Marks & Spencer Share News (MKS)

LONDON (Alliance News) - UK and European stocks are trading mixed midday Friday, ahead of US inflation figures due at 1330 BST.

US futures also point to a mixed open in New York, with the Nasdaq Composite set to push on to new record highs following a strong set of results from Google.

The FTSE 100 trades down 0.1% at 6,787.99, the FTSE 250 is flat at 17,771.29, and the AIM All-Share is up 0.1% at 757.74.

In Europe, the CAC 40 in Paris is up 0.2%, while the DAX 30 in Frankfurt is down 0.1%.

US futures point to a mixed open on Wall Street. The DJIA is expected to open down 0.1%, the S&P 500 is pointed flat, while the Nasdaq 100 is indicated up 0.3%, building on record highs seen on Thursday.

The Nasdaq is being pushed higher by Google shares, which are called up 11% ahead of the New York open. Google on Thursday reported better-than-expected second-quarter profit, driven mostly by growth in ad volumes, partly offset by lower ad prices and a stronger dollar as well as one-time expenses.

"Our strong results reflect continued growth across the breadth of our products, most notably core search, where mobile stood out, as well as YouTube and programmatic advertising," said Google Chief Financial Officer Ruth Porat, who joined the company in late May.

The broader focus for stock investors for the rest of the London session will be US inflation numbers due at 1330 BST. Economists predict that consumer prices will grow 0.1% year-on-year in June, rising from flat in May. Alongside the inflation numbers will be housing starts and building permits. At 1500 BST there is the Reuters/Michigan consumer sentiment index.

The inflation reading comes after US Federal Reserve Chair Janet Yellen on Thursday said the labour market in the US has move demonstrably closer to a more stable state, providing a reason for the likelihood that the central bank will hike short-term interest rates later this year, The Wall Street Journal reported.

Yellen, speaking before the Senate Banking Committee, having appeared before the House Financial Services Committee on Wednesday, did not specify when the Fed is likely to start raising its benchmark interest rate from its current 0.25% level, though earlier she had said it could happen "at some point this year".

"Fed Chair Yellen's semi-annual testimonies earlier this week hardly deviated from other recent statements and continued to sound cautiously optimistic over the economic outlook," says Nikesh Sawjani, UK economist at Lloyds Bank.

"Today's release of US inflation data for June will provide another key input into the debate. While a recovery in CPI inflation towards 2% over the medium term is generally expected by the [Federal Open Market] Committee, the near-term profile has been expected to remain low," Sawjani adds.

In London, Royal Mail shares lead the FTSE 100 decliners, trading down 3.0%. UK media and communications regulator Ofcom outlined the scope of its review into the regulation of postal service operator Royal Mail, including whether any price controls should be imposed on the company given the lessening of competition in the postal services market.

Ofcom said in June that it had widened its review of the regulation of Royal Mail in light of the decision by competitor Whistl to halt its own direct delivery services in the UK. It said at the time that it would look at whether the commercial flexibility Royal Mail was given following the last regulatory review in 2012 was still appropriate and whether any pricing controls should be imposed.

The publication of the scope of the review on Friday confirmed that this remains on the table as an option, with Ofcom saying it will examine whether Royal Mail's wholesale costs and retail prices are affordable and sufficient to cover the costs of the universal service and whether the company's commercial flexibility remains appropriate within the changing market, including whether wholesale or retail charge controls may be appropriate.

Marks & Spencer Group is down 0.6% after it said John Dixon, its General Merchandise division executive director, has left the company to pursue other career opportunities and it has appointed the head of its Food division to replace him.

Dixon will leave the retailer's board with immediate effect and will leave the company on a date to be agreed. Dixon said he is leaving to become the chief executive of another company, though he did not name the company.

Steve Rowe will take on responsibility for the General Merchandise business. Rowe is currently the executive director of Food at the company and will be replaced, on an interim basis, by Andy Adcock, who is currently the trading director of the Food division.

Housebuilders trade amongst the worst performers in London's main stock indices after Bank of England Governor Mark Carney suggested the UK will see a rate hike by the turn of the year.

Carney said Thursday evening that the central bank will start to consider changing its UK interest rate policy at end of 2015, but said that any increases would be slow and suggested that interest rates would rise to no more than 2.25% in the medium term.

Speaking in Lincoln Cathedral in a speech about the Magna Carta and the Bank of England, Carney said the decision on when to start the process of raising interest rates in the UK, from the current 0.5% rate, "will likely come into sharper relief around the turn of this year".

IG market analyst Alistair McCaig says investors may need to bring forward their expectations for a UK rate hike closer following Carney's speech.

"Prior to last night's speech, currency markets had been factoring in that the BoE would not be raising interest rates until February at the earliest. The markets have brought forward their own timeline but they're obviously still somewhat sceptical that the turn of the year is a realistic call," he says.

Barratt Developments is down 1.2%, Taylor Wimpey is down 1.2%, and Persimmon trades 1.0% lower, while in the FTSE 250, Bovis Homes Group is down 2.4%, Bellway is down 1.9% and Crest Nicholson Holdings is down 1.1%

Meanwhile, the UK Financial Conduct Authority said Martin Wheatley is to step down as its chief executive with effect from September 12.

Wheatley will remain an advisor to the board of the City regulator until the end of January 2016, with a particular focus on implementing the Fair and Effective Markets Review, which he co-chaired.

Tracey McDermott, the director of supervision for investment wholesale and specialist markets at the FCA, will take over from Wheatley on an interim basis while the FCA conducts a search for a permanent replacement.

In the AIM All-Share index, TomCo Energy shares are up 23%. The oil shale exploration and development company said it has secured the final permits needed to develop the Holliday project in the US, but reiterated the project will not be fully developed until its partner's technology is ready in 2017. The company also said it has completed the board reshuffle announced in May, which sees Andrew Jones take over as its new non-executive chairman.

Frontier Resources International is down 33% at 0.499 pence after the company said that it has raised GBP205,000 through the placing of 58.6 million new shares at a price of 0.35p. The funds will be used to provide working capital for the company as it continues to seek a farm-out of one or more of its projects in the Oman and Namibia.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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