Marks & Spencer Share News (MKS)

LONDON (Alliance News) - The FTSE 100 ended higher Wednesday as investor sentiment was lifted by better-than-expected manufacturing Purchasing Managers' Index readings in the UK and Europe.

The FTSE 100 ended up 0.5% at 6,809.50 and the FTSE 250 closed up 0.2% at 17,123.41, taking back some of the losses of the previous session. The AIM All-Share index underperformed, closing down 0.1% at 715.32.

"Just as things looked like they were going to be a repeat performance of yesterday’s dire day of trading, the markets picked themselves up, shook themselves off and rallied off the back of some strong manufacturing data," said Spreadex analyst Connor Campbell. "The FTSE managed to out-muscle that weak US open, holding onto its modest gains despite a worsening trading environment as the day went on."

The British manufacturing sector expanded at the fastest pace in eight months during March on stronger growth in production and new orders that led to increased hiring, survey results from Markit Economics and the Chartered Institute of Procurement & Supply showed. The Markit/CIPS Purchasing Managers Index rose to 54.4 in March from 54.0 in February, which was revised down from 54.1. The latest reading was in line with economists' expectations.

A PMI score above 50 indicates growth, and the British factory sector expanded for the 24th consecutive month.

European indices also rebounded from Tuesday's losses, with the CAC 40 in Paris closing up 0.6% and the DAX 30 in Frankfurt up 0.3%, as manufacturing sectors in both countries and the eurozone as a whole beat expectations.

The French manufacturing sector continued to contract in March but at a slower pace than initially estimated, final data from Markit revealed. The PMI came in at 48.8 in March, up from 47.6 in February, and better than the initial reading, known as the flash score, of 48.2. In Germany, manufacturing growth in March was faster than estimated earlier, marking the strongest improvement in eleven months. The PMI figure climbed to 52.8 from 51.1 in February. The flash reading was 52.4. Eurozone manufacturing PMI rose to a 10-month high of 52.2 in March from 51 in February. The flash score was 51.9.

The situation in Greece, however, continues to concern investors. According to a report by Reuters, Greece failed to reach a deal with the European Union and International Monetary Fund to unlock further financial aid on Tuesday, after the creditors dismissed the package of reforms tabled by Athens as ideas rather than a concrete plan.

The lack of a deal will raise the pressure on Greece's government, which is facing the prospect of running out of money in a few weeks though if fail to convince its creditors to give it more.

In the US, manufacturing activity grew at a slower-than-anticipated pace in March, according to a report released by the Institute for Supply Management on Wednesday. The ISM said its purchasing managers index dropped to 51.5 in March from 52.9 in February. Economists had expected the index to show a more modest drop to 52.5.

Meanwhile, private sector job growth in the US continued to slow in the month of March, according to a report released by payroll processor ADP on Wednesday, with the increase in employment coming in below 200,000 for the first time since January of last year. ADP said private sector employment climbed by 189,000 jobs in March following a slightly upwardly revised increase of 214,000 jobs in February.

At the London equity markets close, Wall Street was trading down, with the DJIA down 0.5%, the S&P 500 down 0.5% and the Nasdaq Composite down 0.7%.

In London, oil producers were amongst the best performing stocks. The FTSE 350 Oil & Gas Producers sector index was up 1.4%, with Royal Dutch Shell 'B' shares closing up 1.6%, BP up 1.2% and BG Group up 2.7% in the FTSE 100.

Brent and West Texas Intermediate oil prices moved higher, even after the growth in weekly US crude oil stocks came in higher than expected. Crude oil stocks were up 1.0% in the week to March 27, rising 4.8 million barrels to 471.8 million barrels, according to the US Energy Information Administration. When the London equity markets closed, Brent Oil was trading up 2.7% on the day at USD56.53 a barrel, while WTI was up 3.1% at USD49.06 a barrel.

Diplomatic talks between Iran and the five permanent members of the UN Security Council to secure a landmark nuclear deal carried on past their scheduled deadline on Tuesday, as negotiators battle to salvage the terms of an accord following nearly a week of discussions, the Financial Times reported early Wednesday.

Concerns that a deal was imminent weighed on oil prices on Tuesday. Investors fear a deal will result in relaxed sanctions against Iran, allowing it to sell oil into an already oversupplied world market.

Banking stocks were also amongst the biggest gainers in London's blue-chip index, with Barclays up 2.8% at 249.30p, Lloyds Banking Group up 1.4% at 79.40p, and Royal Bank of Scotland Group up 1.6% at 345.40p.

Morgan Stanley lifted its price target for Barclays to 333.2 pence from 315.5p, reiterating its Overweight rating, while it also raised its RBS price target to 391.6p from 375p, keeping its Equal-Weight rating. Meanwhile, Jefferies upgraded Lloyds to Hold from Underperform, saying the group's premium valuation is now supported by a progressively rising dividend.

In the FTSE 250, Firstgroup was the best performer, closing up 6.8%. The travel company said trading in the fourth quarter and for the whole of its financial year that ended on Tuesday was in line with expectations, with a good performance in its UK bus and rail operations.

Evraz was also amongst the biggest gainers in the mid-cap index, up 5.2%. The steel miner said it will return USD375 million to its shareholders even though its pretax loss widened in 2014 on the back of a USD1.0 billion foreign exchange loss caused by the devaluation of the rouble, saying it has "improved business prospects" in 2015.

In the AIM All-Share index, Nationwide Accident Repair Services closed up 11.1% after the company agreed to be taken over by US private equity firm Carlyle Group in a GBP43.2 million deal, coming the same day that Nationwide said it has completed the acquisition of a bodyshop chain in Hampshire. Carlyle said it would pay 100 pence per share for Nationwide, after Quindell earlier this month sold its 25% stake in the business for GBP7.1 million, or 65 pence a share.

In the corporate calendar, Forbidden Technologies will release full year results Thursday. Tate & Lyle, Electrocomponents and Ferrexpo will issue trading updates, Marks & Spencer Group and Booker Group will issue fourth quarter interim management statements, and Dunelm Group will issue a third quarter management statement.

In the economic calendar Thursday, UK Markit Construction Purchase Managers' Index is at 0930 BST. In the US, jobless claims data is at 1330 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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