Monks Inv Share News (MNKS)

LONDON (Alliance News) - The FTSE 100 closed fractionally lower Tuesday, after yet another low-volume session, with communications services provider BT Group the biggest faller in the index after British Sky Broadcasting Group fought back in the battle over sports and broadband customers.

BT closed down 2.4% after rival BSkyB said it will launch a new sports channel, Sky Sports 5, dedicated to European football matches. The new channel will be added at no extra cost as part of Sky's sports package, and customers who take up the channel can also get two years free unlimited broadband.

"This is a shot across the bow for BT whose shares have outperformed its rival's since last November's win (from ITV and BSkyB) of exclusive rights to the UEFA Champions League, and whose most recent financial results have shown success in the battle for broadband customers thanks to its BT Sports channels being free to BT Broadband customers," said Michael van Dulcan, head of Research at Accendo Markets.

Competition between the two companies has increased over the past year after BT launched its BT Sport service after winning the Champions League rights and also exclusive rights for Europa Cup football matches.

However, the news also hit BSkyB, with the company's shares ending the day down 0.8%.

BSkyB is using the new channel as an opportunity to get customers to sign up for its latest broadband offer, said Sarah Simon, an analyst at Berenberg. It is only actually adding Dutch football to its existing football offering, and the new channel is unlikely to bring in new TV customers or persuade existing customers to upgrade to the sports channels, she said.

The FTSE 100 closed 0.02% lower at 6,873.55, the FTSE 250 closed down 0.1% at 16,210.64, and the AIM All-Share index closed down 0.2% at 803.68.

In Europe, the CAC 40 in Paris closed up 0.1%, and the DAX 30 in Frankfurt closed up 0.2%. On Wall Street, the DJIA, S&P 500, and NASDAQ Composite are all down 0.1%.

The UK's blue-chip index has been close to its all-time high of 6,950.60 for several weeks, but has so far been unable to breach it. The closest it reached was a fourteen-year high of 6,894.88 in mid-May. The German DAX 30 and US S&P 500, however, have been breaking their respective all-time highs consistently in recent days.

"I think it’s symptomatic of the low volatility currently permeating stock markets at the moment that we’ve heard a lot of gumpf over the last few days about the underperformance of the FTSE 100 relative to the German DAX and the S&P 500," said Michael Hewson, chief market analyst at CMC Markets.

"The main drag on the FTSE 100 has been weaker commodity prices, particularly gold and copper, concerns about emerging markets, while financial stocks have also underperformed, due to lower trading volumes, lower margins and increased regulatory concerns. Given these sectors make up a good chunk of the market capitalisation of the benchmark index, maybe it isn’t so surprising that the FTSE 100 is finding upside progress a lot harder than its peers," Hewson said.

Also at the individual UK equity level, FTSE 100-listed Anglo American, closing down 1.3%, and FTSE 250-listed Lonmin, closing down 3.2%, were big fallers within their respective indices Tuesday.

The mining companies fell sharply after talks set up by the South African Minister of Mineral Resources to solve the ongoing strikes that are crippling the platinum mining industry in the country and weighing on its economic growth dissolved without an outcome late Monday. The strikes, which are now in the twenty-first week, have cost mining companies over ZAR21.7 billion, according to the companies.

Ted Baker, ending the day down 4.2%, was the mid-cap index's biggest loser, having jumped in early dealings. The British clothing and accessories retailer reported strong sales growth in the first 19 weeks of its new financial year, driven by a strong performance across the business, especially in the UK and North America, but the growth marked a slowdown compared with the previous year.

Group revenues increased almost 18% in the 19 weeks to June 7, with retail sales up 16% and wholesale sales up 25%. However, in the 20 weeks to June 15 last year, Ted Baker reported a 33% increase in revenue, with retail sales up 31% and wholesale up 41%.

Still, Liberum Capital analyst Sanjay Vidyarthi said that this was a "very strong performance given the comps."

Oxford Instruments, closing up 2.2%, was among the leading risers in the FTSE 250 Tuesday. The technology tools and systems company posted a fall in pretax profit for the year to end-March, as it was hit by costs relating to its acquisition of Andor Technology in January. However, it said orders for the first two months of its new financial year are ahead of the same period of the previous year.

The company proposed a total dividend for the year of 12.4 pence, up from 11.2p in the previous year.

In the forex market, the pound edged higher against the dollar and euro after UK industrial and manufacturing data came in better-than-expected.

UK Industrial production increased by 3.0% year-on-year in April, the fastest pace since January 2011, while manufacturing production increased by 4.4% on an annual basis, also the fastest pace since 2011. On a monthly basis, both increased 0.4%, in line with expectations.

"Manufacturing is benefiting from gradually returning growth in the eurozone and solid underlying momentum in the US, as well as the strong UK domestic recovery which is increasingly spreading to investment," said economist Rob Wood, chief UK economist at Berenberg. "The UK economy is increasingly firing on all cylinders, setting up the second quarter for another strong growth reading," he said.

However, sterling then gave up the majority of its gains against the euro, and has slipped lower against the dollar. At the close of the UK equity market, sterling trades at USD1.6753 and EUR1.3544.

In the data calendar on Wednesday, UK jobs data for April are released at 0930 BST.

Three-month average earnings, including bonuses, are expected to have increased 1.3% in April, having risen 1.7% in March. Excluding bonuses, earnings are forecast to have increased 1.2% from 1.3% in March. The claimant count change reading is expected to report 25,000 fewer unemployed in the UK in April, slightly below the 25,100 reduction seen in March. The ILO unemployment rate is expected to edge down to 6.7%, from the 6.8% posted in March.

In the US, the Mortgage Bankers Association releases its MBA mortgage applications data at 1200 GMT, ahead of the monthly budget statement at 1900 BST.

In the corporate calendar, blue-chip J Sainsbury and mid-cap WH Smith release trading updates Wednesday. FTSE 250-listed Monks Investment Trust and Betfair Group are scheduled to release full-year results.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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