Taylor Wimpey Share News (TW.)

LONDON (Alliance News) - UK stocks ended a volatile day mostly higher Wednesday, with the FTSE 100 ending a four-day losing streak, as investors bought strongly in the morning and sold heavily in the afternoon.

"As much of the Western world stops to observe Remembrance Day today, we were always likely to see lower volumes in trade to account for the US, Canadian and French public holidays," said Joshua Mahony, market analyst at IG.

"However, the existence of lower volumes has done little to stand in the way of price action, with volatility relatively high as reflected by the strong UK session and subsequent sell-off at the open of the US markets," he added.

The FTSE 100, which had hit an intraday high of 6,327.16, gave back its gains following a weak open on Wall Street, but rebounded somewhat shortly before the close, ending the day up 0.4% at 6,297.20, meaning it closed higher for the first time since Wednesday last week. The FTSE 250, meanwhile, closed up 0.4% at 17,101.77 and the AIM All-Share index closed fractionally lower, down 0.1% at 742.78.

In Europe, stocks closed firmly higher. The CAC 40 in Paris closed up 0.8%, while the DAX 30 in Frankfurt closed up 0.7%.

On Wall Street, at the UK equity market close, the DJIA, S&P 500 and NASDAQ Composite are all between 0.1% and 0.2% lower.

In data released from the UK Wednesday, the Office for National Statistics revealed that UK earnings including bonuses increased by 3% and that excluding bonuses grew 2.5% in three months to September. According to FXStreet.com, economists had forecast a 3.2% increase for total pay and a 2.7% increase excluding bonuses.

The number of people claiming unemployment related benefits increased by 3,300 from September, which was more than the expected rise of 2,700. At the same time, however, the ILO jobless rate dropped to 5.3% in the September quarter from 5.6% in the prior quarter. The UK unemployment rate has not been lower since March to May 2008. The expected rate was 5.4%.

"Much like yesterday afternoon, it has been a relatively quiet day in the FX [forex] markets due to the lack of any significant eurozone or US data, and as North American banks are closed in observance of Veterans Day," said Fawad Razaqzada, technical analyst at FOREX.com. "But luckily, we’ve had some important employment data from the UK which caused a bit of volatility in the pound," he added.

At the close of the UK equity market, sterling traded at USD1.5210, having traded at USD1.5110 at the same time on Tuesday. The euro, meanwhile, traded at USD1.0741 at Wednesday's UK stock market close.

"Overall, it was a decent jobs report, although economists were looking for even stronger figures," said Razaqzada.

Berenberg's Senior UK Economist Kallum Pickering was even more bullish. "The latest unemployment data unambiguously demonstrate the labour market has recovered, proving that the UK economy is not just doing okay any more, but is in good shape – it's time to start thinking about rate hikes," he said.

"The bottom line is this; both the labour market and the pace of GDP [gross domestic product] growth are showing mid-cycle characteristics – monetary policy doesn't need to remain so accommodative for much longer," he added.

In the commodities market, at the UK equity market closing bell, Brent oil traded at USD46.13 a barrel, West Texas Intermediate traded at USD43.07 a barrel and gold stood at USD1,086.80 an ounce.

At the individual UK equity level, J Sainsbury ended the day as the biggest loser in the FTSE 100 after it said that the grocery market in the UK remains challenging and it posted lower sales for the first half, even though it swung to a pretax profit in the period.

The grocer said its pretax profit for the 28 weeks to September 26 was GBP339.0 million, a swing from a GBP290.0 million loss made a year earlier due to writedowns it had booked. Underlying pretax profit, which excludes profits or losses on property disposals, one-off items, pension scheme expenses and fair value movements, fell 18%, however, to GBP308.0 million from GBP375.0 million a year before.

Sainsbury's also said that it will pay an interim dividend of 4.0 pence per share, down 20% from 5.0p a year earlier. It said it plans to maintain full-year dividend cover at two times its underlying earnings for the full year.

Total group sales, excluding VAT and fuel, fell 2.0% to GBP12.42 billion from GBP12.67 billion a year earlier, it said. Underlying sales, including VAT, fell 2.0% to GBP13.64 billion from GBP13.92 billion. Retail sales for the group, including VAT but excluding fuel, were down 0.1% in the half, while like-for-like sales were down 1.6%.

Sainsbury's closed down 7.1%, while fellow food-retailers WM Morrison Supermarkets and Tesco closed down 1.6% and 0.8%, respectively. The FTSE 350 food and drug retailers sector as a whole ended the day down 1.6%.

Housebuilder Barratt Developments, closing down 1.3%, was another big faller in the blue-chip index, despite saying that it had started its current financial year well.

Barratt said it remains on track following a strong start to its current financial year, which ends June 30, 2016, as conditions in the UK's housing market continue to be robust and demand holds up across the regions.

The company said its net private reservations per week for the 19 weeks to November 8 rose 13% year-on-year to 261, with a sales rate of 0.7 net private reservations per active site per week, up from 0.63 a year earlier. Its total forward sales position at the end of the period was GBP2.50 billion, up 21% year-on-year.

