LONDON MARKET CLOSE: Stocks End Mixed; RBS Slides As Shell Rallies

LONDON (Alliance News) - London's main stock indices closed mixed Thursday having traded in a narrow range, with the focus again on heavy corporate news flow including a new loss from Royal Bank of Scotland Group that meant it closed amongst the worst performing stocks in the FTSE 100.

The FTSE 100 closed up 0.2% at 6,960.63, the FTSE 250 closed slightly lower at 17,474.63, while the AIM All-Share index edged up 0.1% to 753.27.

In Europe, the CAC 40 in Paris closed up 0.1% and the DAX 30 in Frankfurt ended up 0.2%. Both markets are closed on Friday due to the Labour Day holiday.

When the European markets closed, the DJIA was down 0.2%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.6%.

RBS said it swung to a first-quarter net loss, as revenue fell and operating expenses rose due to GBP856 million in litigation and conduct costs and GBP453 million in restructuring costs. The bank said it made a GBP446 million net loss in the three months ended March 31, compared with a net profit of GBP1.20 billion in the corresponding quarter of the prior year.

Its litigation and conduct costs included GBP334 million in connection with foreign exchange investigation and litigation, adding to the GBP320 million provision already in place at the beginning of 2015, GBP257 million for customer redress relating to investment advice and packaged accounts, and GBP100 million for compensating customers who were mis-sold insurance. In addition, a provision for litigation related to the issuance of mortgage-backed securities in the US before the financial crisis increased by GBP176 million to GBP2.05 billion.

RBS said it is in talks with authorities over failings in its foreign exchange businesses within its corporate and institutional bank, including "advanced settlement discussions" over the criminal investigation being conducted by the US Department of Justice and with other regulators.

RBS shares ended down 3.2%.

Royal Dutch Shell confirmed that its pretax profit fell sharply in the first quarter of 2015 after its exploration and production division was hit hard by the drop in oil prices and this was only partially offset by an improved performance from the division that sells fuels and lubricants.

The oil major, which is in the process of acquiring BG Group, also said it has further cut its capital investment budget and reduced costs as part of its ongoing cost control programme.

Still, the company's results beat analysts' expectations. Shell's closely-watched current cost of supply earnings excluding divestment gains, tax credits and other items more than halved to USD3.2 billion from USD7.3 billion, but was still above consensus expectations of USD2.4 billion, according to Liberum.

Shell 'B' shares were amongst the best FTSE 100 performers up 1.2%, while Shell 'A' shares closed up 0.4%.

PostNL said that it is exploring alternative scenarios for its Whistl UK business, after Lloyds Banking Group's private equity arm LDC told the Dutch postal operator it wouldn't be proceeding talks about a possible investment in Whistl to fund a further rollout of its end-to-end activities.

The news saw Royal Mail Group ending as the best FTSE 100 performer, up 5.3%, as the expansion of Whistl's services would have further challenged its position as the biggest mail operator in the UK. Whistl currently collects and sorts post, but then relies on Royal Mail to do the final delivery. Its expansion plan involves setting up its own final delivery operation after a successful trial in London.

ITV, down 4.2%, and Centrica, down 5.0%, were the two worst performers in the blue-chip index after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payouts.

In the FTSE 250, shares in Zoopla Property Group surged 17%. The property portal diversified into the online price comparison market, saying it will buy Ulysses Enterprises Ltd, the operator of the uSwitch energy, telecoms and financial products comparison site for up to GBP190 million. It will pay GBP160 million initially on a cash-free, debt free basis, and then a performance-based earn-out of up to GBP30 million.

Ophir Energy was the worst FTSE 250 performer, closing down 12%, after Kulczyk Investments SA sold its entire 8% holding in the oil and gas explorer at a discount. Kulczyk sold 56.6 million shares in the company for 140 pence per share, raising a total of 79.3 million. Ophir shares ended at 142.1371p.

RPS Group fell 11% after it said it has struck a deal to acquire Norway's Metier Holding AS but said its energy business has had a slower-than-expected start to the year as tough conditions in the oil market dragged on its performance. The energy and environmental consultancy said it will pay NOK267 million, or around USD22.3 million, in cash to acquire Metier, an Oslo-based project management and training services provider.

Liberum cuts its earnings forecasts for RPS for this year and next, saying that although the acquisition will be earnings enhancing, that will be more than offset by the hit to the energy division.

Marine engineering services company James Fisher & Sons also ended down 11% after it warned its Oil Offshore arm has taken a hit from the weak conditions in the oil and gas market, with the company expecting a weaker first half due to one-off contract wins that it secured in Brazil a year earlier.

The dollar regained some of the drop that followed Wednesday's weaker-than-expected US GDP after an upbeat weekly jobs report Thursday. The Labor Department said first-time claims for US unemployment benefits fell to the lowest level in fifteen years in the week ended April 25th. Initial jobless claims dropped to 262,000, a decrease of 34,000 from the previous week's revised level of 296,000. Economists had expected jobless claims to edge down to 288,000 from the 295,000 originally reported for the previous week.

At the close of European equity markets, the pound traded at USD1.5364. The euro, however, recovered its losses against the dollar, and was trading at USD1.1196.

In the economic calendar Friday, there is Japanese unemployment and CPI data at 0030 BST and Nomura Purchasing Managers' index at 0230 BST. Chinese non manufacturing PMI is at 0200 BST. After the London open, UK mortgage approvals, consumer credit and Markit manufacturing Purchasing Managers' Index data is due at 0930 BST. US Markit manufacturing PMI is at 1445 BST, before ISM manufacturing PMI and Reuters/Michigan Consumer Sentiment Index, both at 1500 BST.

In a lighter corporate calendar, there are first quarter interim management statements from Lloyds Banking Group, Colt Group, and Rentokil Initial. Capital & Counties Properties issues a trading statement.

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

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