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LONDON (Alliance News) - Stock prices in London had given up their early gains by midday Thursday, after mixed UK preliminary fourth quarter GDP figures and as investors continued to decipher the US Federal Reserve's policy statement issued late Wednesday.

After raising its head above the 6,000 mark, the FTSE 100 index traded down 0.9% at 5,939.22 points. The FTSE 250 was down 0.6% at 16,189.57, and AIM All-Share was up 0.3% at 688.07. European stocks were trading lower, with the CAC 40 in Paris down 0.9% and the DAX 30 in Frankfurt down 1.3%.

However, US futures pointed to a positive open after heavy losses on Wednesday. The DJIA was pointed up 0.1%, the S&P 500 up 0.2% and the Nasdaq 100 up 0.6%.

Facebook was up 12% in premarket trade after the social media giant reported late Wednesday a surge in fourth-quarter profit, driven largely by a 44% jump in revenue. Both earnings and revenue trumped Wall Street estimates.

Earnings season continues in the US Thursday, with reports out from Amazon, Microsoft, Visa, and Caterpillar amongst others.

Stocks in the US ended firmly on the red on Wednesday after the Federal Reserve left its benchmark interest rate unchanged and said it continues to closely watch global economic and financial developments.

The Fed held its target range at 0.25% to 0.50% after hiking rates last month from the near-zero range that had been in place for seven years. The unanimous decision was warranted "given the economic outlook", the US Federal Open Market Committee said in its statement released after the London equities market close.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, said that whilst the Fed tweaked its economic assessment, the general underlying message was the same as in December.

"Perhaps what is notable in its absence is a recognition of the market turbulence since the start of the year. It also does not pay due to the fact that before the week is out, the US will likely to report that the economy practically stagnated in Q4 (less than 1% growth an annualized pace)," Chandler said.

Chandler said that, according to Fed funds futures prices, there is only about a 25% chance of an interest rate hike in March from the US central bank.

In UK economic news, gross domestic product accelerated in the fourth quarter according to the first estimate by the Office for National Statistics.

GDP climbed 0.5% sequentially in the fourth quarter, slightly faster than the 0.4% expansion posted in third quarter. The growth rate matched economists' consensus. On a yearly basis, GDP climbed 1.9% in the fourth quarter, also in line with expectations.

The dominant service sector advanced 0.7% quarter-on-quarter, while production and construction shrank 0.2% and 0.1%, respectively. The agriculture sector grew 0.6%.

However, in 2015 as a whole, GDP increased by 2.2%, which was slower than the 2.9% seen in 2014.

"The rather mixed message sent by the Q4 figure, then, helps to clarify why an air of negativity has begun to creep into the markets this Thursday morning, with the FTSE abandoning its gains to fall into the red," said Connor Campbell, financial analyst at Spreadex.

In the FTSE 100, Anglo American led gainers, up 6.9%, despite the miner saying production fell across most of its commodities during 2015, including its iron ore division in South Africa. Iron ore production from South Africa fell 7% year-on-year in 2015 to 44.9 million tonnes whilst the Minas Rio mine in Brazil produced a total of 9.2 million tonnes in the year after only producing a small amount in 2014.

On Tuesday, Anglo had said its first sales cycle for its De Beers diamond business delivered a big increase in revenue compared to the final cycle it handled in 2015.

Firm oil prices were helping Royal Dutch Shell 'A' shares, up 0.5% and BG Group, up 0.3%. Brent oil continued its recent ascendency and was quoted at USD33.42 a barrel midday, while West Texas Intermediate was trading at USD32.36 a barrel.

Ashtead Group was the worst performer in the blue-chip index, down 6.5%. Shares in the equipment rental business were dragged down by weak results reported on Wednesday by US-peer United Rentals.

For the fourth quarter of 2015, United Rentals reported total group revenue USD1.52 billion and rental revenue was USD1.27 billion, compared with USD1.56 billion and USD1.32 billion, respectively, for the same period the prior year.

Centrica traded down 4.9% after Societe Generale downgraded the British Gas parent to Sell from Hold as it cut its earnings estimates to reflect the continued decline in commodity prices.

In the FTSE 250, FirstGroup was down 9.3%, making it the worst performing mid-cap stock. The transport company said it was lowering its outlook for operating profit in the current financial year, after a difficult third quarter across divisions.

It said its group revenue in the third quarter to the end of November was down 9.5% on a constant currency basis, after its sales were hit by the number of First Student operating days this year, due to the timing of the school calendar, and changes to its rail franchise portfolio.

Shares in peer Go-Ahead Group were down 5.3%, making it the second worst performer in the index.

Paypoint said its total revenue dipped in the third quarter, hit in part by the unseasonably warm winter weather conditions in the UK.

Total revenue for the quarter to the end of December fell 3.3% to GBP58.1 million, hit by declines in top-up and billing activity. Overall transactions processed in the quarter rose 3.9% to 225.4 million year-on-year. The stock traded down 4.4%.

Still ahead in the economic calendar, German inflation numbers are at 1300 GMT before US initial and continuing jobless claims and durable goods orders, both at 1330 GMT, and US pending home sales at 1500 GMT.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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