LONDON MARKET CLOSE: Commodity Prices Slide Dents Stock Gains

LONDON (Alliance News) - Stocks in London erased a large part of earlier gains Monday, but still managed to close higher, as commodity prices fell after some brief respite.

"The FTSE 100 has seen much of its early gains erased in a commodity correlated move, with base metals, precious metals and Crude all falling back after initial gains," said Joshua Mahony, market analyst at IG Group.

Brent oil's advances were wiped out by the time of the London stock market close. The commodity reached a high of 38.89 during the middle of the London session, but closed at USD38.03 a barrel, close to its intraday low of USD37.99. It also was lower than the USD38.59 a barrel seen at the London close on Friday.

Oil prices were initially depressed by a report on Friday stating Saudi Arabia will freeze crude production only if Iran and others do so as well. Bloomberg reported that the kingdom's deputy crown prince, Mohammed bin Salman, signalled in an interview that, if any country raises output, Saudi Arabia will follow suit.

The price of gold traded at USD1,218.00 an ounce at the close Monday versus USD1,211.90 at the same time on Friday.

The FTSE 100 closed up 0.3%, or 18.67 points, to 6,164.72. The blue-chip index remained below 6,200, a level it has struggled to meaningfully breach over the last few weeks. The FTSE 250 ended up 1.96 points, to 16,845.64, while the AIM All-Share ended up 0.1%, or 0.69 points, to 712.29.

European stocks also ended higher. The French CAC 40 closed up 0.5%, while the German DAX 30 ended up 0.3%.

The economic calendar was thin Monday, but there were unemployment data from the eurozone, which showed the jobless rate in the single-currency market fell to its lowest level since August 2011. Eurostat said the jobless rate dropped marginally to 10.3% in February from a revised 10.4% in January, and in-line with economists' forecasts.

At the London close the euro was a touch higher against the dollar than at the same time on Friday at USD1.1382 versus USD1.1365.

The pound, meanwhile, made significant gains against the greenback. At the London equities close it traded at USD1.4272 against USD1.4173 on Friday.

On Wall Street at the London close, the Dow Jones Industrial Average and the the S&P 500 were both down 0.2%, whilst the Nasdaq Composite was down 0.4%.

In UK corporate news, Shire said it has seen positive results from a four week phase III study of its SHP465 compound for the treatment of attention deficit hyperactivity disorder in children and adolescents aged between 6 and 17 years.

Shire said this study addresses a key requirement from the US Food and Drug Administration to evaluate the safety and efficacy of the treatment before filing a resubmission for approval. This means SHP465 remains on track for a potential launch in the US in 2017. Shares in the company ended up 2.9%

Anglo American closed up 1.7%, also amongst the best performers in the FTSE 100. The miner progressed its asset sale plans by agreeing to offload another coal mine in Australia as the company continues to try to lower its debt.

Anglo, which is in the process of significantly downsizing its asset portfolio to realign the business, said it agreed to sell its 70% stake in the Foxleigh metallurgical coal mine in Queensland, Australia.

The company is selling the stake in the mine to a consortium led by Australia-based Taurus Fund Management, which manages assets in excess of USD1.00 billion for institutions and high net worth individuals, but did not disclose any further details regarding the deal, stating the transaction remains subject to several conditions and that the terms are confidential.

Mondi shares ended down 2.5%, the second biggest blue-chip faller. The Anglo-South African paper and packaging company said Russian authorities have started an investigation into its Russian business.

Mondi said the Federal Antimonopoly Service of the Russian Federation said last week it had initiated an investigation into Mondi Syktyvkar for violating anti-monopoly laws in regards to pricing of offset paper.

On Friday, the Federal Antimonopoly Service said it had established the cost of offset paper for domestic customers had increased around 50%, which did not match the change in the cost of producing and selling the goods.

Ocado Group was up 8.7%, the best performer in the FTSE 250, after The Times reported the online grocery delivery company is understood to be moving closer to signing a deal to enter the US market.

The Times said it understands Ocado has hired logistics company Mace to advise on how it should make its debut in the US market, which may be its first step towards securing a licensing deal to supply online groceries for a US retailer.

Mace is thought to have been hired to advise Ocado on where and how to best roll out its logistics and technical operations in the US, The Times said.

Wealth manager Brewin Dolphin was the second biggest gainer in the mid-cap index, up 8.2%, after N+1 Singer upgraded it to Buy from Hold. The broker said the recent recovery in key benchmarks for Brewin Dolphin and the discount at which it traded to peers makes the stock look attractive.

Sepura shares plunged 32%, making it the worst performer in the FTSE All-Share, after the critical communications provider warned its earnings before interest, tax, depreciation and amortisation in its recently ended financial year will be lower than expected.

Adjusted Ebitda for the year ended April 1 will be between EUR16 million and EUR20 million, the company said, missing expectations for the year. Sepura said this was due to two significant orders being delayed into the first quarter of the new financial year, as well as a EUR2.6 million hit from adverse foreign exchange rates.

In the economic calendar for Tuesday, Markit services purchasing managers' indexes will be in focus for the day. The string of releases will begin with Spain at 0815 BST, Italy at 0845 BST, France at 0850 BST, Germany at 0855 BST, the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.

Also in the calendar are German factory orders at 0700 BST and eurozone retail sales at 1000 BST. In the afternoon, US trade balances are at 1330 BST, the Redbook index is at 1355 BST, and JOLTS job openings and ISM non-manufacturing PMI are both at 1500 BST.

In the UK corporate calendar, there are a number of updates from mid-cap constituents, with full-year results from roadside assistance and insurance company AA and gifts and greeting card retailer Card Factory, while electronic and maintenance products distributor Electrocomponents, food company Cranswick and food ingredients maker Tate & Lyle all release trading statements. International Consolidated Airlines Group issues March traffic statistics as well.

Also on Tuesday are the Kantar Worldpanel grocery market share figures at 0800 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

Copyright 2016 Alliance News Limited. All Rights Reserved.