LONDON MARKET CLOSE: FTSE 100 Dragged Down By Shanghai And Commodities

LONDON (Alliance News) - The FTSE 100 ended lower Friday, with falling oil prices and mining stocks as the main drag, but not helped by a sharp decline in Shanghai prior to the London open or by subdued volumes on Wall Street as the New York market was open for just a half day.

The FTSE 100 index ended down 0.3% at 6,375.15 points, but up 0.6% for the week as a whole. The FTSE 250 closed up 0.3% at 17,265.10, and the AIM All-Share also finished up 0.3% at 732.02.

US stocks were firm at the London close, with the Dow 30 index flat, the S&P 500 up 0.1% and the Nasdaq Composite up 0.2%.

"With US stock markets open for just half a day, no major economic data before the weekend, and a sliding oil price, a drop in Europe was probably going to happen irrespective of China," said CMC Markets analyst Jasper Lawler.

The Shanghai Composite ended down 5.5% and the Hang Seng in Hong Kong off 1.9%. The fall in Chinese stocks came after the country's securities regulator urged domestic brokerages to cease financing clients' stocks purchases through over-the-counter swap contracts, in order to lessen leveraged financing risk in its stock markets after the summer stock rout.

The news weighed on UK-listed Asian-focused financial stocks such as Standard Chartered, down 1.3%, HSBC Holdings, down 0.9% and Aberdeen Asset Management, down 2.5%. In the FTSE 250, Fidelity China Special Situations fell 1.4%.

The Nikkei 225 index in Tokyo closed down 0.3%. Japan's core inflation continued to remain negative in October, weighed down by lower energy prices, raising concerns about the nation's ability to achieve its inflation target. Official data also showed that the unemployment rate dropped to a 20-year low, but household spending and income declined from the prior year.

The pound dropped after after second estimates published by the Office for National Statistics showed that the UK economic growth slowed as estimated in the third quarter.

Gross domestic product climbed 0.5% from prior quarter, unrevised from the prior estimate released on October 27. This was the eleventh consecutive quarter of positive growth. In the second quarter, the UK economy had expanded 0.7% quarter-on-quarter. On a yearly basis, GDP rose 2.3% in the third quarter, in line with preliminary estimate, compared with 2.4% in the second quarter.

The pound was quoted at USD1.5044 at the London close, having stood at USD1.5090 just before the GDP data release. Meanwhile, the euro was at USD1.0590.

European indices also headed south, with the CAC 40 in Paris ending down 0.3% and the DAX 30 in Frankfurtdown 0.2%.

German consumer confidence is set to ease for a fourth straight month in December, as the high influx of migrants raised fears of unemployment and thus hurt economic and income expectations in the biggest euro area economy. The forward-looking consumer confidence index dropped to 9.3 for December from 9.4 for November, while economists expected a score of 9.2.

Eurozone economic confidence remained unchanged in November as increases in sentiment among consumers and in services and construction were offset by deteriorating confidence in manufacturing and retail trade. The economic confidence index came in at 106.1, unchanged from October. The expected score was 105.9.

Oil stocks ended in the red as crude prices slid back from their best levels of the past week. At the London close, Brent oil was just below the USD45 line at USD44.96 a barrel, having touched USD46.47 on Wednesday. West Texas Intermediate was at USD42.00 a barrel, beneath the USD43.43 mark reached on Tuesday.

Royal Dutch Shell 'B' shares lost 0.7%, BP 0.8% and BG Group 0.6%. Mid-caps Tullow Oil and Ophir Energy fell 0.8% and 2.1%, respectively.

Miners gave back gains made on Thursday, with the FTSE 350 Mining Sector index ending down 3.7% at 7,905.77 points, having hit its lowest level since 2008 at 7,846.05. Anglo American fell 6.6%, Glencore 4.0%, Antofagasta 4.1% and BHP Billiton 3.2%.

At the London close, gold was hitting a five-year low at USD1,057.60. Gold miners Fresnillo and Randgold Resources ended down 4.5% and 4.3%, respectively.

The General Retailers Sector Index ended as the best performing index, up 0.7%, even though the Black Friday shopping event didn't appear to have been as successful as last year, at least at street level.

"There's been plenty of anecdotal evidence around this morning to suggest that Black Friday, in terms of store-based retail, has been something of a damp squib in the UK this year. TV crews outnumbered shoppers on London's retail destination Oxford Street, while many stores that we visited were virtually deserted," said Bryan Roberts, senior Vice-President & Knowledge Officer at Kantar Retail.

"It seems certain that Black Friday will largely be an online event this year, with shoppers opting for the convenience of home delivery or click & collect rather than braving a trip to the high street, retail park or shopping centre," Roberts added.

Some stocks benefited from broker notes. Inmarsat rose 1.3% at 1,101.86p after HSBC lifted its price target to 1,100p from 980p. Meanwhile, water utility Severn Trent was the best blue-chip performer, rising 2.1% after being upgraded to Hold from Sell by Investec.

In the FTSE 250, Zoopla Property ended up 3.1% after Exane BNP raised the property portal to Neutral from Underperform, while bookmaker Betfair Group rose 1.5% after Deutsche upgraded it to Buy from Neutral.

Pennon Group rose 5.5%. The water company said its profit and earnings both improved in the first half thanks to energy recovery facilities in its Viridor business and a better-than-expected contribution from recently-acquired Bournemouth Water.

Pennon, which owns South West Water and waste management business Viridor, along with the recently-acquired Bournemouth Water unit, said its pretax profit for the six months to the end of September was GBP106.8 million, up from GBP100.0 million a year earlier.

SVG Capital ended up 3.9% after the private equity investor said there is a need for "discipline and caution" amid a tough macro environment.

"The company's strong balance sheet positions us well to cover our liabilities, take advantage of any investment opportunities as they arise, as well to mitigate any short-term volatility," Chief Executive Lynn Fordham said in a statement.

Fordham's comments came as SVG said it has reaped the benefits of a strategy implemented in 2012, with investments made following that year showing a total return of 7.0% in the quarter and 10% over the nine months to October 31.

In the UK corporate calendar on Monday, Aberdeen Asset Management releases full-year results while IG Group Holdings, Cranswick, KCOM Group, NextEnergy Solar Fund, Acal and Accsys Technologies publish half-year results.

In the economic calendar, UK's consumer credit and mortgage approval data are due at 0930 GMT, while Germany's consumer price index is at 1300 GMT. In the US, the Chicago Purchasing Manager's Index is due at 1445 GMT and pending homes data are expected at 1500 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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