Merlin Entertainments Share News (MERL)

LONDON (Alliance News) - London shares ended mixed on Tuesday, held back by investor disappointment after a meeting between top officials from Russia and members of OPEC resulted in a freeze of oil production, rather than an actual cut.

The FTSE 100 index ended up 0.7% at 5,862.17 points, the FTSE 250 down 0.2% at 15,702.29 and the AIM All-Share flat at 671.87. In Europe, the CAC 40 in Paris closed 0.4%, while the DAX 30 in Frankfurt finished down 1.0%.

The world's biggest oil producing countries - Russia and members of the Organization of the Petroleum Exporting Countries, including Saudi Arabia - reached a conditional agreement to freeze production at January levels following a meeting in Doha.

The deal was also signed by OPEC members Venezuela and Qatar, according to the statement on the Russian Energy Ministry's website, with Iran absent from the meeting and planning to ramp up shipments.

Saudi oil minister Ali al-Naimi said freezing production at January levels was an adequate measure and new steps to stabilize the market could be considered in the next few months. He said he hoped other producers would adopt the proposal, while Venezuelan Oil Minister Eulogio Del Pino said more talks would take place with Iran and Iraq on Wednesday.

Following the news, the FTSE 100 and the price of oil retreated in favour of gold, a supposed safe haven from market turmoil, as investors expecting an actual cut in crude production were disappointed.

"Nevertheless, the agreement is a step in the right direction and if other major producers follow suit then this, at the very least, should help to allow demand to catch up with supply and thus prevent oil prices from suffering further big falls," said FOREX.com analyst Fawad Razaqzada.

"For now though, the disappointment means oil prices could fall in the short-term, which is also a bearish outcome for the stock markets after the latter enjoyed a noticeable bounce over the past couple of trading sessions," Razaqzada added.

Brent crude went to as high as USD35.52 a barrel, but reversed following the announcement, touching a low of USD32.12. US benchmark West Texas Intermediate had a similar response, falling to a low of USD28.69 from a high of USD31.48 a barrel.

At the London equities close, Brent oil was at USD32.28 a barrel, while WTI was at USD29.04 a barrel. The gold price was standing at USD1,212.70 an ounce at the close, up from USD1,199.00 at the London equities open and continuing its impressive rally since the start of 2016.

Shares in the blue-chip oil producers gave back some of their gains, but still ended higher. BP closed up 1.4%, while Royal Dutch Shell 'A' ended up 1.6%. Goldman Sachs re-initiated research on Shell with a Buy recommendation, also lifting the oil major's shares.

The pound slid following mixed UK inflation data. The Office for National Statistics said that on a yearly basis, inflation rose marginally to 0.3% in January, in line with expectations and above the reading of 0.2% in December. Consumer prices increased for the third consecutive month in January.

However, month-on-month, consumer prices dropped for the first time in four months in January, falling 0.8% versus a 0.1% rise a month ago. Economists had forecast a 0.7% fall.

Berenberg senior UK economist Kallum Pickering highlighted that core inflation eased to 1.2% in January from 1.4% in December.

"Monthly data can be volatile so one month doesn't always point to a trend. But should this trend persist, it could be pointing to a slowdown in demand, so this data point should be watched carefully," noted Pickering. The core inflation reading excludes energy, food, alcoholic beverages and tobacco.

Pickering said this means that the Bank of England will hold off on UK interest rate hikes "until the end of the year".

The data came after Bank of England policymaker Ian McCafferty said on Monday that he dropped his call for a rate hike at the BoE's last monetary policy meeting this month because inflationary pressures in the UK have receded.

Sterling remained somewhat resilient immediately after the inflation data release, but it was quoted at USD1.4293 at the London close, having stood at USD1.4484 prior to the data.

Meanwhile, German investor confidence plunged to a 16-month low in February, amid worries over the global economic slowdown and the falling oil price, adding pressure on the European Central Bank to come up with solid measures to boost euro area growth and raise inflation to its medium-term target level of "below, but close to 2%".

The economic sentiment index dropped to 1.0 from 10.2 in January, falling for a second straight month, survey data from the Mannheim-based think tank ZEW said. Economists had forecast a zero score. The latest reading was the lowest since October 2014, when the score was -3.6.

