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LONDON (Alliance News) - UK stocks ended lower Thursday, with commodities-related stocks once again dragging on the FTSE 100, while Wall Street also was lower as investors showed caution ahead of a speech by US Federal Reserve Chair Janet Yellen.

The FTSE 100 index ended down 1.2% at 5,961.49 points, the FTSE 250 closed down 0.9% at 16,514.53, and the AIM All-Share finished down 0.3% at 728.89.

In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt both lost 1.9%.

Wall Street also was lower at the London close, with the Dow 30 down 1.4%, the S&P 500 down 1.3% and the Nasdaq Composite down 1.6%.

Market participants were looking ahead to a speech by Yellen, who will be speaking at 2200 BST at the University of Massachusetts Amherst about inflation dynamics and monetary policy.

"Yellen has an opportunity to provide more clarity when she speaks today, something she clearly failed to do last week," said Oanda analyst Craig Erlam.

"If she continues to talk up the threat of emerging markets and the existence of deflationary pressures, we could see markets continue to push back rate-hike expectations into next year," the Oanda analyst said. "Already the markets are pricing in only around a 35% chance that rates will rise this year, if she still intends to hike and not cause too much market turmoil, she needs to start sending a clear message."

The comments from Yellen will follow a mixed set of economic data from the US on Thursday.

The number of people filing first-time unemployment claims in the US edged up less than expected for the week ended September 19, according to government data.

The US Labor Department said initial jobless claims came in at 267,000 for the week ended September 19. This was up 3,000 from the previous week's figure of 264,000, while economists had expected the figure to come in at 275,000.

However, continuing jobless claims for the week ended September 12 rose to 2.242 million, while economists had expected a decrease to 2.235 million from the previous reading of 2.237 million.

US new home sales continued to surge in August, as buyers took advantage of low interest rates and better employment prospects. New home sales rose 5.7% at an annual rate of 552,000 in August, according to the Census Bureau. Economists were forecasting that new-home sales had risen by only 1.6% last month to a seasonally adjusted annual rate of 515,000.

Meanwhile, US durable goods orders fell 2% in August, according to statistics released by the US Department of Commerce. This matched the expectation of economists. However, the 2.2% increase initially reported for July was revised lower to show a 1.9% increase.

A strong dollar and lackluster global economy hurt demand for big-ticket items from the US, particularly jet aircraft. Excluding the volatile transportation sector, orders were flat in August, with economists having expected a rise of 0.1%

"Today's weak durable goods figures are perhaps a sign that Fed chair Janet Yellen was right to sit on her hands with regard to the interest rate rise," said Dennis de Jong, managing director at UFX.com. "However, it will be interesting to see how the furore around German autos this week affects the US durable goods data in the coming months."

Volkswagen shares gave back the gains seen earlier in the session and ended up just 0.6%, after Chief Executive Martin Winterkom resigned on Wednesday to take responsibility for the emissions testing scandal that has played havoc with VW reputation and market value. In first three days of the week, VW shares shed almost a third of their value.

Meanwhile, shares in VW peer BMW closed down 5.2% in Frankfurt after a German magazine, Auto Bild, reported that the X3 xDrive 20d sport utility vehicle emitted as much as 11 times the European limit for air pollution in a road test. BMW responded by saying there is no system in its cars that responds to tests differently than it would operate on the road.

"The BMW Group has not manipulated [emission tests], and we comply in every country with both legal requirements and local test requirements," the Munich-based company said.

German business sentiment improved unexpectedly in September, the Munich-based Ifo Institute said. The Ifo Business Climate Index rose to 108.5 in September from 108.3 in August. It was forecast to fall to 107.9.

However, CMC Markets chief market analyst Michael Hewson warned that this survey was done before the Volkwagen scandal broke. Hewson said that "given the repercussions this event is likely to have on German supply chains...if the survey were done now, the result would quite likely be very different."

On the London Stock Exchange, miners took a hit. Glencore, down 8.0%, Anglo American, down 4.5%, and Antofagasta, down 2.2%, were among the worst blue-chip performers.

Oil-related stocks ended also fell as crude oil prices failed to recover from Wednesday's decline. Brent oil stood at USD47.67 at the London close Thursday, after reaching a peak of USD50.22 on Wednesday before sharply reversing. West Texas Intermediate was at USD44.38, after touching a high of USD47.08 on Wednesday.

Royal Dutch Shell 'A' shares ended down 2.5%, BP closed down 2.0% and BG Group down 0.6%.

However, gold miners shone, with Randgold Resources, up 5.5%, and Fresnillo, up 3.4%, leading the FTSE 100 gainers, as the price of the yellow metal rose to USD1,154.80 an ounce from a low Thursday of USD1,130.80.

Lloyds Banking Group closed up 1.6%. Directors of the Financial Conduct Authority will hold crunch talks about the imposition of a deadline to draw a line under the GBP25 billion payment protection insurance mis-selling scandal, Sky News reported.

The report said the city regulator will discuss the merits of a so-called time-bar exercise as part of a scheduled board meeting. Banks have already set aside close to GBP30 billion for PPI compensation, with the state-backed Lloyds responsible for almost half that sum.

In the FTSE 250, sugar and sweeteners company Tate and Lyle closed up 3.3% after Liberum upgraded it to Buy from Sell.

Thomas Cook Group shares ended up 2.7%. The travel operator said its summer holiday sales were in line with its expectations in spite of the terrorist attack which hit Tunisia in June and curtailed holidays to the country. It also said it has made an encouraging start to the winter, allowing it to reiterate its earnings guidance for the full year.

It said that all markets performed in line, with Northern Europe achieving particularly strong trading in the second half of the year. Overall bookings were up 2% in the summer season, but average selling prices declined 2%. Thomas Cook said the summer season was 91% sold, in line with the same time last year.

Among mid-cap fallers, Poundland Group dropped 13% at 268.00p. The company raised GBP50 million through the placing of 17.9 million shares at 280.00 pence per share, in order to fund its acquisition of 99p Stores, and said that it expects core pretax profit for its full financial year to meet market expectations, although it will be weighted towards the second half.

In the corporate calendar Friday, Judges Scientific releases half-year results and CVS Group publishes full-year results.

In the economic calendar, French Consumer Confidence is due at 0745 BST. In the US, Gross Domestic Product is expected at 1330 BST. Markit's US services and composite Purchasing Manager's indices are due at 1445 BST. At the same time, Federal Reserve Bank of St. Louis President James Bullard participates in a discussion on "New Directions in Monetary Policy" before the Global Interdependence Center in St. Louis.

By Daniel Ruiz; danielruiz@alliancenews.com

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