Star Energy Share News (STAR)

LONDON (Alliance News) - Shares in London were lower Thursday midday, with commodity stocks being sold and Rolls-Royce at the bottom of the FTSE 100 after issuing a profit warning, while Wall Street was called for a negative open with speeches from several US Federal Reserve Board members on the schedule.

The FTSE 100 index was down 0.6% at 6,260.66 points. The FTSE 250 also was down 0.6% at 17,001.99, and the AIM All-Share was down 0.4% at 740.23.

US stock futures pointed to a lower open, with the Dow 30 seen down 0.2% and the S&P 500 and the Nasdaq 100 both down 0.1%. A negative open would add to the losses from Wednesday, when the three indices each closed down 0.3%.

US Federal Reserve Board member are slated for speeches, including Chair Janet Yellen at 1430 GMT. Shortly before Yellen, comments from Federal Reserve Bank of St. Louis President James Bullard are due at 1415 GMT.

Later in the day, Richmond Federal Reserve Bank President Jeffrey Lacker is due to speak at 1445 GMT, with Fed Vice-President Stanley Fischer at 1500 GMT and Federal Reserve Bank of Chicago President Charles Evans at 1515 GMT. Federal Reserve Bank of New York William Dudley talks at 1715 GMT.

"The point markets need to focus on is what signal will be given for 2016 (we can probably assume the December hike is a done deal)," said UBS analyst Paul Donovan. "Slow tightening does not mean a glacial pace of tightening, as 2016 is a rising inflation environment and thus risks being a falling real rate environment."

The Fed's next two-day monetary policy meeting is scheduled for December 15-16, with no meeting scheduled for November.

The US earnings seasons continues Thursday with third-quarter updates from media company Viacom, due before the US market open, and technology company Cisco Systems, expected after the US closing bell.

In the US economic calendar, weekly initial and continuing jobs data are expected at 1330 GMT, with the US monthly budget statement due after the UK equity market close at 1900 GMT.

The euro weakened against other major currencies after the European Central Bank President Mario Draghi signalled further monetary stimulus at the next ECB meeting on December 3.

Speaking to the European Parliament's Economic and Monetary Affairs Committee, Draghi said that "signs of a sustained turnaround in [eurozone's] core inflation have somewhat weakened, due to lower oil prices and the delayed effects of the stronger euro exchange rate seen earlier in the year."

"Downside risks stemming from global growth and trade are clearly visible," Draghi said, adding that "normalisation of inflation could take longer than we anticipated." He also indicated that the Governing Council will "re-examine" the degree of monetary policy accommodation at the December meeting.

Draghi reiterated that the ECB is ready to use all available instruments to achieve its inflation target. The euro slid to USD1.0715, following Draghi's comments, having stood at USD1.0741 at the London close on Wednesday.

The CAC 40 in Paris and the DAX 30 in Frankfurt haven't recover from their losses at the open, still down 1.0% and 0.5%, respectively.

Germany's inflation accelerated as initially estimated in October, final data from the Destatis showed Thursday. Consumer prices rose 0.3% year-on-year in October after staying flat in September. The latest gain was the fastest since June, when prices climbed at the same pace. Month-on-month, consumer prices remained flat following a 0.2% fall in the prior month.

Meanwhile, France's inflation rose by more than expected, final data published by the statistical office Insee showed. Month-on-month, the consumer price index rose 0.1%, above expectations of a flat reading, while year-on-year it rose 0.2%, also ahead of economists forecast of a 0.1% lift.

House prices in the UK remain on an upward curve, the latest house price balance from the Royal Institution of Chartered Surveyors showed with a score of 49%. That topped forecasts for 45%, and it was up sharply from 44% in September.

On the London Stock Exchange, Rolls-Royce was down 21% after another in a series of recent profit warnings. Rolls-Royce affirmed its 2015 guidance but said profit will come in at the low end of expectations. The FTSE 100 jet engine and power turbine maker also downgraded its expectations for 2016 thanks to revenue mix changes and weaker margins.

The aerospace and defence engineering group also said it will review its dividend policy in light of the weak expectations for 2016, with any changes to be announced in due course, and said it will undertake a wide-ranging restructuring of the business, with plans to save around GBP150 million to GBP200 million per year.

"Rebuilding confidence in the company's outlook is now paramount for the relatively new Chief Executive [Warren East]," said Hargreaves Lansdown equity analyst Keith Bowman. "For now, despite management changes and a still sizeable order book, current consensus analyst opinion of a weak hold is likely to come under further downward pressure."

Oil-related shares were sold after a retreat in crude prices amid concerns about rising US inventories. The American Petroleum Institute reported Wednesday that US crude oil inventory rose by 6.3 million barrels, a much larger-than-expected build.

Brent crude was quoted at USD45.72 a barrel Thursday midday, having fallen on Wednesday from an intraday high of USD47.81 a barrel. US benchmark West Texas Intermediate was at USD42.85 a barrel, having touched an intraday high on Wednesday at USD44.08 a barrel.

Later Thursday, US Energy Information Administration oil stocks are expected at 1600 GMT.

Royal Dutch Shell 'A' was down 2.2%, BG Group down 0.6% and BP down 0.5%. Premier Oil was down 3.2%, Amec Foster Wheeler 2.2% and Ophir Energy 1.9%.

Mining stocks also were lower, with the FTSE 350 Mining Sector Index down 2.6%, putting it on course for a sixth consecutive negative close. Among index's constituents, Glencore was down 7.9%, Anglo American down 5.9% and Antofasgasta down 3.4%.

Elsewhere, BAE Systems was at the top of the FTSE 100, up 4.4%. The defence contractor said it will cut jobs in its military arm due to an anticipated reduction in Typhoon fighter jet production, though it remains confident on it current outlook.

BAE said it has continue to achieve solid growth in commercial markets in 2015 and is confident on an uptick in defence spending from both the UK and US governments given recent budget commitments made in the former and the Congressional budget approval secured in the latter.

The group said it taking actions to reduce its current production rate of Typhoon jets in order to ensure production continuity at competitive costs over the medium term. As a result, the group will cut 371 jobs in its Military & Air Information business, which will hit its results for 2015.

In the FTSE 250, FirstGroup was the best performer, up 3.8%. The transport operator said it swung to a pretax loss in the first half due to the impact of the loss of a rail franchise in the period, although its adjusted figures were weaker as well amid mixed trading across its operations.

The FTSE 250-listed transport operator said its pretax loss for the half to the end of September was GBP7.5 million, swung from a GBP9.9 million profit a year earlier, as revenue in the half fell to GBP2.44 billion from GBP2.94 billion due to the loss of the Capital Connect and ScotRail franchises.

FirstGroup said its trading was in line with its expectations in the half, with the rest of the rail portfolio performing well and financial performance at the top end of its forecasts, underpinned by strong passenger volume growth.

Meanwhile, ceramic and carbon products manufacturer Morgan Advanced Materials was down 13%, after said trading conditions have weakened in the second half, and its earnings for the full year are set to come in at the low end of market expectations.

In AIM, Starcom was up 52%. The wireless monitoring products company said it has agreed a joint venture with US-based data management technology firm Sato Global Solutions. Under the terms of the agreement, Sato will be Starcom's US distribution partner, and the pair will work on combining their respective technologies to develop new products.

At the other end, Ubisense Group was off 22%. The location intelligence services company said its revenue and profit for the year look at serious risk of falling short of previous guidance after the company was heavily bruised by the emissions-cheating scandal at German car giant Volkswagen.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2015 Alliance News Limited. All Rights Reserved.