LONDON (Alliance News) - London shares opened higher Friday, boosted by firm oil prices and by the Bank of Japan's decision to cut interest rates into negative territory.
The FTSE 100 index was up 1.2% at 6,005.19 points, the FTSE 250 up 0.5% at 16,278.84 and the AIM All-Share up 0.1% at 688.56. In Europe, the CAC 40 in Paris was up 1.7%, while the DAX 30 in Frankfurt was up 1.6%.
On Thursday, oil prices spiked higher due to the possibility of oil supply cuts, after the prospect was raised by the Russian Energy Minister but then shot down by OPEC delegates.
Oil prices retained their gains overnight, with North Sea benchmark Brent crude standing at USD35.24 a barrel Friday, just below its USD35.79 high on Thursday. US benchmark West Texas Intermediate was quoted at USD33.72 a barrel, having reached a peak of USD34.78 on Thursday.
Oil-related companies were among the best performers shortly after the open, with BP up 2.3%, Royal Dutch Shell 'A' up 2.0% and BG Group up 1.2%. In the FTSE 250, Tullow Oil was up 3.9%, Ophir Energy up 2.8% and Amec Foster Wheeler was up 2.6%.
Shares in broadcaster Sky were up 1.6%. The company said it has reappointed James Murdoch, son of Rupert Murdoch, as chairman, succeeding Nicholas Ferguson, as the television broadcaster reported 5% revenue growth for its first half and strong customer growth in its second quarter.
Murdoch was previously chief executive of Sky between 2003 and 2007 and chairman between 2007 and 2012. Martin Gilbert has been appointed deputy chairman, with Andrew Sukawaty to replace Gilbert as Sky's senior independent director.
For the half year to end-December, Sky posted a pretax profit of GBP414 million, down from GBP1.21 billion a year before, mostly as a result of exceptional profits from the sale of the company's stake in ITV in the year comparative period not repeating.
However, operating profit also slipped to GBP524 million from GBP536 million a year before, as a rise in revenue to GBP5.72 billion from GBP4.30 billion was offset by a big step-up in operating expenses to GBP5.19 billion from GBP3.77 billion, resulting from the costs of the company's acquisition and integration Sky Deutschland and Sky Italia.
The company added 337,000 new customers during the quarter, which it said included its highest UK and Ireland customer growth in ten years. Sky proposed an interim dividend of 12.6 pence per share, up from 12.3p a year before.
Following the update, Shore Capital upgraded Sky to Buy from Hold.
"We are encouraged by the progress detailed in these results and positive on Sky's business model and strategy," said Shore analyst Roddy Davidson.
Mid-cap Tullett Prebon was the best performer in the FTSE 250, up 9.0%, after it said its revenue rose 14% in the final two months of 2015 compared to the previous year, helping to take its revenue growth for the year to 13%.
The interdealer broker said its revenue in 2015 was GBP796 million, up 13% from the GBP704 million it reported in 2014. Excluding PVM Oil Associated and its subsidiaries, which Tullett acquired in November 2014, revenue was down 1%. Tullett said that activity in some traditional interdealer product areas in the last two months of 2015 had been higher than it had seen a year before, with the increased level of activity it saw in oil and related products market continuing.
The company expects its 2015 full year underlying profit margin to be higher than it had previously indicated at around 13.5%.
Vedanta Resources was up 6.5%, despite it saying its revenue for the third quarter dropped significantly year-on-year as the group contended with a tough commodities market.
The India-focused oil and gas explorer and miner said its group revenue for the quarter to the end of December was USD2.44 billion, down from USD3.36 billion a year earlier. For the nine months to the end of December, revenue fell to USD8.13 billion from USD9.81 billion. The revenue falls were broadly shared out across its operations, with revenue falling across the board for its zinc, iron ore, copper and aluminium mining operations and for its oil and gas business.
Production levels remained robust across the company, with record quarterly refined silver production from its Zinc India business and record metal production in its aluminium unit, but revenue was dragged lower across the board by sinking commodities prices.
"The positive opening call comes thanks to the Bank of Japan making a surprise jump on to the negative interest rate bandwagon, despite recently denying the possibility, in an attempt to spur banks to lend more to boost the weak economy and encourage inflation," said Accendo Markets Head of Research Michael van Dulken.
The Bank of Japan announced plans to introduce negative interest rate in order to achieve its 2% inflation at the earliest possible time but left its massive asset purchase programme unchanged.
The BoJ also pushed back the projected timing for reaching inflation target, citing lower crude oil prices. The policy board of the BoJ on Friday voted 5-4 to apply -0.1% interest rate on current accounts that financial institutions maintain at the bank. The board said it will cut the rate further into negative territory, if judged as necessary.
The move by the central bank followed some weak Japanese economic numbers released Friday.
Industrial production in Japan stumbled a seasonally adjusted 1.4% on month in December, the country's Ministry of Economy, Trade and Industry said, sliding for the second straight month. That missed forecasts for a fall of 0.3% following the 0.9% decline in November. On a yearly basis, industrial production slipped 1.6% - also missing expectations for a decline of 0.6% following the 1.7% gain in the previous month.
Consumer prices in Japan were up 0.2% on year in December, data from the Ministry of Internal Affairs and Communications showed, in line with forecasts but slowing from 0.3% in November. Core inflation, which excludes the volatile prices of food, added just 0.1% on year, unchanged and matching forecasts. On a monthly basis, overall inflation slipped 0.1% and core CPI fell 0.2%.
Another report from Japan's Ministry of Internal Affairs and Communications said the jobless rate in Japan came in at a seasonally adjusted 3.3% in December, in line with expectations and unchanged from the previous month.
The Japanese Nikkei 225 index closed up 2.8%. In China, the Shanghai Composite ended up 3.1%, while the Hang Seng index in Hong Kong added 2.2%.
Germany's retail sales decreased unexpectedly at the end of the year, according to preliminary figures from Destatis. Retail sales edged down a seasonally adjusted 0.2% month-on-month in December, reversing a 0.4% rise in the previous month. Economists expected the reading to remain unchanged. On an annual basis, retail sales growth slowed to 1.5% in December from 2.4% in November. The expected rate of increase was 1.9%.
In the economic calendar Friday, eurozone private loans data are at 0900 GMT and consumer price index is at 1000 GMT. The first reading of US fourth quarter GDP is at 1330 GMT, as is the employment cost index and personal consumption expenditures prices. Chicago Purchasing Managers Index is at 1445 GMT and Reuters/Michigan Consumer Sentiment Index is released at 1500 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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