RDSA.L Share News (RDSA)

LONDON (Alliance News) - The FTSE 100 ended in the green Friday, while Wall Street also was trading higher at the London close, as analysts believe the several sets of weak economic data seen throughout the week will keep central banks around the world in dovish mood.

The UK blue-chip index ended up 0.6% at 6,378.04 points but shed 0.6% for the week as a whole. The mid-cap FTSE 250 closed down 0.3% at 16,892.70, while the AIM All-Share finished up 0.6% at 740.86 points.

Among major European indices, the CAC 40 in Paris ended up 0.6% and the DAX 30 in Frankfurt closed up 0.4%.

US stocks were up at the London close, with the Dow 30 index up 0.2%, the S&P 500 also up 0.2% and the Nasdaq Composite up 0.1%.

Asian stocks ended higher Friday, with the Japanese Nikkei 225 index up 1.1%. In China, the Hang Seng in Hong Kong closed up 0.8% and the Shanghai Composite finished up 1.6%.

"Financial markets seek to end the week on a more positive tone, despite some of the recovery seen yesterday fading," said IG market analyst Joshua Mahony.

"In a week that saw US, eurozone and UK CPI all within negative territory, there is good reason to believe that we remain within an expansionary phase of monetary policy. Driven primarily by the second wave of the European Central Bank, Bank of Japan and People's Bank of China, the overall monetary policy outlook remains bullish for stocks as long as rate hikes continue to be pushed back."

Final data from Eurostat showed Friday that eurozone inflation turned negative as initially estimated in September.

Consumer prices fell 0.1% year-on-year in September, offsetting a 0.1% rise in August. The rate matched flash estimate published on September 30. The ECB's target is to bring inflation to "below, but close to, 2% over the medium term".

Excluding energy, food, alcohol and tobacco, core inflation remained unchanged at 0.9% in September. The core rate also matched the preliminary estimate.

The data came ahead of the European Central Bank meeting on monetary policy, scheduled for next Thursday. Although analysts do not expect the central bank to make any move, they believe ECB President Mario Draghi has to be careful delivering its message.

"We do not expect any material policy changes from the ECB's meeting next week," said Reinhard Cluse, economist at UBS. "Although the ECB has turned a lot more dovish since its last meeting on September 3, the case for more policy accommodation is not strong enough, in our view."

"A failure to add new stimulus might disappoint some market participants; this will make it all the more important for the ECB to carefully calibrate its message," added Cluse.

Anatoli Annenkov, senior economist at Societe Generale, said Draghi has a tough task of managing expectations.

"On the one hand, he will need to continue sending a dovish message of standing ready to act if needed. On the other hand, he does not have enough evidence of a sharp slowdown in activity and inflation to signal an imminent policy reaction," Annekov said.

The economist assumes the central bank will, at some point, extend its QE programme and targeted longer-term refinancing operations beyond September 2016, adding a corporate bond purchase programme in the spring of next year.

In the US, investors focused Friday on third-quarter results from conglomerates General Electric and Honeywell International, as US earnings season remains in full swing.

General Electric said its third-quarter profit declined from the previous year, while it also reported a drop in revenue. However, the group said operating earnings improved from the previous year. Meanwhile, Honeywell said its profit for the third quarter rose from last year, as lower revenues were more than offset by a decline in expenses and higher margins.

At the London close, New York-listed General Electric was up 2.3%, while Honeywell was down 2.3%.

In the US economic calendar, the University of Michigan released a report on Friday showing that consumer sentiment in the US has improved much more than anticipated in October, following a notable deterioration in September.

The University of Michigan said the preliminary reading on its consumer sentiment index for October came in at 92.1 compared to the final September reading of 87.2. Economists had expected the index to rise to 89.5.

Meanwhile, the US Federal Reserve released a report showing a modest decrease in US industrial production in September, largely reflecting a steep drop in mining output. The report said industrial production fell by 0.2% in September, after edging down by a revised 0.1% in August. Economists had expected production to drop by 0.3%.

On the London Stock Exchange, luxury goods retailer Burberry Group ended in the red, down 1.9%, after it suffered a downpour of price target downgrades by the likes of Societe Generale, Goldman Sachs, Bernstein, Credit Suisse, Deutsche Bank, UBS, Jefferies and Barclays.

On Thursday, the trench coat maker said its exposure to the slowing Chinese market was hitting its sales growth, and its above-sector-average sales derived from the market meant it took a heavier hit than its rivals. The stock closed the day down 8% having hit lows not seen since the end of 2012.

Rio Tinto ended down 0.8%, despite the Anglo-Australian mining giant said iron ore production and shipments, the company's main profit driver, rose in the third quarter of 2015 as it reiterated its full-year guidance across all of its commodities.

Analysts were relatively positive on the miner following the update. Only Societe Generale said that iron ore production was a touch below the broker's estimates. Rio Tinto reported global iron ore production for the third quarter of 86.1 million tons, missing SocGen's forecasts of 88.7 million tons.

Nevertheless the broker kept a Buy recommendation on the miner.

Meanwhile, shares in oil producers retained their session gains after the price of Brent oil stood above USD50 a barrel for most of the day. Brent oil was quoted at USD49.86 a barrel at the London close, still above its USD48.81 a barrel at the equity markets close on Thursday.

Royal Dutch Shell 'A' shares were up 1.7% and BP shares up 1.2%.

In the FTSE 250, Provident Financial Group ended at the top of the mid-cap index, up 5.4%. The lender said it has found a new managing director for its Vanquis Bank credit cards division, after Michael Lenora stated his intention to retire in 2016.

The news came as the group said that all three of its businesses performed well in the third quarter, reinforcing the company's confidence in generating "good-quality growth" in 2015 as a whole.

Inter-dealer ICAP was down 3.6% after being downgraded to Equal Weight from Overweight by Barclays.

In a light corporate calendar Monday, Matchtech Group releases full-year results.

In the economic calendar, the main interest by far will be China's gross domestic product and industrial production figures, due at 0300 BST and 0630 BST, respectively.

In the US, the NAHB housing market index is due at 1500 BST. At 1700 BST, Federal Reserve Bank of Richmond President Jeffrey Lacker speaks at an event hosted by the Virginia Chamber of Commerce and the Virginia Early Childhood Foundation.

By Daniel Ruiz; danielruiz@alliancenews.com

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