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Britain's FTSE lags Europe after ECB extends stimulus

Thu, 08th Dec 2016 17:02

* FTSE 100 up 0.4 pct

* ECB helps FTSE into positive territory

* Capita falls 14 pct after profit warning

* Sports Direct down after weak results (ADVISORY- Follow European and UK stock markets in real time onthe Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

By Alistair Smout and Kit Rees

LONDON, Dec 8 (Reuters) - UK shares rose overall on Thursday- though not as much as European shares after the EuropeanCentral Bank extended its stimulus programme - while outsourcingfirm Capita tumbled after a profit warning.

The blue chip FTSE 100 index was up 0.4 percent at6,931.55 points by the close, hitting its highest level in onemonth, though euro zone blue chips outpaced Britishshares to end 1.4 percent higher.

European shares rose, helped by strength in banks followingthe European Central Bank's decision to extend its assetpurchase programme by 9 months, longer than had been expected,while cutting the size of monthly purchases.

Shares were choppy after the announcement, but turnedhigher. The ECB loosened restrictions on the assets it couldpurchase and President Mario Draghi gave a dovish pressconference where he said the level of purchases could rise againif needed.

"Despite the reduction in the amount of asset purchases fromApril 2017, a somewhat longer than expected extension in the QEtimeline (to the end of December) as well as the overall dovishtone of the press conference, suggest that the high level ofmonetary accommodation in the Euro area remains in place," saidAnna Stupnytska, global economist at Fidelity International.

The announcement helped Britain's FTSE 100 into positiveterritory after early falls, though a slump in Capitacontributed to the index's underperformance.

Capita, the top faller, plunged 14 percent and hit itslowest since July 2006 after a second profit warning in threemonths, blaming Brexit-related client indecision. It said itwould sell assets and trim costs to protect its balance sheet.

Outsourcing firms have been under pressure since Britainvoted to leave the European Union in June. Shares in peer Mitie, which issued a second profit warning in November, fell1.3 percent.

Disappointing results hit shares in mid-cap sporting goodsretailer Sports Direct, which dropped more than 8percent. Its shares are down 50 percent so far in 2016, havingbeen hit by a plunge in sterling following the Brexit vote aswell as criticism over the treatment of its workers.

Betting companies William Hill and Ladbrokes CoralGroup fell 6 percent and 2.8 percent following a mediareport about a clampdown on betting machines.

Towards the top of the FTSE 100, tour operator TUI rose 2 percent after extending its existing profit forecast foranother year.

Advertiser WPP rose 4.6 percent to top the blue chipindex after an upgrade to "buy" from "hold" from Jefferies,whose analysts said they expected a limited impact on the firmfrom a reported U.S. Justice Department investigation into theindustry.

The report had knocked back WPP shares in the previoussession. (Editing by Tom Heneghan)

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Copyright 2024 Alliance News Ltd. All Rights Reserved.

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