheme.The insurer said the Airways Pension Scheme buy-in was the "largest ever bulk annuity policy arranged with a UK pension scheme", covering close to 22,000 pensioners. As part of the agreement, British Airways's existing longevity insurance was converted into a bulk annuity.At the other end of the large cap index,
Imperial Brands and
British American Tobacco closed down 2.5% and 1.8% respectively, giving back some gains from Wednesday. Tobacco stocks surged late Wednesday after the US Food and Drug Administration said it could ban all flavoured e-cigarettes due to their popularity among teenagers.Shares in BAT and Imperial closed up 5.9% and 3.2% respectively on Wednesday.
SSE closed down 2.4% as investors continued to punish the "Big Six" energy supplier for its profit warning on Wednesday. The stock closed down 8.3% on Wednesday.On Wednesday, SSE said that "dry, still and warm weather" in the first five months of its financial year, in addition to "consistently" high gas prices, has hit adjusted operating profit to the tune of GBP190 million.WM Morrison Supermarkets closed down 2.1% after the supermarket chain reported a drop in half-year profit.For the six months to August 5, the UK's fourth biggest supermarket chain by market share posted pretax profit of GBP142 million, down 29% year-on-year from GBP200 million. This was after net adjustments of GBP51 million, including GBP33 million in one-off costs due to a bond tender offer and GBP28 million in relation to increased stock provisioning, Morrisons explained.Oil majors
BP closed down 0.7%,
Royal Dutch Shell 'A' closed down 0.9% and Shell 'B' closed down 0.8% tracking spot oil prices lower. Brent oil was lower quoted at USD78.16 a barrel at the London equities close from USD79.30 at close Wednesday, after the International Energy Agency said the global oil supply hit a record high in August. The report from the IEA noted that global oil supply reached a record 100 million barrels per day in August, with output from OPEC countries and Russia rising to a nine-month high.In addition, news that Hurricane Florence in the US was downgraded to a category two storm from category four also added to the selling pressure.The pound was higher quoted at USD1.3101 at the London equities close, compared to USD1.3028 at the close Wednesday, as the BoE kept UK interest rates on hold. The Monetary Policy Committee, led by Governor Mark Carney, voted 9-0 to keep the key rate unchanged at 0.75%.The committee also unanimously decided to maintain the quantitative easing through asset purchases at GBP435 billion.Policymakers said if the economy continues to develop broadly in line with the August Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target.The MPC reiterated that any future increases in Bank Rate were likely to be at a gradual pace and to a limited extent.Ruth Gregory, an economist at Capital Economics, said the MPC will "tread cautiously" until uncertainty over Brexit has been resolved.In Paris the CAC 40 ended down 0.1%, while the DAX 30 in Frankfurt ended up 0.2%. The euro stood at USD1.1673 at the European equities close, marginally higher against USD1.1625 late Wednesday as the European Central Bank left its benchmark interest rate unchanged. The ECB trimmed its growth forecasts for the 19-member eurozone in the face of a US-led trade war but remained optimistic about the bloc's economic outlook despite a slew of global market risks.The eurozone should expand by 2% this year, down from its June projection of 2.1%, ECB chief Mario Draghi said, pointing to the impact on global demand of the tariffs introduced, notably following the tit-for-tat trade war between China and the US.Still, the eurozone was enjoying "ongoing, broad-based growth," Draghi told a press conference.The bank expects the region's economy to expand by 1.7% in 2020, the same as its June forecast, Draghi said.He was speaking after the Frankfurt-based bank left its benchmark refinancing rate at a historic low of zero, holding its deposit rate at minus 0.4% and the marginal lending rate at plus 0.25%."The BoE and ECB continue to strike the pose of central banks either required (in the case of the BoE) or content (for the ECB) to await developments, leaving policy unchanged, although the trimming of growth forecasts by the latter did give some investors pause for thought," said IG chief market analyst Chris Beauchamp.Completing the triumvirate of central bank updates, Turkey raised its key interest rate by a bigger-than-expected volume, defying calls from the country's President Tayyip Erdogan for lower rates. The Monetary Policy Committee, led by Governor Murat Cetinkaya, raised the one-week repo auction rate to 24% from 17.75%. Economists had expected the rate to be raised to 20.75-22%.Earlier on Thursday, Erdogan said high interest rates are a "tool of exploitation" and the central bank should cut them. The lira fell over 3% on his comments."The fact that the CBRT has taken fairly aggressive action will ease some of the concerns about the erosion of its independence," Capital Economics economist Jason Tuvey said.Stocks in New York were higher at the London equities close amid optimism about global trade following reports the US is proposing a new round of trade talks with China.China's Ministry of Foreign Affairs said that the Asian nation would welcome a fresh round of trade talks with the US government, following overtures from US Treasury Secretary Steven Mnuchin this week."The Chinese side has indeed received an invitation from the US, and we welcome this. The two sides are currently communicating on the details," Foreign Ministry Spokesman Geng Shuang said. He also said the talks would continue inroads made by Chinese and US officials, who met in Washington last month. The invitation is an about-face for the US government after President Donald Trump last week indicated that the US may still impose another USD200 billion in tariffs as part of an ongoing trade war between the economic powerhouses. Foreign companies working in China, however, are already feeling the impact of the tariffs, according to surveys from the European Chamber of Commerce in China and two American Chambers of Commerce published on Thursday. Notably, almost two-thirds of 430 US companies surveyed found that the new tariffs imposed by China and the US on imports are affecting business operations, according to a survey by AmCham China and AmCham Shanghai. The DJIA was up up 0.4%, the S&P 500 index up 0.4% and the Nasdaq Composite up 0.8%.On the economic front, a report released by the Labor Department on Thursday showed a modest increase in US consumer prices in the month of August.The Labor Department said its consumer price index rose by 0.2% in August, matching the increase seen in July. Economists had expected prices to climb by 0.3%.The report also said the annual rate of consumer price growth slowed to 2.7% in August from 2.9% in July.Core consumer prices were up by 2.2% year-over-year in August compared to the 2.4% increase in the previous month."Ostensibly the disappointing CPI figures cast a smidge of doubt on a September hike from the Federal Reserve," said Spreadex analyst Connor Campbell.Gold was flat quoted at USD1,203.00 an ounce at the London equities close against USD1,202.20 late Wednesday.The economic events calendar on Friday has retail sales numbers from China at 0300 BST, Japan industrial production data at 0530 BST, Italy inflation readings at 0900 BST, eurozone trade balance figures at 1000 BST and US retail sales at 1330 BST. In addition, Carney give the annual Whitaker lecture at the Irish central bank at 1100 BST in Dublin. The UK corporate calendar on Friday has full year results from pub chain JD Wetherspoon and trading statements from recruiter SThree and Anglo-South African financial services group Investec.
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