Marks & Spencer Share News (MKS)

LONDON (Alliance News) - London stocks were lower midday Thursday as the oil price rally ran out of steam, giving back some of the gains made at the open from dovish minutes published by the US Federal Reserve on Wednesday.

The FTSE 100 index was down 0.1%, or 4.25 points at 6,157.38. Meanwhile, the CAC 40 index in Paris was down 0.1%, and the DAX 30 in Frankfurt was flat.

Higher oil prices had supported London stocks on Wednesday, and crude had continued to make gains overnight. However, the rally was losing strength by midday Thursday, with Brent oil quoted at USD39.78 a barrel, still above the USD39.38 a barrel at the equities close Wednesday. Meanwhile, West Texas Intermediate was at USD37.63 a barrel against USD37.60 late Wednesday.

Oil prices had been buoyed by a reduction in US crude oil inventories. The US Energy Information Administration said its crude oil inventory declined by 4.9 million barrels in the week ending April 1. It was the first decline in the EIA's crude oil stocks in eight weeks.

The minutes of the Federal Open Market Committee's March 15-16 meeting, which were published late Wednesday after the London close, revealed that US monetary policymakers remained concerned about low inflation and lingering economic problems overseas.

A number of Fed officials argued against an April rate hike, thinking this would signal a sense of urgency they did not think appropriate. This is in line with last week's dovish remarks from Fed Chair Janet Yellen, who noted downside risks to the US economy.

"Several participants expressed the view that the underlying factors abroad that led to a sharp, though temporary, deterioration in global financial conditions earlier this year had not been fully resolved," the minutes read.

However, the minutes also showed a divide amongst the committee, with some participants indicating a rate hike might well be warranted if the incoming economic data showed the recovery proceeding at a healthy pace.

Wall Street closed higher Wednesday after the minutes release, but was expected to give back some of those gains at the open Thursday. The DJIA and the Nasdaq 100 were both called down 0.4%, while the S&P 500 was seen down 0.5%.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.2%, the Shanghai Composite ended down 1.4%, and the Hang Seng in Hong Kong up 0.3%.

Fed Chair Yellen is due to speak at 2230 BST Thursday at an event in New York, together with predecessors Ben Bernanke, Alan Greenspan and Paul Volcker. Meanwhile, European Central Bank President Mario Draghi is expected to make a speech in Lisbon. Also in the economic calendar, US continuing and initial jobless claims at 1330 BST and US consumer credit at 2000 BST.

Before that, the ECB will release, at 1230 BST, the accounts of its latest monetary policy meeting of March 10. At the time, market expectations for ECB stimuli were high, and the central bank delivered with a cut to all three of its interest rates and an expansion to its asset purchase programme.

However, Draghi rained on his own parade in the press conference following the announcement of the measures, when he damped prospects for future rate cuts.

Oanda senior market analyst Craig Erlam said the ECB accounts should shed further light on the central bank's intentions.

"Mario Draghi appeared to suggest at the meeting that no further rate cuts are being considered at the moment, which is what sparked the initial rally in the euro last month, and it will be interesting to see if this view is shared by the rest of the committee and whether it applies to all forms of easing," Erlam noted.

Ahead of the release of the accounts, the euro traded the dollar at USD1.1395, compared to USD1.1388 at the close on Wednesday. Meanwhile, the pound was at USD1.4067, slightly lower than USD1.4103 on Wednesday.

In UK corporate news, Marks & Spencer Group reported growth in sales in the fourth quarter of its financial year, as a rise in food sales offset a decline in general merchandise. The FTSE 100 food, clothing and homewares retailer said group sales in the 13 weeks ended March 26 were up 1.9% on the same period the year before.

The food division achieved sales growth of 4.0% while the struggling general merchandise business saw sales fall by 1.9%, although this decline was slower than in the previous quarter. On a like-for-like basis, food sales were flat and general merchandise sales were down 2.7%. The stock traded up 1.3.

Shares in M&S were at the top of the blue-chip index, up 3.3%.

Ex-dividend stocks were weighing on the FTSE 100. Education and publishing company Pearson was the worst performer in the blue-chip index, down 5.0%, Lloyds Banking Group was down 4.0%, insurer Aviva down 3.4% and housebuilder Taylor Wimpey down 2.4%.

Also amongst the biggest fallers in the blue-chip index was Worldpay Group, down 2.3%, after Bank of America Merrill Lynch said two private equity firms that are invested in the London-listed payments company have sold all of the shares they put up for sale under a placing, selling a 13.8% stake in the company for GBP740.0 million.

Advent International and Bain Capital made 275.0 million shares that they held in Worldpay available for sale under a placing launched on Wednesday, with Barclays Bank, Goldman Sachs International, Merrill Lynch International and Morgan Stanley & Co International acting as joint bookrunners.

Early Thursday, it was revealed that all of those shares were sold at a price of 269.0 pence per share, raising GBP740.0 million in total. None of those proceeds will be going to Worldpay. The stock traded at 277.00 pence at midday.

The FTSE 250 was down 0.2% at 16,831.31 and the AIM All-Share was up 0.1% at 716.44.

Centamin was the biggest gainer in the mid-cap index, up 7.1%. The company, which derives all of its gold production from the Sukari mine in Egypt, said total gold production in the first quarter amounted to 125,268 ounces, which is 6.5% higher than the previous quarter and a 16% increase from the same period a year earlier.

Shore Capital analyst Yuen Low believes the miner can surpass its guidance at the end of 2016. Low said "continuing optimisation" at the Sukari mine cited by Chief Executive Andrew Pardey make the broker believe the current annual guidance of 470,000 ounces is "the company's habitual low-ball to cater for potential disappointments".

Homewares retailer Dunelm Group was up 4.2% after it reported growth in revenue in the third quarter of its financial year, driven by like-for-like growth and a rise in online home delivery sales. Dunelm said total revenue in the 13 weeks ended April 2 grew by 5.9% to GBP229.0 million on the same period the year before.

Student accommodation developer Unite Group said its chief executive will leave to join the St Modwen Properties. Mark Allan will take over at the regeneration company from December 1, after joining as CEO designate on November 1. He will take over from Bill Oliver, who will retire at the end of November. Shares in St Modwen were up 3.8%, while those in Unite were up 0.4%.

At the other end of the index, KAZ Minerals was the worst mid-cap performer, down 6.9%, after downgraded the miner to Underweight from Neutral. Meanwhile, home credit lender International Personal Finance was cut to Hold from Buy by Liberum, sending its shares down 4.1%.

In the London Main Market, Connemara Mining shares more than doubled their value. The miner's shares soared after publishing the results of its short-hole drilling programme over its gold licences in Northern Ireland, which has confirmed "without a doubt" that a gold bearing vein system is present. The stock was at 3.29p per share more than double its opening price of 1.48p.

By Daniel Ruiz; danielruiz@alliancenews.com

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