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(Alliance News) - Stocks in London ended lower on Monday as US House Speaker Nancy Pelosi kicked off an Asia tour that has been shrouded in secrecy following an escalation in tensions with China over Taiwan.
With no word if Pelosi will visit the island, she stopped first in Singapore, where Prime Minister Lee Hsien Loong urged her at a meeting to strive for "stable" ties with Beijing.
Her itinerary also includes Malaysia, South Korea and Japan, but a possible Taiwan visit has dominated attention in the run-up.
Reports about a plan to visit the island have enraged Beijing and caused unease in the White House with President Joe Biden trying to lower the temperature.
Beijing considers self-ruled Taiwan its territory - to be seized one day, by force if necessary - and said it would regard a Pelosi visit as a major provocation.
The FTSE 100 index closed down 10.01 points, or 0.1%, at 7,413.42. The FTSE 250 ended down 85.67 points, or 0.4%, at 20,079.23. The AIM All-Share closed down 3.17 points, or 0.3%, at 918.63.
The Cboe UK 100 index lost 0.1% at 741.59. The Cboe 250 shed 0.3% at 17,522.48. The Cboe Small Companies rose 0.3% at 13,931.44.
In Paris the CAC 40 stock ended lost 0.2%, while the DAX 40 in Frankfurt ended 0.1% lower.
"It's been a nervous start to the new month for markets in Europe with decent gains for financials after HSBC drew down the curtain on a positive H1 for the UK banking sector, as a whole, against a backdrop of concerns in its core Asia markets. Away from those positives, European markets have fallen back from their intraday highs on reports that US House Speaker Nancy Pelosi would be landing in Taiwan tomorrow evening in defiance of Chinese warnings not to do so," said CMC Markets analyst Michael Hewson.
In the FTSE 100, Pearson ended the standout performer, up 12%, after the education materials publishing company lifted its dividend as profit for the first half of 2022 surged.
Pearson reported pretax profit of GBP179 million for the six months to June 30, multiplied from GBP4 million a year before, as operating expenses fell 7.3% to GBP690 million from GBP744 million. It had booked GBP85 million in restructuring costs a year earlier. Revenue rose 12% year-on-year to GBP1.79 billion from GBP1.60 billion.
The London-based firm lifted its interim dividend by 4.8% to 6.6 pence from 6.3p year-on-year.
Pearson backed its full-year expectations for revenue and adjusted operating profit. Pearson is launching a strategic review of its Online Program Management business, which is part of its Virtual Learning segment. The OPM review comes ahead the end of Pearson's contract with Arizona State University next June.
HSBC Holdings ended up 6.1% after the Asia-focused bank posted a decline in half-year profit but said it aims to restore its dividend to pre-Covid levels "as soon as possible".
In the six months to June 30, pretax profit fell to USD9.18 billion from USD10.84 billion the year before. Keeping a lid on profit was HSBC racking up USD1.09 billion in expected credit losses, swinging from a USD719 million gain the year prior.
In the first half, net interest income rose to USD14.45 billion from USD13.10 billion, aided by rising central interest rates around the world. The lender's net interest margin improved to 1.30 % from 1.21%.
"We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade," said Chief Executive Noel Quinn. "As a result, we are providing more specific dividend payout ratio guidance of around 50% for 2023 and 2024. We understand and appreciate the importance of dividends to all of our shareholders. We will aim to restore the dividend to pre-Covid-19 levels as soon as possible."
Rival Standard Chartered rose 1.3% in a positive read-across.
In the FTSE 250, Quilter ended the best FTSE 250-listed performer, jumping 14%.
FTSE 100-listed NatWest is mulling making an offer for the London-based wealth manager, the Daily Mail reported. According to the newspaper, private equity firms CVC Capital Partners, Bain Capital and BC Partners are sizing up Quilter, which currently has a market capitalisation of GBP1.67 billion.
Shares in the state-backed lender closed up 1.3%. Rival mid-cap wealth managers Jupiter, Rathbones and Ninety One closed up 4.3%, 3.4% and 1.6% respectively in a positive read-across.
At the other end of the mid-caps, Ascential ended the worst performer, down 16%, after the business-to-business media and events firm posted a widened interim loss.
The London-based firm said revenue jumped 59% year-on-year to GBP95.1 million from GBP59.7 million for the six months to June 30, reflecting "continuing structural growth in attractive end markets boosted by a bounce-back from major events," it explained.
However, Ascential's pretax loss widened to GBP41.6 million from GBP13.6 million. Ascential said it booked a GBP31.4 million impairment related to its Edge Digital Shelf e-commerce analytics platform. It did not book any impairments a year earlier.
Ascential, which did not declare a dividend in 2020 and 2021 due to Covid, decided against an interim payout again.
The pound was quoted at USD1.2270 at the London equities close, up sharply from USD1.2163 at the close Friday, despite data showing growth in the UK manufacturing sector weakened in July.
The latest S&P Global/CIPS UK manufacturing purchasing managers' index fell to 52.1 points in July, from 52.8 in June. Though remaining above the 50.0 no change mark, the PMI hit its weakest level in over two years.
The euro stood at USD1.0270 at the European equities close, up from USD1.0196 late Friday.
The single currency also shrugged off disappointing economic data from the continent.
Eurozone manufacturing activity shrank in July as inflation "squeezed" demand, according to S&P Global.
The manufacturing purchasing managers' index declined to 49.8 in July from 52.1 in June, signalling the sharpest production downturn since the first wave of strict Covid lockdowns in May 2020.
New orders fell sharply. Excluding the pandemic, manufacturing order book volumes fell at the fastest rate since the eurozone debt crisis in 2012.
Against the yen, the dollar was trading at JPY131.85, down from JPY133.45 late Friday.
Stocks in New York were higher at the London equities close despite geopolitical tensions over House Speaker Pelosi's trip to Asia.
The DJIA was up 0.1%, the S&P 500 index up 0.3% and the Nasdaq Composite up 0.5%.
"This raising of tensions presents a bit of a problem for the US, especially given Russia's aggressive behaviour in Ukraine. It will be enormously difficult for the US not to proceed with this visit, despite Chinese displeasure, as to not do so would send the wrong message and give China encouragement to push its luck further out when it comes to its military activities in the Asia region," explained CMC's Hewson.
On Wall Street, Dow member Boeing was up 4.6% after the Federal Aviation Administration certified the aerospace company's plan to resume deliveries of its 787 Dreamliner aircraft.
Brent oil was quoted at USD100.70 a barrel at the equities close, down sharply from USD105.24 at the close Friday.
Gold stood at USD1,766.01 an ounce at the London equities close, firm against USD1,763.38 late Friday.
The economic events calendar on Tuesday has the Reserve Bank of Australia's interest rate decision overnight.
The UK corporate calendar on Tuesday has interim results from oil major BP, gold miner Fresnillo, pizza chain Domino's Pizza and builders merchant Travis Perkins.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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