Lloyds Share News (LLOY)

LONDON (Alliance News) - The UK's main indices ended higher Thursday, suggesting investors believe that the independence referendum in Scotland will see the country remain a part of the United Kingdom.

At the close of trade, the FTSE 100 ended up 0.6% at 6,819.29, the FTSE 250 up 0.9% at 15,722.81 while the AIM All-Share index underperformed, closing down 0.7% at 758.25.

Scottish citizens have been voting Thursday on whether they would like Scotland to remain as part of the UK or to become an independent state. The opinion polls before voting began struggled to put one side clearly ahead but IG market analyst David Madden said that the performance of stocks exposed to Scotland Thursday suggests that investors believe the "No" campaign has the edge.

"The Scottish are voting on the future of their country as we speak, but seeing as stocks with large exposure to Scotland are rallying it would suggest the support for the ‘Yes’ campaign is fading," the analyst said. "Traders were given a shock by the YouGov poll that put the ‘Yes’ campaign ahead nearly two weeks ago, but the sentiment has shifted to the ‘No’ side and traders have used the [Alex] Salmond shake up as an opportunity to pick up cheap banking stocks."

Stocks such as Aberdeen Asset Management, up 1.9%, SSE, up 1.6% and Lloyds Banking Group, up 1.4% were amongst the gainers in the FTSE 100 at the close Thursday.

The pound, meanwhile, appreciated against the dollar to a two-week high amid the Scottish vote. At the close of European trade it was valued at USD1.6370.

"The lack of actual vote results and a ban on exit polls tells us this [appreciation] is largely a technical correction; many traders have closed GBP-short positions in a hurry on what promises to be big volatility as results come in," said David Rodriguez, a quantitative strategist at DailyFX.

The European Central Bank's first targeted longer term refinancing operation disappointed as banks took up less than the expected amount of funds. The ECB announced Thursday the results of its first TLTRO in which 255 banks were allotted EUR82.60 billion, below the EUR100-EUR150 billion predicted by analysts. The poor take-up of TLTRO funds questions whether the ECB's proposed measure of purchasing covered bonds and asset-backed securities will help it to achieve its goal of expanding the central bank's balance sheet to EUR1 trillion.

"The poor take up of the TLTRO suggests it might be blunt policy tool and makes outright [quantitative easing] more likely because investors will start to expect policy action with a bit more vigour," said Jasper Lawler, markets analyst at CMC Markets.

European markets outperformed the UK throughout the day with the CAC 40 in Paris closing up 0.6% and the DAX in Frankfurt up 1.3%.

At the London close, US indices were making gains with the DJIA and the Nasdaq Composite both trading up 0.5%, and the S&P 500 up 0.4%.

On the London stock exchange, TUI Travel ended the day as the biggest gainer on the FTSE 100 after Morgan Stanley upgraded the stock to Overweight from Equal-Weight with a price target increase to 500 pence from 470p. TUI closed up 4.3% at 382.64174 pence.

In the FTSE 250, Booker Group said sales inched up in the second quarter of its financial year, helped by non-tobacco sales, and said its turnaround plans for the Makro business remain on track and on budget. Total sales in the 12 weeks to September 12 were up 0.1% including sales from Makro. Non-tobacco sales were up 0.8%, while tobacco sales declined 1.4%. Booker's non-tobacco sales on a like-for-like basis excluding Makro, were up 3.1%, while tobacco sales declined by 0.5%. The group also said its Makro's cash and profits are both in line with its expectations. The stock was the biggest gainer in the mid-chip index, finishing up 7.8%.

Mariana Resources shares gained 57% on the AIM All-Share index as the company said it has entered into an agreement to buy Canadian explorer Aegean Metals Group in an all-share deal. The acquisition of Aegean will add four gold-copper-silver projects to Mariana's portfolio in Turkey and Chile. They include the Ergama and Hot Maden gold-copper exploration projects in the Tethyan Porphyry-Epithermal Belt in Turkey and the Doea Inos and Explorada East projects in Chile. Under the terms of the deal, Mariana will issue 1.902 Mariana shares for each Aegean share.

Aside from the results of the Scottish independence referendum, the economic calendar is quiet on Friday. A host of Japanese data will be released before the open of European markets and US Conference Board leading indicator, which measures future trends of the overall US economy, will be released at 1500 BST.

In the corporate calendar, FTSE 250-listed bank and asset manager Investec will be releasing a trading statement, while AIM-listed Brain Juicer will be posting half-year results.


By Neil Thakrar; neilthakrar@alliancenews.com

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