SAB.L Share News (SAB)

LONDON (Alliance News) - Shares in London ended lower Friday, with oil prices declining significantly ahead of a long-awaited meeting in Doha on Sunday, where oil producing countries will try to reach an agreement on an output freeze, with the aim of pushing crude prices higher.

The FTSE 100 ended down 0.3%, or 21.35 points, at 6,343.75 Friday. The blue-chip index rose 2.3% in the week, having reached a 2016 high on Thursday at 6,373.93, a level it hasn't seen since early December.

In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt both ended down 0.4%.

Investors are focusing on the meeting in Doha where a group of OPEC and non-OPEC countries will decide on whether or not to freeze production at January levels, which were at an all-time high for OPEC.

There has been a lot of chatter about the potential outcome of the meeting as the date approaches. On Tuesday, Russian news agency Interfax reported that Russia and Saudi Arabia had reached a consensus on freezing oil output, citing a diplomatic source in the capital of Qatar. However, Iran remains one of the key players yet to accept any deal.

Analysts at finnCap noted that the OPEC and non-OPEC countries involved in the meeting produce over half of global production all together. Iran's acceptance is still in the air as Tehran on several occasions has ruled itself out of an output freeze, as it looks to regain market share after international sanctions on it were lifted.

The broker warned that, historically, OPEC has not been "particularly effective" at sticking to quotas, "so it is unclear if this new group will be any stricter should the freeze be put in place".

"On Monday we should have some visibility as to what the outcome of the meeting has been. An agreement to freeze will be good for the oil price in the short term, but any sign of cheating would be viewed negatively by the market, making the whole process to that point pointless," said finnCap.

Brent crude price declined heavily Friday, having reached its highest level so far in 2016 earlier this week, at USD44.90 a barrel. Nevertheless, the North Sea benchmark has made a significant recovery in the first months of the year, following the multi-year lows reached mid-January of around USD27.

Brent was quoted at USD42.80 a barrel at the London equities close, lower than the USD44.27 a barrel quoted at the close Thursday. Meanwhile, gold was at USD1,230.90 an ounce at the close, having stood at USD1,231.18 at the close Thursday.

Later today, investors will keep an eye on the US Baker Hughes oil rig count, which is due at 1800 BST.

Already released, consumer sentiment in the US unexpectedly deteriorated in April, data the University of Michigan showed. The report said the preliminary reading on the consumer sentiment index for April came in at 89.7, compared to the final March reading of 91.0. Investors expected it to inch up to 92.0.

Data from the Federal Reserve showed that US industrial production fell by 0.6% in March, matching the downwardly revised drop reported for February. That was below consensus expectations of a 0.1% decrease. The bigger than expected decline was partly due to the steep drop in mining output, which plunged by 2.9% in March after slumping by 1.0% in February.

In New York, the Dow 30 and the S&P 500 were down 0.1%, and the Nasdaq Composite was flat at the London equities close.

Economic data from China were not supportive for Asian stocks Friday. The National Bureau of Statistics showed the Asian giant's GDP expanded 6.7% year-on-year in the first quarter of 2016. This was in line with expectations but slower than the 6.8% economic growth seen in the three months prior. The growth rate fell in the range of the Chinese government's 2016 growth target of between 6.5% to 7.0%, which it set in mid-March.

The Nikkei 225 in Tokyo ended down 0.4%, whilst the Shanghai Composite finished down 0.1%, as did the Hang Seng in Hong Kong.

By the London stock market close Friday, the pound traded the dollar at USD1.4186, compared to USD1.4131 at the same time Thursday. The euro was at USD1.1308 Friday, having stood at USD1.1252 Thursday.

Brewing giant Anheuser-Busch InBev late Thursday said it agreed its approach on public interest commitments in South Africa as it progresses its proposed takeover of SABMiller. That sent shares in the London-listed Anglo-South African drinks giant to the top of the FTSE 100, ending up 1.6%.

AB InBev said it has struck a deal with the government of South Africa concerning employment, localisation of production and inputs used in the production of beer and cider, empowerment in the company, long-term commitments to South Africa and participation of small beer brewers in the local market. AB InBev is acquiring SABMiller for GBP71.0 billion in a deal which will create by far the largest brewer in the world.

Shares in miner Anglo American dropped 1.7%. Without citing a source, Sky News said it has learnt that the advisory firm Institutional Shareholder Solutions has told Anglo American shareholders to reject the pay packet being offered to the company's Chief Executive, Mark Cufitani, following the huge loss the company booked in 2015.

ISS's recommendation - which contrasts with that of Glass Lewis, another proxy adviser - is likely to sway the voting decisions of a number of shareholders, and sources close to Anglo said initial indications were that roughly 20% of investors may oppose the pay report, Sky reported.

The news came less than 24 hours after BP shareholders stunned the city, with over 59% voting against its pay packets for CEO Bob Dudley and Chief Financial Officer Brian Gilvary - a virtually unprecedented rebellion for a company of its size. BP closed down 0.7%.

The FTSE 250 ended down 0.5%, or 90.58 points, at 16,910.82, and the AIM All-Share closed flat, or 0.24 points down, at 732.29.

Hedge fund manager Man Group closed as the best mid-cap performer, up 7.2%. Man Group said its funds under management held up in the first quarter in what Chief Executive Officer Manny Roman described as a "challenging" three months for investment managers.

Man's funds under management fell to USD78.6 billion from USD78.7 billion in the quarter. The stability of Man's funds under management was due to net inflows of client money of USD0.5 billion, thanks to sales of USD5.1 billion exceeding redemptions of USD4.6 billion, Roman said, as well as the investment performance of Man's quantitative computer-driven hedge fund trading strategies.

Polymetal International dropped 0.6%, after the Russian-focused miner reported production of 260,000 ounces of gold equivalent in the first quarter of 2016, down 4% from a year earlier due to lower grades, as expected, at its mature Okhotsk operations, lower-grade stockpiles at Varvara, and a "one-off release of work in progress" at Voro, it said. However, the miner reiterated its full-year production guidance for 2016.

In the UK corporate calendar Monday, Centrica issues a trading statement, whilst Plus500 publishes its first-quarter results. Elecosoft and Simigon release full-year results and International Biotechnology Trust publishes half-year results. Later in the day, miner Rio Tinto releases its operations review at 2330 BST.

In the economic calendar, the International Monetary Fund and World Bank's Spring meetings take place in Washington all weekend until Sunday.

On Monday, China's house price index is due at 0230 BST. In the US, the National Association of Home Builders housing market index is due at 1500 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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