LONDON (Alliance News) - Share prices in London opened higher Friday, with resource stocks leading the rebound from the losses seen on Thursday when investors were spooked by suggestions a US interest rate hike in June is a firm possibility.
The FTSE 100 was up 1.5%, or 90.42 points, at 6,143.77. The FTSE 250 was up 0.8% at 16,870.21 and the AIM All-Share was up 0.1% at 723.65.
Resource stocks were firmly in the green soon after the open Friday in London, recovering some of the ground lost Thursday after the Fed minutes, released on Wednesday, suggested that a US rate hike in June is a firm possibility. New York Fed President William Dudley added to the hawkish picture as he said the Fed is likely to raise rates in the summer if the economy meets the bank's expectations. Dudley said "June is definitely a live meeting".
The dollar strengthened against other currencies, hitting at the same time gold and oil prices. The pound was quoted at USD1.4588 Friday morning, marginally higher than the level of USD1.4583 at the London stock market close Thursday.
Gold hit Thursday its lowest level in nearly a month, at USD1,243.96 an ounce. At the London close on Thursday, the precious metal was at USD1,251.18 an ounce. It has recovered little ground since, quoted at USD1.254.45 an ounce Friday after the open.
However, though it stood at USD47.73 a barrel at the close Thursday, Brent oil recovered overnight, trading at USD49.11 Friday after the market open.
"Oil is trading higher again today after we saw some profit taking early in Thursday's session," said Oanda analyst Craig Erlam. "The first attempt to break through USD50 in Brent was unsuccessful but momentum is still with the bulls and given yesterday's rebound off the lows, we could see another push today".
Anglo American, up 3.0%, Glencore, up 2.7% and Antofagasta, up 2.3%, were among the best blue-chip performers. Oil producers were also in the green, with Royal Dutch Shell 'A' shares up 1.9% and BP up 1.4%.
Shares in Babcock International Group were up 0.6%. The defence support services company said Ascent Flight Training, the FTSE 100-listed company's joint venture with US defence contractor Lockheed Martin, will deliver the rotary wing element of the UK Military Flying Training System on behalf of the UK's MoD.
The contract will include the delivery of Airbus H315 and H145 training aircraft and the installation of new infrastructure and ground-based equipment, Babcock said.
In the FTSE 250, bookie Ladbrokes was the best mid-cap performer, up 7.5%. The UK Competition & Markets Authority said it has provisionally found that the merger between Ladbrokes and peer Gala Coral may give rise to competition concerns in a large number of local areas.
In order to resolve the concerns, around 350 to 400 betting shops may have to be sold for the merger to be conditionally cleared, the CMA said. That would represent less than 10% of the combined Ladbrokes-Coral estate.
Ladbrokes and Gala Coral are the second and third largest bookmakers in the UK by number of shops. Ladbrokes operates 2,154 betting shops in Great Britain and 77 in Northern Ireland, while Gala Coral operates around 1,850 betting shops in Great Britain.
Pendragon was up 3.8% after the car dealer said it is to kick off a GBP20.0 million share buyback, to be run by Jefferies International, after concluding it had the capacity to return surplus cash to shareholders.
Pendragon said its board of directors has considered its capital structure and capital allocation policies with a view to returning surplus capital to shareholders. The group said it has a target range of 1.0 to 1.5 times net debt to underlying earnings before interest, taxation, depreciation and amortisation and is currently trading below this level.
Pendragon said it believes it will continue to generate strong cash flows and, after assessing the capital needs of the business and its current leverage position, concluded there is scope to return cash to shareholders.
At the other end of the mid-cap index, Spectris was down 5.9%, despite it said acquisitions boosted sales in the first four months, as it continues to restructure to better align spending plans with sales growth.
The group, which makes precision measurement instruments for industrial markets, said reported sales for the first four months of 2016 grew 2.0%. Acquisitions contributed all of this growth, as like-for-like sales declined 4.0% in the period, Spectris said. The company said it is making good progress on its restructuring and is focusing on better aligning its cost growth to its sales growth.
In Europe, the CAC 40 in Paris was up 1.2% and the DAX 30 in Frankfurt was 0.9%.
In Asia on Friday, the Japanese Nikkei 225 index ended up 0.5%. In China, the Shanghai Composite rose 0.6%, while the Hang Seng index in Hong Kong is up 1.0%.
In a light economic calendar for Friday are eurozone current account figures at 1000 BST and the Confederation of British Industry Industrial Trends Survey in the UK at 1100 BST.
"The disconnection between the [UK] output and order indicators has been the strange feature of CBI Industrial Trends Surveys recently," analysts at Societe Generale said. "Orders have fallen strongly over the last year whereas the output expectations index has turned up sharply since the beginning of the year."
"As the demand climate is poor, we expect the CBI output series to fall in this month's survey", SocGen noted.
According to FXStreet.com, the UK industrial order book balance is expected to decline to -13% in May from -11% in April.
Germany's producer prices continued to drop in April, figures from Destatis revealed Friday. Producer prices declined 3.1% in April from last year, the same pace of decrease as seen in March but slightly faster than the 3% fall forecast by economists.
German producer prices have been falling since August 2013. The 3.1% decrease was the biggest since January 2010 when prices slid 3.5%.
By Daniel Ruiz; danielruiz@alliancenews.com
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