Last checked at 
LONDON (Alliance News) - UK stocks were slightly higher Thursday, with insurer Aviva leading the blue-chip FTSE 100 index while property advisor Savills doing the same for the mid-cap FTSE 250, with investors awaiting the outcome of a European Central Bank monetary policy meeting.
The FTSE 100 was up 0.1%, or 6.31 points, at 6,152.63.
The FTSE 250 was up 0.2% at 16,619.22, and the AIM All-Share was up 0.2% at 700.82. In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were flat and down 0.2%
Aviva was the best blue-chip performer, up 2.7%. The insurer said it has entered 2016 from a position of strength after reporting higher annual operating profit for 2015 and lifting its dividend. Operating profit increased 20% to GBP2.67 billion in 2015, the insurer said, versus GBP2.21 billion in 2014, beating company-supplied analyst expectations of GBP2.49 billion.
Aviva increased its total dividend per share for the year by 15% to 20.8 pence from 18.1p, slightly below analyst expectations of a 21.2p payment, and said it expects dividend increases to "moderate" in future. Aviva will consider "additional" distributions to shareholders, depending on economic conditions, markets, and having excess capital and liquidity. "We are not there yet," Aviva said.
Whitbread was up 1.7%, after the hotel and coffee shop owner was upgraded by Jefferies to Hold from Underperform. Shopping centres owner Intu Properties also was benefiting from an upgrade by Macquarie to Outperform from Neutral, according to traders, with its shares up 1.2%.
Meanwhile, Ashtead was down 4.2%, after Deutsche Bank initiated the equipment rental company with a Sell recommendation. Also in the red, Royal Bank of Scotland was down 2.2% after Bernstein cut the bank to Market-Perform from Outperform.
Engine maker Rolls-Royce was another blue-chip faller, down 1.7%, after Goldman Sachs cut its rating on the group to Neutral from Buy.
Wm Morrison Supermarkets said it swung to a pretax profit in its recently-ended financial year, mainly due to the restructuring costs booked a year earlier, but expressed confidence in its outlook as underlying profit hit its expectations.
The grocer, which will re-enter the blue-chip index later this month, having fallen out late in 2015, said its pretax profit for the year to the end of January was GBP217.0 million, swung from a GBP792.0 million loss a year earlier, when it booked significant costs on the restructuring of its business and store estate.
Stripping out those restructuring and store closure costs, underlying pretax profit hit GBP302.0 million, down from GBP413.0 million the year earlier but in line with the company's guidance of GBP295.0 million to GBP310.0 million.
"With discounters Aldi and Lidl rapidly improving their fresh credentials and its supermarket peers continuing to cut prices on fresh and chilled foods, the onus is on Morrisons to supplement this new found price advantage with added service," said Simon Johnstone, senior analyst at Kantar Retail.
"That means building a more compelling offer and leveraging its in-house strengths such as its bakery section, upgrading traffic driving categories such as wine and providing a more localized offer. The issue for Morrisons is how are they going to differentiate themselves when most of their initiatives will also be a key strategic focus for Asda, Sainsbury's and Tesco," added Johnstone.
Shares in Morrisons were down 0.2%.
Also in the FTSE 250, property advisor Savills was the best performer, up 7.3%. The group recorded a surge in pretax profit, boosted by strong revenue growth from its US business. Savills recorded GBP98.6 million pretax profit for the year ended December 31, 16% higher than GBP84.7 million in 2014, after revenue came in at GBP1.28 billion, up 19% from GBP1.08 billion in 2014.
Savills recommended a final dividend of 8.0 pence per share, meaning total dividend for the year will be 26.0 pence per share, up from 23.0p for 2014.
Meanwhile, Aldermore was up 3.7%. The company, which lends to smaller businesses, homeowners and landlords in the UK, said annual profit grew as net lending jumped by 28% in 2015 and customer numbers rose by 27% to around 71,000.
