Taylor Wimpey Share News (TW.)

LONDON (Alliance News) - The gains seen at the open in London as investors cheered dovish minutes from the US Federal Reserve were erased Thursday, with stocks ending lower after the oil price reversed from its rally on Wednesday.

The FTSE 100 ended down 0.4%, or 24.74 points, at 6,136.89. In Europe, the CAC 40 in Paris closed down 0.9% and the DAX 30 in Frankfurt ended down 1.0%.

"After resisting the temptation to join its global peers in the red, the FTSE 100 had little choice but acquiesce as the session began to wrap up," said Spreadex analyst Connor Campbell. "The main catalyst for this shift in sentiment was Brent Crude's reversal of its earlier gains".

Crude gave back some of the gains made late Wednesday and overnight, when it was boosted by data from the US Energy Information Administration showing a reduction in US crude oil inventories. The EIA said its crude oil inventory fell by 4.9 million barrels in the week ending April 1. It was the first fall in the EIA's crude oil stocks in eight weeks.

That boosted Brent oil, with the North Sea benchmark hitting a high of USD40.26 overnight. However, the rally ran out of steam and Brent was quoted at USD38.93 a barrel at the London equities close on Thursday, below the USD39.38 a barrel at the same time Wednesday. Meanwhile, US benchmark West Texas Intermediate was at USD37.08 a barrel at the close Thursday against USD37.60 late Wednesday.

UK stocks were initially higher Thursday, taking the lead from the positive close in New York on Wednesday, following the release of the minutes of the Federal Open Market Committee's March 15-16 meeting. The minutes, published Wednesday after the London close, revealed that US monetary policymakers remained concerned about low inflation and lingering economic problems overseas.

A number of Fed officials argued against an April rate hike, thinking this would signal a sense of urgency they did not think appropriate. This was in line with last week's dovish remarks from Fed Chair Janet Yellen, who noted downside risks to the US economy.

"Several participants expressed the view that the underlying factors abroad that led to a sharp, though temporary, deterioration in global financial conditions earlier this year had not been fully resolved," the minutes read.

The focus will turn to Fed Chair Yellen, who is due to speak at 2230 BST at an event in New York, together with predecessors Ben Bernanke, Alan Greenspan and Paul Volcker.

This will come after the Labor Department released a report saying that first-time claims for US unemployment benefits fell by more than expected in the week ended April 2. The report said initial jobless claims fell to 267,000 from a reading of 276,000 in the previous week. Economists had expected claims to fall to 272,000. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, rose by 19,000 to 2.191 million in the week ended March 26.

Wall Street was lower Thursday at the London close, with the DJIA down 0.8, the S&P 500 down 0.9% and the Nasdaq Composite down 1.0%.

The pound was at USD1.4096 at the London close, slightly lower than USD1.4103 at the same time Wednesday. The euro also retreated against the greenback, quoted at USD1.1373 at the close, having stood at USD1.1388 on Wednesday.

The single currency hit a high of USD1.1453 earlier in the day, but dropped after the accounts from the European Central Bank's March 10 meeting were released.

The report showed that ECB policymakers discussed the possibility of a sharper interest rate cut at the meeting, but decided that a limited cut was appropriate as prospect of further cut cannot be ruled out if the inflation outlook deteriorates. Governing Council members broadly supported a further cut in the deposit facility rate and stressed the importance of communication and the link to the formulation of forward guidance.

"On the one hand, a sharper rate cut could be considered, together with indications that the effective lower bound would have been reached for all practical purposes," the accounts said. "On the other hand, the proposed limited rate cut could be judged as appropriate for now, given the current assessment, while it would also not rule out the possibility and prospect of further cuts if warranted by the outlook for price stability."

Elsewhere in the economic calendar, UK house prices increased more than expected in the first quarter, survey data from mortgage lender Halifax revealed. House prices advanced 10.1% in three months to March after rising 9.7% in three months to February. Economists had forecast the pace to slightly ease to 9.5%.

Randgold Resources was among the best performers in the FTSE 100, up 1.9%, benefiting from higher gold prices. Fellow blue-chip gold miner Fresnillo ended up 0.8%. The precious metal was at USD1,238.74 an ounce at the London close compared to USD1,221.73 at the same time Wednesday.

Centamin, a gold miner in the FTSE 250, rose 9.7%, the biggest riser in the mid-cap index. The company, which derives all of its gold production from the Sukari mine in Egypt, said total gold production in the first quarter amounted to 125,268 ounces, which was 6.5% higher than the previous quarter and a 16% increase from the same period a year earlier.

Marks & Spencer Group ended up 3.0%, among the best performers in the FTSE 100. The food, clothing and homewares retailer reported growth in sales in the fourth quarter of its financial year, higher food sales offset a decline in general merchandise. However, its new chief executive Steve Rowe said more needs to be done to return the retailer's struggling clothing and homewares business to growth.

Group sales in the 13 weeks ended March 26 were up 1.9% on the same period the year before. The food division achieved sales growth of 4.0% while the struggling general merchandise business saw sales fall by 1.9%, although this decline was slower than in the previous quarter. On a like-for-like basis, food sales were flat and general merchandise sales were down 2.7%.

Meanwhile, Worldpay Group ended down 2.3% at 276.35p, after Bank of America Merrill Lynch said private equity firms Advent International and Bain Capital sold a 13.8% stake in the blue-chip payments company for GBP740.0 million. The holding was sold at 269.0 pence per share.

A number of stocks went ex-dividend, meaning that past declared dividends go to the seller rather than the buyer, weighed on the FTSE 100, with education and publishing company Pearson ending down 6.8%, Lloyds Banking Group down 2.9%, life insurer Aviva down 4.1% and housebuilder Taylor Wimpey down 3.2%.

The FTSE 250 closed down 0.9%, or 151.88 points, at 16,714.23, while the AIM All-Share finished up 0.2%, or 1.58 points, at 717.02.

Homewares retailer Dunelm Group closed up 4.1% after reporting growth in revenue in the third quarter of its financial year, driven by like-for-like growth and a rise in online home delivery sales. Dunelm said total revenue in the 13 weeks ended April 2 grew by 5.9% to GBP229.0 million on the same period the year before.

At the other end of the index, KAZ Minerals ended as the worst mid-cap performer, down 8.2%, after JPMorgan Cazenove downgraded the miner to Underweight from Neutral. Meanwhile, home credit lender International Personal Finance was cut to Hold from Buy by Liberum, sending its shares down 2.7%.

In the London Main Market, Connemara Mining shares more than doubled in value. The miner's shares soared after publishing the results of its short-hole drilling programme over its gold licences in Northern Ireland, which has confirmed "without a doubt" that a gold bearing vein system is present. The stock closed at 2.90p per share, more than double its opening price of 1.48p.

Liontrust Asset Management ended up 3.8%, after saying it acquired the European income fund management unit of Argonaut Capital Partners. Liontrust added GBP298.0 million to its total assets under management. The consideration for the business will be paid in cash and will be equal to 1.5% of the assets under management of the acquired business when transferred. At present, this would translate to a GBP4.5 million cash payment by Liontrust.

In a thin UK corporate calendar Friday, Plant Health Care releases full-year results.

In the economic calendar, Japan's consumer confidence index is due at 0600 BST, Germany's trade data are due at 0700 BST. UK's manufacturing and industrial production data are due at 0930 BST, while the NIESR gross domestic product estimate is due at 1500 BST. In the US, Baker Hughes oil rig count is due at 1800 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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