LONDON MARKET CLOSE: Stocks Extend Rally Despite Brent Nearing USD44

LONDON (Alliance News) - London stock indices closed higher for a fifth consecutive session, despite the oil price remaining under pressure after data showed that US crude inventories are at historically high levels for this time of the year.

The FTSE 100 ended up 0.2%, or 15.12 points, at 6,866.42. Trading remained in a narrow range Wednesday, while volumes also were soft.

The blue-chip index last Thursday broke a resistance level at 6,750.00 points around which it had been trading sideways for the second half of July. This was a long period of consolidation after the rapid gains made following the London market's post-referendum sell-off.

The FTSE 250 index of mid-caps added 0.1%, or 12.28 points, to end at 17,699.68 Wednesday, and the AIM All-Share index finished down 0.12 point, at 776.94.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt both fell 0.4%.

In New York, stocks were flat to lower at the European equities close, with the Dow 30 down 0.2%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.5%.

The pound stood at USD1.3002 at the equities close Wednesday, barely changed from USD1.3000 on Tuesday. The euro was quoted at USD1.1168 at the equities close against EUR1.1111 on Tuesday.

On the London Stock Exchange, engineer Rolls-Royce Holdings ended at the top of the FTSE 100, up 3.5%, after the stock was upgraded by Morgan Stanley to Equal Weight from Under Weight. It was its biggest one-day rise since July 28, when the company beat analysts expectations on the interim underlying profit line as it recovers from two years punctuated by five profit warnings.

Investment manager and life insurer Legal & General Group rose 2.3%. The company's shares recovered some ground after a 5.5% decline on Tuesday, when a cautiously upbeat outlook from L&G failed to prevent the stock from sinking, as investors remained concerned about the blow that UK pension funds may face from Brexit.

Fellow FTSE 100-listed life insurer Prudential ended 2.6% higher. The group said operating profit in the first half of 2016 grew year-on-year, led by a strong performance for its Asian operations, prompting a hike to its dividend and a confident outlook from the group.

The company said operating profit in the six months to the end of June grew to GBP2.06 billion from GBP1.88 billion a year before, up 9.0% in actual rates and 6.0% in constant currencies as it benefited from a weaker pound in the half. Prudential declared an interim dividend of 12.93 pence per share, up 5.0% year-on-year.

Hikma Pharmaceuticals ended down 1.8% after the Jordan-founded drug company was downgraded to Buy from Strong Buy by Charles Stanley. Meanwhile, Smith & Nephew shares fell 0.7% as the medical devices maker was cut to Equal Weight from Underweight by Barclays.

Amid a lack of macro-economic data and UK corporate news, investors decided to focus on so-called safe-havens such as gold, with the precious metal recovering some of the ground lost after the dollar strengthened significantly following an upbeat US job report released on Friday.

Gold was quoted at USD1,347.56 an ounce at the London equities close, compared to USD1,340.00 an ounce at the same time Tuesday. The metal touched an intraday high of USD1.356,90 an ounce on Wednesday, recovering from the low of USD1,329.70 touched on Monday, still hit by the US employment data.

FTSE 100 gold miners Randgold Resources and Fresnillo added 1.5% and 1.3%, respectively.

Brent crude failed to cling back onto the USD45 line, following a decline suffered late Tuesday after the American Petroleum Institute reported that crude oil stocks rose more than expected. On Wednesday afternoon, the Energy Information Administration released a report also showing an increase in crude oil inventories in the week ended August 5.

The EIA said crude oil inventories climbed by 1.1 million barrels and are at historically high levels for this time of year.
At the same time, the report said gasoline inventories and distillate fuel inventories fell by 2.8 million barrels and 2.0 million barrels last week, respectively.

The North Sea benchmark was standing at USD44.14 a barrel at the equities close, against USD45.25 on Tuesday.

In the FTSE 250, G4S ended at the top of the mid-cap index, up 15%, after the security company said pretax profit and revenue grew in the first half of 2016, though it experienced a largely flat period year-on-year in terms of contract wins.

Pretax profit for the half-year to June 30 was GBP115.0 million, up from GBP80.0 million a year prior. Revenue increased to GBP3.53 billion from GBP3.42 billion year-on-year, and G4S said the bottom line benefited from an improvement in margins as it continued to boost productivity in the business. The group declared a flat interim dividend of 3.59p.

FTSE 250 television and film producer Entertainment One rose 9.0% after saying it had rejected a takeover offer from FTSE 100-listed broadcaster ITV which valued Entertainment One around GBP1.03 billion. Entertainment One said the proposal "fundamentally undervalues" the business, but ITV said its offer was at a "significant premium" to Entertainment One's share price prior to its boost from takeover speculation. Shares in ITV rose 0.6%.

Paysafe Group shares added 6.6%. The payments processing company said pretax profit and revenue rocketed higher in the first half of 2016 following its creation from the merger of Optimal Payments and Skrill in the second half of 2015, but underlying growth also proved strong and Paysafe upgraded its full-year revenue guidance.

Meanwhile, Regus ended down 5.4% after the office space provider was downgraded to Hold from Buy by Numis, as it reported on Tuesday a slowdown in revenue growth in the second quarter of 2016 due to global macro-economic uncertainty.

There is a busy UK corporate calendar Thursday, with TUI AG publishing a trading statement and Glencore reporting second-quarter production results. Also among the highlights are half-year results from Old Mutual and Coca Cola HBC.

However, the economic calendar is again thin, with US initial and continuing jobless claims at 1330 BST, and the UK Leading economic index at 1430 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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