"Barratt continues the expected trend of housebuilders making positive trading updates reflecting a still positive macro-environment," said Robin Hardy, an analyst at Shore Capital. "As is typical for a Q1 [first quarter] update, a high rate of sales and a large jump in the forward order book is reported," he added.

However, Hardy said that the issue with housebuilding stocks remains "one of valuation rather than performance," and that he still viewed the shares as "fully valued" despite the sharp drop in the company's share price recently.

FTSE 100-listed housebuilding peer Persimmon was another big loser, ending the day down 1.0%, while Taylor Wimpey closed down 0.7% and Berkeley Group Holdings closed down 0.5%.

At the other end of the spectrum, SABMiller was among the leading risers in the blue-chip index.

SABMiller closed up 2.4% at 4,071.003 pence after it reached an agreement to be acquired by bigger rival Anheuser-Busch InBev in a deal valuing the Anglo-South African brewer at around GBP71.0 billion, bringing a close to months of talks between the two on creating a company which will be by far the biggest beer business in the world.

SABMiller also said it has struck a deal to sell its stake in the MillerCoors joint venture in the US to Molson Coors Brewing Co, its partner in the company. Molson Coors will pay USD12.0 billion to acquire SABMiller's 58% stake in the business, though the deal is conditional on the combination of AB InBev and SABMiller completing.

The sale of the stake should help pave the way for regulatory approval of the takeover, though further remedies are likely to have to be offered as the combined group will control about a third of global beer volumes. In particular, it is expected the pair will have to sell some assets in China to secure regulatory passage.

The pair entered into talks in October, and SABMiller rejected a couple of bids from AB InBev before agreeing in principle to a 4,400 pence per share bid, which is where formal takeover deal has been agreed.

In the FTSE 250, telecommunication company TalkTalk Telecom Group ended the day as the biggest riser, up 13%, after it said it will book a one-off cost related to the recent cyber attack on it but said trading outside of this is in line with its expectations.

The group said the hacking attack will result in one-off costs being booked in the current financial year to the end of March 2016 of GBP30.0 million to GBP35.0 million.

Excluding the impact of the cyber attack, TalkTalk said trading is in line with its expectations for the full year. The group made a pretax loss for the half to the end of September of GBP8.0 million, swung from a pretax profit of GBP20.0 million a year earlier. TalkTalk will pay an interim dividend of 5.29 pence per share, up from 4.60p a year earlier, and said it remains on track to meet its expectations for the year, excluding the hack impact.

Shares in interdealer brokers Tullett Prebon and ICAP, meanwhile, moved in opposite directions Wednesday after an agreement for Tullett to buy ICAP's voice broking and information business in a deal which will see ICAP and its shareholders own a majority of Tullett was reached.

Under the terms of the offer, Tullett will issue shares to ICAP shareholders and to ICAP in consideration for the acquisition. The new shares will represent a 56% stake in Tullett's enlarged share capital and ICAP shareholders will own 36% of the company, while ICAP itself will own 20%.

The deal was revealed as ICAP announced its interim results for the six months to the end of September, with pretax profit rising to GBP83.0 million from GBP36.0 million a year earlier, despite revenue falling to GBP595.0 million from GBP620.0 million. It will pay a flat interim dividend of 6.60 pence per share.

ICAP's shares ended the day up 5.1%, placing them among the leading risers in the mid-cap index, while Tullett ended the day as the index's heaviest faller, closing down 10%.

In the data calendar Thursday, German and French consumer price index data for October are scheduled to be released ahead of the UK equity market open at 0700 GMT and 0745 GMT, respectively, with eurozone industrial production readings for September due shortly after at 1000 GMT.

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

Investors will also be keeping a close eye on a raft of speeches from an array of central bankers Thursday, with European Central Bank president Mario Draghi due to speak at 0830 GMT.

Federal Reserve Bank of St. Louis President James Bullard is scheduled to speak at 1415 GMT, ahead of US Federal Reserve Chair Janet Yellen at 1430 GMT, Richmond Federal Reserve Bank President Jeffrey Lacker at 1445 GMT, 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 is due to speak at 1715 GMT.

In the corporate calendar, FTSE 100-listed Burberry, 3i Group and SABMiller publish their half-year results Thursday, with fellow blue-chip Rolls-Royce Holdings scheduled to release a trading update. In the FTSE 250, FirstGroup, Halfords Group, WS Atkins are due to release half-year results, while Beazley, Premier Oil, Morgan Advanced Materials, Kier Group, Card Factory, Safestore, Rexam, IMI, Restaurant Group, Derwent London and Aggreko release trading updates.

Also of note, UK blue-chips GlaxoSmithKline, Marks & Spencer Group and Royal Dutch Shell 'B' shares are joined by mid-caps UK Commercial Property Trust, Home Retail Group, Just Retirement Group, Kennedy Wilson Europe Real Estate and Ladbrokes, amongst others, in going ex-dividend Thursday, meaning new buyers no longer qualify for the latest dividend payout.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

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