LONDON (Alliance News) - Stock prices in London were down early Monday morning after a positive open was scuppered by a retreat in oil prices, halting a short-lived rally that began late last week.
The FTSE 100 index was down 0.2% at 5,887.75 points, the FTSE 250 down 0.2% at 16,104.37, while the AIM All-Share was up 0.1% at 688.18. In Europe, the CAC 40 in Paris was up 0.1%, while the DAX 30 in Frankfurt was flat.
Oil prices had rallied since Friday, with North Sea benchmark Brent oil peaking at USD32.78 a barrel before the London equities open Monday, but they have since retreated again, though remaining above USD30.
Brent crude was quoted at around USD31.25 a barrel after the open, while US benchmark West Texas Intermediate was standing at USD31.36.
Oanda senior market analyst Craig Erlam said he remains "unconvinced" about the rebound seen in oil prices.
"The market is too bearish, and I struggle to see this rally lasting much longer. Brent appears to have eased its way through USD32.50 which could have provided firm resistance having previously been support. The next key level for me is USD34, at which point I think we could well see some interest once again," Erlam said.
Kingfisher was at the bottom of the FTSE 100 shortly after the open, down 2.4%, even though the DIY retailer announced a five-year plan to deliver a GBP500 million annual profit uplift by the end of the fifth year and a capital return of GBP600 million over the next three years.
The group said it will deliver the GBP500 million profit uplift on top of the profit it will generate from normal business. It expects its performance pre-transformation to be broadly in line with the macroeconomic backdrop in its respective markets, Kingfisher said. Kingfisher's reported pretax profit of GBP644 million in the financial year to January 31, 2015.
Reported profit, before the benefits of the transformation plan, will be hit by GBP50 million in the first year of the plan and by between GBP70 million and GBP100 million in the second year, Kingfisher warned. The company also expects to book a cash cost of GBP800 million in relation to the plan.
The GBP600 million capital return to shareholders will likely be via a share buyback and will be on top of the annual ordinary dividend.
GKN was down 1.6% after Credit Suisse cut the aerospace and automotive engineer to Neutral from Outperform.
Shares in Tesco were down 0.7%. The supermarket is to close down its two food-to-go stores as it beats a retreat just over a year after it made an attempt to challenge the likes of Pret-a-Manger, The Daily Telegraph reported. Tesco confirmed to the paper it will shut down its two food-to-go outlets, located in the City of London and near London Charing Cross Station, after they failed to gain traction with consumers.
It was insurers at the top of the blue-chip index at the open, with Old Mutual up 1.7%, RSA Insurance up 1.3%, Direct Line Insurance Group up 0.9% and Standard Life up 0.8%.
3i Group was up 1.8% at 444.00 pence after Societe Generale lifted the private equity group price target to 650p from 630p.
In the FTSE 250, Ophir Energy was the best mid-cap performer, up 6.8%, after it said it has signed heads of terms with US oil services group Schlumberger to be its upstream partner on the Fortuna floating liquefied natural gas project in Equatorial Guinea.
The London-listed oil and gas explorer said Schlumberger, subject to the agreement being definitively agreed and to government approval in Equatorial Guinea, will get a 40% economic interest in the project. Ophir said it expects the final deal, on which no financial details were provided, to be signed in the second quarter of 2016.
Ophir also released a short trading update, with its production for 2015 averaging 13,000 barrels of oil equivalent per day for the year, ahead of guidance after its Bualuang and Sinphuhorm fields in Thailand performed ahead of budget.
Asian stocks closed higher on Monday, with the Japanese Nikkei 225 index up 0.9%, the Shanghai Composite up 0.8%, and the Hang Seng index in Hong Kong up 1.3%.
In the economic calendar on Monday, IFO business climate survey results for Germany are at 0900 GMT, before the UK Industrial Trends Survey at 1100 GMT and the Dallas Federal Reserve manufacturing business index at 1530 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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