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LONDON (Alliance News) - Shares in the UK ended lower Wednesday, as declines in heavyweight commodity-related stocks outweighed gains for housebuilders and gold miners, while the pound was again hit by uncertainty over the Brexit referendum.

The FTSE 100 closed down 1.6%, or 95.13 points, at 5,867.18. The FTSE 250 closed down 0.7%, or 111.17 points, at 16,117.50, while the AIM All-Share ended up 0.2%, or 1.13 points, at 687.39.

European stock exchanges also ended the day lower. The CAC 40 index in Paris lost 2.0% and the DAX 30 in Frankfurt 2.6%.

Miners ended at the bottom of the FTSE 100, still hit by read-across from the dividend cut announced by BHP Billiton on Tuesday. The FTSE 350 Mining sector ended down 6.4%, adding to the losses seen on Tuesday, when it closed down 3.1%.

Glencore ended down 6.9%, BHP down 4.2%, Anglo American down 5.1% and Antofagasta down 5.2%.

However, a rise in the gold price supported shares in Randgold Resources and Fresnillo, which ended up 1.0% and 1.7%, respectively. The precious metal added to its impressive 2016 rally, quoted at USD1,248.40 an ounce at the London equities close, compared to USD1,224.90 an ounce at the close on Tuesday. The gold price is up by 18% year to date.

The oil price remained resilient after data from the US Energy Information Administration showed that crude stockpiles in the US rose more than expected in the week ended February 19. The report said US crude oil inventories rose by 3.5 million barrels last week, with economists expecting an increase of 3.3 million barrels.

Brent oil was at USD32.91 a barrel at the London equities close, having stood at USD33.22 a barrel at the close Tuesday. Meanwhile, US benchmark West Texas Intermediate was quoted at USD30.91 a barrel.

Still, shares in BP fell 1.8%, Royal Dutch Shell 'A' shares ended down 2.0% and Shell 'B' shares fell 2.2%. In the FTSE 250, Tullow Oil was down 6.4%.

On Tuesday, crude prices retreated after Iran and Saudi Arabia ruled out a deal by major producers to cut oil output, and data from the American Petroleum Institute showed a further build in crude stockpiles. The API's weekly crude oil stocks rose by 7.1 million barrels, having declined by 3.3 million barrels last week.

Furthermore, Organization of the Petroleum Exporting Countries Secretary General Abdalla Salem El-Badri blamed US and Canadian oil companies for the global supply glut that has dragged down crude oil prices. "You can't invest in new production and then expect OPEC to cut production," he said at the annual CERA conference in Houston.

OPEC members Saudi Arabia and Russia have proposed to freeze output at January levels, but analysts say a significant reduction in output is needed to alleviate the global supply glut.

Housebuilders Persimmon and Barratt Developments also ended among the few blue-chip gainers, up 1.8% and 2.4%, respectively.

UBS and Numis upgraded Persimmon to Buy and Hold, respectively, after the group announced on Tuesday an acceleration of its capital returns programme, following a very strong year for the UK housebuilding industry. The housebuilder said it will return 110.0 pence per share to shareholders, a huge rise on the 10.0p per share it had been planning previously.

Barratt Developments said on Wednesday that pretax profit surged by 40% in the first half of its financial year to December 31, after it sold more houses at higher prices, which appears to be continuing into its second half.

The housebuilder posted pretax profit of GBP295.0 million, up from GBP210.2 million for the first half of its previous financial year, whilst revenue was boosted in the half to GBP1.88 billion from GBP1.58 billion, up 19%. Barratt announced an interim dividend of 6.0 pence per share, up from 4.8 pence per share the previous year.

Shares in other housebuilders also avoided losses after data from the British Bankers' Association showed that UK mortgage approvals increased to their highest level in nearly two years in January. The number of mortgages approved for house purchases increased to 47,509 in January from 43,660 in December. This was the highest since February 2014 and above the expected level of 45,000.

Taylor Wimpey ended up 0.8% while mid-caps Bovis Homes and Bellway both rose 1.1%.

The pound was again hit by the uncertainty over the outcome of the Brexit referendum, scheduled for June 23.

