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(Alliance News) - London's blue-chip stock benchmark was trying to claw its way back into the green on Tuesday morning aided by a stellar performance from BHP shares, as the mining giant confirmed a bumper merger of oil interests with Australia's Woodside Petroleum.
The FTSE 100 index was down just 2.94 points at 7,151.04 on Tuesday, after having initially opened down 0.4%.
The mid-cap FTSE 250 index was down 63.83 points, or 0.3%, at 23,648.82. The AIM All-Share index was down 0.2% at 1,257.52.
The Cboe UK 100 index was flat at 712.01. The Cboe 250 was down 0.4% at 21,476.47, and the Cboe Small Companies was 0.2% lower at 15,448.00.
In mainland Europe, the CAC 40 in Paris was 0.6% lower and DAX 30 in Frankfurt was down 0.5%.
The UK unemployment rate came in slightly lower than expectations in the second quarter of 2021, data from the Office for National Statistics showed on Tuesday.
Amid a general move higher by the dollar, the pound was quoted at USD1.3811 early Tuesday, down from USD1.3850 at the London equities close Monday. The euro was priced at USD1.1774, down from USD1.1785.
The UK unemployment rate for the three months to June was estimated to be 4.7%, down a touch from 4.8% for the three months to May.
This improved upon market expectations, according to FXStreet, which saw the unemployment rate remaining unchanged. The UK jobless rate started 2021 at 5.0%, representing the three months to January.
"Like the wider UK economy, the jobs market appeared to be on fire through the second quarter. Optimism from the vaccine rollout had succeeded in taking online job adverts in some of the hardest-hit sectors above pre-virus levels through the spring, and that's translated into a fast rebound in payrolled employees in the likes of hospitality and entertainment. Indeed, this turnaround has prompted staff shortages in some sectors and regions of the UK, as any holidaymaker to Cornwall recently can probably attest," commented analysts at ING.
Also, early estimates for July indicate that the number of payrolled employees rose by 2.0% compared with the same month the year before, which is a rise of 576,000 employees. However, the UK statistics office noted the number of payrolled employees remains down by 0.7% since February 2020, a fall of 201,000.
Richard Hunter, head of Markets at interactive investor, said: "The UK continues its measured recovery with a jobs report indicating further progress.
"As expected, the unemployment rate fell marginally, but with 953,000 job vacancies and averagely weekly earnings having surged by 8.8%, there is increasing evidence of both strengthening demand as well as labour shortages in certain sectors. The next reports will give an even stronger indication of where the economy stands as the government furlough scheme comes to an end, although the current demand and supply imbalance for labour may take some of the strain."
In London, BHP surged to the top of the FTSE 100 in early trading, rising 8.8%.
The miner said it is merging its oil and gas portfolio with Woodside Petroleum, confirming reports from Monday that BHP was in talks with the Aussie firm over the sale of Petroleum business.
Instead, the pair will create a "global energy company", combining their respective oil and gas portfolios through an all-stock merger.
"On completion of the transaction, BHP's oil and gas business would merge with Woodside, and Woodside would issue new shares to be distributed to BHP shareholders. The expanded Woodside would be owned 52% by existing Woodside shareholders and 48% by existing BHP shareholders," BHP explained.
It added: "With the combination of two high-quality asset portfolios, the proposed merger would create the largest energy company listed on the ASX, with a global top 10 position in the LNG industry by production. The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition."
Woodside closed 2.1% lower in Sydney on Tuesday.
Separately, BHP reported a surge in annual attributable profit, leading to a more than doubled shareholder payout.
Profit from operations in the year to June 30 rose 80% year on year to USD25.91 billion from USD14.42 billion, leading to attributable profit growing 42% to USD11.30 billion from USD7.96 billion.
BHP declared an annual dividend of 301.00 US cents, up from 120.00 cents the year before.
BHP's revenue rose to USD60.82 billion from USD42.93 billion. Copper production slipped 5% to 1.6 million tonnes, but iron production was up 2% to 254 million tonnes.
Tesco and Ocado were among the few green shoots in the FTSE 100, up 0.5% and 0.4%, respectively, despite UK supermarket sales having slipped in recent weeks, though they remain comfortably above pre-virus levels, data from Kantar showed on Tuesday.
Kantar noted a slight slip in online grocery buying as some old shopping habits return. The slowdown meant sales for online specialist Ocado declined for the first time on record. Most major grocers saw falls in sales, though Tesco, J Sainsbury and German discount chains Aldi and Lidl gained market share.
Sainsbury's was trading 0.7% lower, while Morrisons was down 0.1%.
In the 12 weeks to August 8, UK grocery sales fell by 4.0% year-on-year to GBP29.55 billion from GBP30.77 billion. Sales were 9.9% higher than they were in 2019, so before the onset of the virus outbreak.
In the midcaps, Plus500 was the best performer, up 5.1%.
The contracts-for-difference trading platform saw its first half revenue sink, as it was unable to match the amount of new customers from a year before. Pretax profit fell to USD188.7 million in the six months to June 30 from USD363.2 million a year before. Revenue dropped 39% year-on-year to USD346.2 million from USD564.2 million.
Plus500's active customers grew 2% to 333,940, but new customers take on board in the period dropped by 31% to 136,980.
Average revenue per user was down 40% to USD1,037.
Plus500 did, however, unveil a new USD12.6 million share buyback on Tuesday morning and said it is confident of further growth ahead.
Chief Executive David Zruia said: "Future growth will be delivered through continued organic investments in our business, our technology and targeted bolt-on acquisitions to further expand our CFD offering, launch new trading products, introduce new financial products and deepen engagement with our customers. Having increased our expectations for the outlook for the group, the board is increasingly confident that Plus500 will continue to deliver further growth and consistent levels of cash generation over the medium to long term."
Plus500 said it expects revenue to be significantly ahead of current compiled analysts' consensus forecasts.
In Tokyo, the Nikkei 225 index closed down 0.4% on Tuesday. In China, the Shanghai Composite ended 2.0% lower, while the Hang Seng index in Hong Kong was down 1.7% in late trade. The S&P/ASX 200 in Sydney ended down 0.9%.
Against the Japanese yen, the dollar was trading at JPY109.26, up from JPY109.15.
Brent oil was quoted at USD69.10 a barrel Tuesday morning, down from USD69.15 late Monday. Gold was trading at USD1,794.50 an ounce, higher against USD1,786.04.
Still to come Tuesday, eurozone economic growth figures are at 1000 BST and US retail sales numbers are due 1330 BST.
By Paul McGowan; paulmcgowan@alliancenews.com
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