Pretax profit grew to GBP94.7 million in 2015, the lender said, from GBP50.3 million in 2014. Net loans to customers were up by GBP1.3 billion or 28% to GBP6.1 billion. Even though the increase in net lending was below Aldermore's target of around GBP1.4 billion, the company said it represented a "very strong" performance.
At the other end of the index, Hiscox, was down 5.6%. The group, which provides insurance to retail and business customers, said it will look to grow DirectAsia's operations in Singapore and Thailand, after agreeing to sell the unit's Hong Kong division to Well Link Group Holdings.
DirectAsia, primarily a motor insurer, was established in 2010 in Singapore before expanding into Hong Kong in 2012 and Thailand in 2013. Including the Hong Kong operations, the company has over 75,000 customers and employs around 200 people.
The Hong Kong division generated USD8.0 million of gross written premium in 2015, has 9,000 customers, and employs 40 people. No financial details on the disposal were released.
The spotlight Thursday will be in Frankfurt, where the European Central Bank will hold its monetary policy meeting, with the monetary policy decision scheduled for 1245 GMT and ECB President Mario Draghi's press conference set for 1330 GMT.
The market widely expects the ECB to announce a deposit rate cut, as well as an increase in the size and duration of its asset purchases programme, but analysts are uncertain what will be the exact composition of Draghi's stimulus package.
A 10-basis-point cut to the deposit rate is expected by analysts at Lloyds Bank, Bank of America Merril Lynch or UBS, but those at Berenberg and Societe Generale expect an even deeper cut of 20 basis points.
An increase in the ECB's monthly asset purchases of EUR10 billion to EUR70 billion from the current EUR60 billion is also widely expected. But Berenberg expects a more aggressive move, looking for an increase to EUR80 billion per month. The bank also thinks the ECB will extend the asset purchase programme six months further to September 2017.
"What makes this meeting particularly interesting is that, due to the rotation of voting rights in the governing council, Bundesbank head and well-known hawk Jens Weidmann will not have a vote at today's meeting," said Oanda analyst Craig Erlam. "This could therefore be Draghi's best opportunity to gather the necessary support to unleash the bazooka, having failed to do so in December".
In December, the market was deeply disappointed by the ECB measures, even though the deposit rate was cut by 10 basis points to its current -0.30% and the asset purchase programme was extended until March 2017.
Ahead of the decision, the euro was quoted at USD1.0960, slightly lower than the USD1.1017 at the London equities close Wednesday.
CMC Markets analyst Michael Hewson said the euro has hold up "fairly well" amid all the speculation ahead of the meeting. Hewson noted that, while the natural reaction would be to sell the single currency, the shadow of December's disappointment still hangs over the market, "which suggests that whatever the ECB does today may not be enough to stop the currency moving higher".
Meanwhile, China's inflation accelerated at the fastest pace since July 2014 reflecting a surge in food prices amid Lunar New Year holidays. Consumer prices increased at a faster pace of 2.3% year-on-year in February following a 1.8% rise in January, data from the National Bureau of Statistics revealed. Inflation rose to the fastest since July 2014, while it was forecast to remain unchanged at 1.8%. However, inflation remains well below the full-year target of 3%.
On a monthly basis, consumer prices climbed 1.6% after rising 0.5% each in January and December, the NBS said. That was above expectations of a 1.1% score.
Asian stocks ended mixed Thursday, with the Japanese Nikkei 225 index up 1.3%, the Shanghai Composite in China down 2.0%, and the Hang Seng index in Hong Kong flat.
Wall Street ended higher Wednesday, with the DJIA up 0.2%, the S&P 500 up 0.5% and the Nasdaq Composite up 0.6%.
Still ahead in the economic calendar, US initial and continuing jobless claims data are due at 1230 GMT, while EIA natural gas storage change data are at 1430 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2016 Alliance News Limited. All Rights Reserved.
