LONDON (Alliance News) - UK stock prices started firm on Friday, with shares in engine maker Rolls-Royce Holding soaring as the company left its outlook for 2016 unchanged, even as it cut its dividend and reported a drop in underlying pretax profit.
Underlying pretax profit fell to GBP1.43 billion in 2015, from GBP1.62 billion in 2014, coming in ahead of the GBP1.3 billion expected by analysts, as underlying revenue fell to GBP13.35 billion from GBP13.86 billion.
"Our outlook for 2016 is unchanged. Despite steady market conditions for most of our businesses it will be a challenging year as we start to transition products and sustain investment in Civil Aerospace and tackle weak offshore markets in Marine," Chief Executive Warren East said.
Rolls cut its dividend for the year as a whole to 16.37 pence from 23.10p, slightly ahead of the 16.20p expected by analysts. East said the payment to shareholders will be halved at the next half year. Underlying free cash flow fell to GBP179 million from GBP447 million.
Rolls-Royce was by far the biggest gainer in the FTSE 100, up 12%.
"With 2016 guidance left unchanged, investors fearing yet another warning will be breathing a sigh of relief today," commented Alex Joyner, senior analyst at Galvan Research, adding: "However, despite today?s bounce higher, there's plenty more work to be done before we can expect to see a long-term recovery in the share price."
The FTSE 100 traded up 1.4% at 5,612.54 points, the FTSE 250 was up 0.7% at 15,277.37 and the AIM All-Share was flat at 663.87.
In Europe, the CAC 40 index in Paris rose 1.7% and the DAX 30 in Frankfurt was up 1.4%.
In Asia, the Tokyo stock market caught up with the losses made by its European and US counterparts on Thursday as it returned from its one day break. The Nikkei 225 index added to its recent run of losses closing down 4.8%. The Hang Seng in Hong Kong closed down 1.2%, while Shanghai remained closed for Lunar New Year.
Elsewhere on the London market, financial stocks were nursing their recent losses and were amongst the biggest gainers. Emerging-markets focused bank Standard Chartered traded up 5.5%, having fallen 5.1% on Thursday. The group was upgraded Friday to Buy from Hold by Investec.
Investec shares themselves were moving higher, up 3.2%. HSBC upgraded the Anglo-South African bank and asset manager to Buy from Hold according to traders.
Meanwhile, Supergroup was the biggest faller in the mid-cap index, down 8.2% to 1,222.00 pence. The clothing retailer said Founder and Product & Brand Director Julian Dunkerton sold 4.0 million shares in the company at 1,200 pence each via an accelerated bookbuild on Thursday.
Following the sale, Dunkerton now holds 22.1 million shares in the company, equivalent to a 27% stake in the company.
Still ahead in the economic calendar, eurozone GDP is at 0900 GMT before industrial data from the single currency union at 1000 GMT. US retail sales and import and export price indexes are at 1330 GMT, while the Reuters/Michigan Consumer Sentiment Index and business inventories both at 1500 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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