Merlin Entertainments Share News (MERL)

LONDON (Alliance News) - UK stocks were mostly flat Tuesday midday, giving back a higher open, amid disappointment that 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 was up 0.2% at 5,835.82 points, the FTSE 250 flat at 15,730.20 and the AIM All-Share flat at 671.60. European major indices were mixed, with the CAC 40 in Paris up 0.1% and the DAX 30 in Frankfurt down 0.6%.

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, Reuters reported. The news agency said the deal was contingent on other producers, 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.

The FTSE 100 and the price of Brent oil gave back earlier gains in favour of gold, a supposed safe haven from market turmoil, as investors expecting a cut in crude production were disappointed, IG analyst Joshua Mahony said.

However, Mahony noted that "a production cut was never going to happen, with the recent Saudi-Iran dispute meaning it would be political suicide for either to concede market share".

"We have never heard anything to indicate that either Iran or Saudi are even considering any reduction in production, and perhaps today's fall in oil prices reflects the realisation of this fact," Mahony said.

Brent crude went to as high as USD35.52 a barrel, but reversed following the announcement to hit a low of USD33.67. US benchmark West Texas Intermediate had a similar response, falling from a high of USD31.48 a barrel to USD29.48.

At midday, Brent was quoted at USD33.72 a barrel and WTI was at USD29.61 a barrel. The gold price stood at USD1,215.53 an ounce, up from USD1,199.00 at the London equities open and continuing its impressive rally since the start of 2016.

The FTSE 350 Oil & Gas Producers sector was still among the best performing equity sectors in London, up 1.6%, led by BP, up 2.0%, and Royal Dutch Shell 'A' shares, up 1.6%.

Meanwhile, the Office for National Statistics showed mixed UK inflation data. 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.

Core inflation, which excludes energy, food, alcoholic beverages and tobacco, eased to 1.2% in January from 1.4% in December.

"All in all, domestic inflationary pressures remain notable by their absence," said Ben Brettell, senior economist at Hargreaves Lansdown.

The analyst recalled Bank of England policymaker Ian McCafferty's comments, who said on Monday that he dropped his call for an UK interest rate hike at the BoE's last monetary policy meeting this month because inflationary pressures in the UK have receded.

"There looks no reason to suggest the era of ultra-low interest rates will come to an end any time soon," added Brettell.

The pound was quoted at USD1.4425 at midday, having stood at USD1.4484 prior to the inflation data.

Another report from the ONS showed UK house price inflation eased for the first time in five months in December. The house price index rose at slower pace of 6.7% year-over-year in December, following a 7.7% climb in the previous month.

House price inflation in England alone was 7.3% in December. Excluding London and the South East, UK house prices increased by 5.1% in the 12 months to December 2015. On a monthly basis, house prices dropped a seasonally adjusted 0.2% at the end of the year, reversing a 1.0% increase in November. It was the first decrease in eight months.

Still ahead in the economic calendar, the New York Empire State manufacturing index is at 1330 GMT, and the US National Association of Home Builders' housing market index is at 1500 GMT.

The New York market will reopen Tuesday after the President's Day holiday on Monday. The Dow Jones Industrial Average is called higher, up 1.2%, as is the S&P 500, while the Nasdaq 100 is pointed up 1.7%.

Elsewhere on the London Stock Exchange, Merlin Entertainments was up 2.6%. 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 were up 0.4%.

Standard Chartered was the worst blue-chip performer, down 7.3%. Investec cut its rating on the emerging markets-focused bank to Hold from Buy, having upgraded the company 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 has increased 17% to within 2.0% of its 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.

Anglo American was down 6.2%. 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.

Anglo reported a 55% fall in underlying earnings before interest and tax to USD2.23 billion from USD4.93 billion in 2014. However that was considerably higher than 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.

In the FTSE 250, Spectris shares were the biggest gainers, up 6.9%, 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.

However, N+1 Singer said the group's 2015 results were in line with the broker's expectations and its outlook is positive.

"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.

International Personal Finance was up 5.2% after Liberum upgraded the 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 and while it remains high risk, and further downgrades are likely due to troubles in its Slovakian business, this looks to have been largely priced into the shares.

BGEO Group shares were up 5.2%. The lender said it has increased its dividend payout after reporting a solid set of results in 2015 that showed a material rise in revenue and profit. BGEO, the holding company of JSC Bank of Georgia, reported an 30% lift in pretax profit in 2015 to GEL359.4 million from GEL276.6 million a year earlier after revenue soared 39% to GEL861.6 million from GEL621.2 million. BGEO raised its annual dividend for the year by 14% to GEL2.4 per share.

Meanwhile, Pennon Group was down 2.4% after Credit Suisse downgraded the water utility and waste management company to Underperform from Neutral.

By Daniel Ruiz; danielruiz@alliancenews.com

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