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LONDON (Alliance News) - UK stocks are mixed Wednesday mid-morning, with Standard Chartered and some miners leading blue-chip risers, while the UK services purchasing manager's index reading came in below economists expectations.
The FTSE 100 is up 0.2% at 6,699.25, the FTSE 250 is down 0.3% at 17,690.48, and the AIM All-Share is flat at 755,08.
In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt are both up 1.0%.
Standard Chartered is amongst the best performers in the FTSE 100, having drifted between gains and losses after it slashed its interim dividend while reporting a drop in first-half pretax profit and a jump in impairment charges for bad loans.
The bank, which makes the bulk of its money in Asia, the Middle East and Africa, said its pretax profit amounted to USD2.10 billion in the six months to the end of June, compared with USD3.25 billion in the corresponding half of the prior year.
Operating income increased to USD8.77 billion from USD9.25 billion, and operating expenses fell to USD5.04 billion from USD5.08 billion. Impairment losses on bad loans and advances, together with other credit risk provisions, increased to USD1.65 billion from USD846 million. The emerging markets focused bank halved its interim dividend to 14.4 cents per share, and said it expects to make a similar percentage adjustment to the final dividend.
The stock is up 1.2% at 964.30 pence, having already touched an intraday low of 929.10p and reached a high at 1,014p.
BHP Billiton and Rio Tinto, both up 2.6%, and Glencore, up 1.9%, are amongst the biggest blue-chip gainers after Liberum upgraded the miners to Hold from Sell. The broker believes that the recent drops in their share prices, alongside its analysis, suggest that the risk-reward ratio is fairly poised.
"We expect mining fundamentals to continue to deteriorate into the second half of the year as demand conditions worsen, supply in some key commodities accelerates and dividends come under pressure," write Liberum analysts Richard Knights and Ben Davis.
"However, valuation sensitivity to a set of feasible long-run assumptions suggests risk/reward is fairly evenly poised; iron ore downside looks largely priced in at BHP Billiton and Rio Tinto and valuation sensitivity to a range of feasible long-run copper prices looks skewed to the upside," the analysts say.
Legal & General Group is up 1.8%. The insurance and investment company reported an 18% increase in first-half operating profit, driven by growth in four of its six divisions. It increased its interim dividend by 19% to 3.45 pence per share from 2.90p, as operating profit increased by 18% to GBP750 million in the six months to the end of June, ahead of the 3.36p interim dividend and GBP692 million operating profit analyst forecast provided by the company.
Legal & General said operational cash generation increased to GBP624 million from GBP578 million, which was ahead of the GBP618 million forecast by analysts.
London Stock Exchange Group shares are up 1.9% after the company reported a 17% increase in first-half operating profit, driven by higher revenue from the acquisition of Frank Russell.
The LSE, which operates equity, bond and derivatives markets, said it made a GBP239.4 million operating profit in the six months ended June 30, compared with GBP205.7 million in the corresponding half of 2014. Revenue increased by 90% to GBP1.16 billion when including the acquisition of Frank Russell. The group increased its interim dividend by 11% to 10.8 pence.
In the FTSE 250, IP Group is up 2.2%. The company said it is seeing opportunities to increase the deployment of capital within its existing portfolio of companies, and that it has a "healthy pipeline" of new and potential business opportunities.
IP Group, which works with universities to help develop and commercialise their intellectual property, said the value of its portfolio amounted to GBP478.2 million at the end of June, up from GBP349.9 million six months earlier and from GBP319.6 million at the same stage last year. Its portfolio, which consisted of interests in 96 companies at the end of June, benefited from a net unrealised fair value gain of GBP73.7 million.
Spirax-Sarco Engineering is the worst mid-cap performer, down 4.7%, after it said currency effects dragged down its pretax profit and revenue in the first half, along with costs associated with the start-up of its business in India and with the restructuring of its UK operations.
The company, which makes steam management systems and peristaltic pumps, said pretax profit in the first half was down by 10% to GBP57.3 million from GBP63.5 million a year earlier, primarily due to the GBP8.2 million in exceptional costs it booked in the half from the start-up of its business in India and from the job cuts it made in the UK.
On the economic front, the UK services sector growth slowed by more than expected in July, survey data from Markit Economics showed. Still the survey signalled strong growth in the dominant services sector moving into the second half of 2015. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell to 57.4 in July from 58.5 in June. It was forecast to drop marginally to 58 in July.
That signalled growth of activity for the thirty-first successive month, and at a rate that was broadly in line with the strong average over this sequence, Markit said. Survey respondents linked higher activity to new contracts in July. In contrast to the trend shown for total activity, new business expansion accelerated in July to the highest since April. Further, service providers continued to expand their workforces on average in July.
"A deterioration in service sector growth is the latest in a stream of signals that the economy has slowed as we move into the second half of the year," says Chris Williamson, chief economist at Markit,. "The fall in the services PMI follows signs of ongoing weakness in manufacturing and a renewed slowing in the construction sector."
The pound shrugged off the data and remains at levels prior to it, standing at USD1.5572. At the London equity markets close Tuesday, the pound had been quoted at USD1.5619.
Meanwhile, the rate of expansion in eurozone economic activity slowed slightly at the start of the third quarter, final data from Markit revealed Wednesday. Nonetheless, growth remained close to June's four-year high. The composite PMI fell to 53.9 in July from 54.2 in June. It was above the flash estimate of 53.7.
Solid expansions of output were signalled in both eurozone's manufacturing and service sectors, with the slightly faster rate of growth at service providers. The final services PMI came in at 54 in July, down from 54.4 in June, but above the flash estimate of 53.8.
Still in the economic calendar, in the US, Markit Services and Composite PMI readings are due at 1445 BST. The US Institute for Supply Management Non-Manufacturing PMI is due at 1500 BST, while EIA crude oil stocks are expected at 1530 BST
By Daniel Ruiz; danielruiz@alliancenews.com
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