(Alliance News) - London's flagship FTSE 100 ended October on a downbeat note, with NatWest dragging on the blue-chip index on Friday.
The state-backed lender missed out on gains for the wider banking sector as investors await a likely interest rate hike from the Bank of England next week.
The FTSE 100 index closed down 11.90 points, or 0.2%, at 7,237.57. The blue-chip index notched a week-to-date gain of 0.5%, and has risen 2.1% since the start of the month.
The mid-cap FTSE 250 ended down 93.26 points, or 0.4%, at 23,106.61 - ending the week overall up 0.8% - and the AIM All-Share closed down 1.00 points, or 0.1%, at 1,223.18 on Friday, shedding 0.9% since the start of the week.
The Cboe UK 100 ended flat at 718.06, the Cboe UK 250 closed down 0.3% at 20,754.19, and the Cboe Small Companies ended down 0.3% at 15,379.42.
In European equities on Friday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt ended down 0.1%.
"European markets have finished what has been a positive month, on the back foot today, with the FTSE100 slipping back towards the 7,200 level after hitting 20-month highs earlier this week," said Michael Hewson, chief market analyst at CMC Markets.
NatWest was weighing on the FTSE 100 on Friday.
It ended as the worst performing blue-chip stock, down 4.5%, as investors honed in on GBP294 million of litigation and conduct costs. This included provisions for an anticipated fine pertaining to breaches of the UK Money Laundering Regulations 2007 and "other matters".
More positively, the state-backed bank saw a bump in profit in the third quarter thanks to the release of impairment provisions.
In the three months to September 30, the bank recorded a pretax operating profit of GBP1.07 billion, up sharply from GBP355 million. NatWest made a credit release of GBP242 million versus a GBP254 million provision the year before.
The bank, along with UK peers - such as Barclays, up 1.5% on Friday and Lloyds Banking Group, up 1.3% - could get a boost next week if the Bank of England raises interest rates, as expected by analysts.
The BoE reveals its latest interest rate decision next Thursday and, after recent hawkish comments, analysts have pencilled in a 15 basis point hike to take Bank Rate to 0.25%.
The UK central bank decision comes just a day after the US Federal Reserve on Wednesday. There is also expected to be action in US monetary policy, with markets looking for a formal QE taper from the Fed.
Ahead of the Fed, data on Friday showed prices for goods in the US rose at a steady pace in September against a backdrop of rising global inflation.
The core personal consumption expenditure price index rose 3.6% in September year-on-year, matching August's pace and just missing the market estimate of 3.7%. The core PCE index, which strips out food and energy prices, is the Fed's preferred gauge of inflation.
The dollar was the front foot heading into next week's Fed meet.
The pound was quoted at USD1.3697 at the London equities close Friday, down compared to USD1.3808 at the close on Thursday. Against the yen, the dollar was trading at JPY114.02 compared to JPY113.29 late Thursday.
The euro stood at USD1.1564 at the European equities close Friday, falling from USD1.1682 at the same time on Thursday after data showed eurozone inflation accelerated at the fastest pace in 13 years, but the bloc's economic expansion slowed.
On an annual basis, eurozone's gross domestic product grew 3.7% in the three months to September, slowing sharply from 14% growth in the previous quarter. The print beat the market forecast, cited by FXStreet, of 3.5%.
In a separate release, the eurozone consumer price index rose 4.1% annually in October, accelerating from 3.4% in September. The latest reading showed prices rising faster than market expectations of 3.7%.
Stocks in New York were mixed at the London equities close, with the DJIA up 0.2%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.
Weighing on the tech-heavy Nasdaq were Apple and Amazon.com, falling 3.6% and 3.7% respectively in the wake of Thursday evening's earnings.
Apple late Thursday said a strong fourth quarter "capped off a remarkable fiscal year", but shares were hit by a revenue miss.
Total revenue for the three months to September 25 jumped 29% year-on-year to USD83.36 billion from USD64.70 billion and diluted earnings per share grew 70% to USD1.24 from USD0.73.
While the Cupertino, California-headquartered iPhone maker's quarterly EPS figure was spot-on consensus, the sales figure - while a September quarter record - missed the mark, with analysts having pencilled in nearly USD85 billion.
In a call following the results, Chief Executive Tim Cook said the firm took a USD6 billion hit from supply chain disruption in the quarter.
Amazon fell after posting chunky third quarter sales growth, but profit dropped by more than a third as the e-commerce titan boosted spending. Pretax profit in the three months to September 30 fell 37% year-on-year to USD4.32 billion from USD6.81 billion. The company put what is "best for customers over the long term" ahead of short-term profit, Chief Executive Andy Jassy said.
Back in London, shares in Royal Dutch Shell extended losses following Thursday's disappointing results. 'A' and 'B' shares closed down 1.9% and 1.3% respectively.
The oil major failed to get a boost from crude prices stabilising. Brent oil was quoted at USD84.27 a barrel at the London equities close Friday, up from USD83.94 late Thursday.
Elsewhere in the commodity space, gold suffered as the dollar strengthened. Gold tumbled to USD1,778.08 an ounce at the London equities close Friday, against USD1,802.81 at the close on Thursday.
Precious metals miner Polymetal International in the FTSE 100 closed down 2.5%, tracking the price of gold lower.
In the FTSE 250, ConvaTec rallied 8.0% after the medical products and technologies said it is on track to hit the upper-end of its full-year revenue guidance.
In the nine months to September 30, revenue was up 5.4% on an organic and constant currency basis. Looking ahead, the company expects to be towards the upper end of its organic revenue growth guidance of 3.5% to 5.0% for the full year.
Games Workshop shed 7.7% to 9,645 pence after Jefferies cut its price target on the stock to 12,250p from 13,200p.
Elsewhere in London, Lamprell rose 17% after raising GBP21.9 million in a share placing and subscription priced at 32.00p per share. The engineer on Thursday reported revenue of USD171.7 million for six months to June 30, up from USD142.5 million a year ago, and added that USD232 million is secured for second half.
The UK corporate calendar on Monday has half-year results from Irish budget airline Ryanair.
The economic calendar on Monday has a Chinese manufacturing PMI at 0145 GMT, German retail sales at 0700 GMT and a UK manufacturing PMI at 0930 GMT. A US IHS Markit PMI is due at 1345 GMT and the ISM's manufacturing report at 1400 GMT. Daylight savings time ends in the UK and in Europe over the weekend.
By Lucy Heming; lucyheming@alliancenews.com
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