The euro retreated against the dollar, quoted at USD1.1142 at the London close, having stood at USD1.1156 prior to the data.

In the US, business activity for New York manufacturers has continued to decline in February, according to a report released by the Federal Reserve Bank of New York.

The New York Fed said its general business conditions index climbed to a negative 16.6 in February from a negative 19.4 in January, but a negative reading continues to indicate a contraction in regional manufacturing activity. Economists had expected the index to move to a negative 10.0.

The modest increase in the headline index was partly due to a slower rate of decline in new orders, as the new orders improved to a negative 11.6 in February from a negative 23.5 in January.

US stocks were higher at the London close, reopening after the President's Day holiday on Monday. The Dow Jones Industrial Average was up 0.7%, the S&P 500 up 0.9% and the Nasdaq Composite up 1.4%.

Elsewhere on the London Stock Exchange, Merlin Entertainments rose 3.3%, to end as the top gainer in the FTSE 100. The theme park operator said it hired Anne-Françoise Nesmes as its chief financial officer, poaching her from veterinary health company Dechra Pharmaceuticals. Nesmes will join Merlin from August 1 and will take over from Andrew Carr, who will retire from the role. Dechra shares closed up 0.5%.

Standard Chartered was the worst blue-chip performer, down 5.3% to 428.85p. Investec cut its rating on the emerging markets-focused bank to Hold from Buy, having upgraded the stock only a few days ago, as the company's share price rallied from recent lows.

Since upgrading the stock on Thursday last week, Investec said the stock had moved to within 2.0% of its unchanged 460p target price. Analyst Ian Gordon said this valuation remains "optically cheap" but Investec forecasts no return on tangible equity in 2015 and 2016, and only 4% in 2017.

Shares in Anglo American ended up 1.3% at 397.95p, having risen as high as 410.0p, The miner reported 2015 earnings that beat analyst expectations despite sharp declines, as the company stepped up its restructuring programme in an attempt to adjust the business to cope with low commodity prices.

Underlying earnings before interest and tax fell by 55% to USD2.23 billion from USD4.93 billion in 2014, nevertheless beating the USD2.00 billion expected by analysts. As previously guided, Anglo American will not pay a final dividend for the year, but shareholders did receive the interim dividend of 32.0 cents announced in 2015.

Anglo American said it aims to have positive free cashflow in 2016, importantly at current commodity prices, and said it is targeting a USD1.90 billion Ebit benefit through further cost cutting and productivity improvements.

Spectris ended at the top of the FTSE 250, up 8.8%, even though it reported lower profit for the year. The precision instrumentation and controls supplier said restructuring costs and higher spending pushed its profit lower in 2015, exacerbating the mixed trading conditions in its markets as it was hit by a slowdown in the US manufacturing industry.

N+1 Singer said the group's 2015 results were in line with the broker's expectations.

"Trading does not appear to have weakened since the third-quarter trading update and the outlook appears more encouraging than when Spectris last reported," said N+1's Jo Reedman.

Spectris said it expects an improvement in performance in 2016 as the benefits of its restructuring programme, which is on track, flow through, following a year hit by mixed conditions across its markets and divisions.

BGEO Group shares rose 6.4%. The Georgian banking group lifted its annual dividend by 14% to GEL2.4 per share after reporting a solid set of results in 2015. BGEO, the holding company of JSC Bank of Georgia, reported a 30% jump in pretax profit in 2015 to GEL359.4 million, after revenue soared 39% to GEL861.6 million.

International Personal Finance closed up 3.6% after Liberum upgraded the lender's stock to Buy from Sell, following the sharp drop in its share price in the past year. The broker said it now favours the risk-reward case for the stock. While it remains high risk, with further downgrades likely due to troubles in its Slovakian business, those concerns look to have been largely priced into the shares, Liberum said.

In a light UK corporate calendar, Brunner Investment Trust and Plus500 release full-year results.

In the economic calendar Wednesday, UK ILO unemployment rate is due at 0930 GMT, eurozone trade balance data are due at 1000 GMT, alongside eurozone construction output. In the US, the Producer Price Index is expected at 1330 GMT and the Redbook index is due at 1355 GMT. US Industrial production is due at 1415 GMT.

The Federal Reserve releases the minutes of its January 26-27 meeting at 1900 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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