Irish budget airline Ryanair Holdings put forward its case for the UK to remain in the European Union. Its chief executive, Michael O’Leary, was among the business leaders who wrote to The Times newspaper to warn that a decision to leave the EU would threaten the UK's economy. The letter was signed also by bosses of FTSE 100 companies including oil major Royal Dutch Shell, telecommunications giant BT and drinks company Diageo.

Ryanair said it remains critical of both UK and EU government "failure" to promote low fare tourism growth in areas such as the UK travel tax and continuing indecision over additional runway capacity in the south east. However, it said it remains a "committed supporter" of the UK remaining in Europe as this will lead to more UK jobs and better economic growth, while EU open skies have already "transformed" UK tourism.

Though at the London equities close the pound still traded at lows it hasn't seen since March 2009, sterling recovered some ground after the dollar weakened in the wake of a weak set of US economic data.

The pound was at USD1.3944 at the close, having hit a low of USD1.3879 earlier in the day. At the London close Tuesday, the pound stood at USD1.4082. Meanwhile, the euro was at USD1.1034 at the close, having stood at USD1.1019 at the close Tuesday.

Data from the US Commerce Department showed that new home sales pulled back by much more than expected in January. The report said new home sales tumbled 9.2% to an annual rate of 494,000 in January after surging up 8.2% to a rate of 544,000 in December. Economists had expected new home sales to show a much more modest decrease of about 4.4% to a rate of 520,000.

Flash readings from US Markit's services Purchasing Manager's Index came in below economists' expectations in February. The reading came in at 49.8, compared to the January reading of 53.2. Economists expected a score of 53.5. Meanwhile, the composite reading came in at 50.1, below the 53.2 from January.

At the London equities close, stocks in New York were lower, with the Dow Jones Industrial Average and the Nasdaq Composite both down 1.4% and the S&P 500 falling 1.3%.

Elsewhere on the London Stock Exchange, mid-cap International Personal Finance ended down 13%. The home credit lender said its pretax profit was flat in 2015 at GBP100.2 million. IPF is now pinning greater hopes on growing its business in Mexico, as it warned that new legislation in some of its Eastern European markets will continue to hit profit in 2016 and beyond.

Shares in recruiter Hays ended down 8.4% after it signalled a weakening market in the UK and continued mix conditions in Asia Pacific, though this was offset in its interim results by a robust performance by its European business. The group said said its pretax profit for the six months to the end of December was GBP82.4 million, up from GBP77.3 million a year earlier, as net fees increased to GBP396.9 million from GBP383.9 million. It declared an interim dividend of 0.91 pence per share, up from 0.87p a year earlier.

Oilfield services company Petrofac ended up 8.6%. The company confirmed expectations that the loss booked against the Laggan-Tormore project in the UK North Sea hampered results, but stuck to its commitment to maintain its dividend.

"We faced up to the exceptional challenges we encountered and honoured our commitment to our client. With the plant now successfully operational, these issues are finally behind us," said Chief Executive Ayman Asfari. Petrofac kept its dividend flat in 2015 at 65.80 cents, after it committed to that payout in late 2015.

In a busy UK corporate calendar Thursday, Lloyds Banking Group, Merlin Entertainments, RELX, British American Tobacco, St James's Place, Mondi, Capita, RSA Insurance, Howden Joinery, KAZ Minerals, National Express Group, Playtech and Derwent London release full-year results.

Zoopla and Safestore issue trading statements, while STV Group, UBM, Serco and Molins publish full-year results. Galliford Try and Redde release half-year results. Lavendon Group, Macfarlane Group, Spirent Communications and Rentokil Initial release full-year results. Premier Oil, Law Debenture Corp, Sphere Medical Holding, Bodycote and Countrywide release full-year results.

In the economic calendar, Germany's Gfk consumer confidence survey is due at 0700 GMT, at the same time as the country's harmonised index of consumer prices. UK fourth-quarter GDP is due at 0930 GMT, while eurozone consumer price index data are expected at 1000 GMT. In the US, initial and continuing jobless claims are due at 1330 GMT, as well as US durable goods orders data. US housing price index is due at 1400 GMT, while EIA natural gas storage data are due at 1530 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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