LONDON MARKET CLOSE: Stocks mixed amid Russia-Ukraine peace talks

(Alliance News) - Stocks in London ended mixed on Monday with oil majors weighing on the FTSE 100 as oil prices slumped as investors peace talks between Russia and Ukraine and fresh Covid-19 lockdowns in China.

In the latest developments, the Kremlin said talks between negotiators from Moscow and Kyiv have so far made no major breakthroughs on the conflict in Ukraine as the delegations prepare for a new round of talks in Istanbul.

"So far, we cannot state any significant achievements or breakthroughs," Kremlin spokesman Dmitry Peskov told reporters during his daily press briefing on Monday. "For now we cannot and will not speak of progress," Peskov added.

He said, however, that it was "important" that it had been decided to continue the talks in person. Peskov said that the delegations were arriving on Monday, but it was "unlikely" that talks will resume the same day.

Meanwhile, authorities in China announced late on Sunday that the nation would carry out a two-phased lockdown of Shanghai, which has a population of around 25 million people, to perform mass testing.

The FTSE 100 index closed down 10.21 points, or 0.1%, at 7,473.14. The mid-cap FTSE 250 index rose 113.82 points, or 0.5%, to 21,070.03. The AIM All-Share index ended up 0.50 of a point at 1,036.52.

The Cboe UK 100 ended down 0.1% at 744.49, the Cboe UK 250 closed up 0.5% at 18,595.27, and the Cboe Small Companies ended up 0.3% at 15,177.95.

In Paris the CAC 40 stock index ended up 0.5%, while the DAX 40 in Frankfurt ended 0.8%.

"There is talk that Russian forces are changing their tactics - that they are doing their best to occupy a large portion of Eastern Ukraine, and use that as a starting point for negotiations. Ukraine President Volodymyr Zelensky has talked about the prospect of his country adopting a neural position in a bid to appeal to the Russian government," said Equiti Capital analyst David Madden.

In the FTSE 100, Aviva closed up 2.0% after UBS raised the insurer to 'buy' from 'neutral'.

At the other end of the large-caps, Rolls-Royce ended the worst performer, down 10%. Shares in the jet engine maker had closed up 19% on Friday amid rumours of a possible takeover offer.

According to a blog post on financial news site Betaville on Friday, Rolls-Royce could be involved in a 'significant corporate transaction' with an unidentified suitor.

However, Jefferies highlighted Rolls-Royce is regularly mentioned as a takeover target but the UK government's 'golden share' could see any deal blocked on national security grounds.

"With the UK government holding a golden share in the group, any takeover would have to be much more than purely opportunistic. And we struggle to identify any company where there would be strong rationale for such a deal," said Jefferies analyst Chloe Lemarie.

Barclays lost 4.1% after the bank warned of a GBP450 million hit, due to the over-issuance of structured notes and exchange traded notes.

Barclays said securities issued as part of its US shelf registration statement during a period of roughly one year exceeded the registered amount. Some purchasers now have a right of rescission, which would require Barclays to buy back the instruments at the original purchase price.

Barclays expects rescission losses of GBP450 million, net of tax. The charges will be reflected in its first quarter earnings. It also means its GBP1 billion buyback will now kick off in the second quarter.

NatWest Group finished flat. Ownership of the lender crossed an important threshold, as the UK government early Monday said it has reduced its stake below 50%, more than a decade after a taxpayer bailout during the financial crisis.

The Treasury said it sold 549.9 million shares back to NatWest in an off-market transaction at 220.5 pence per share, netting GBP1.21 billion.

The lender will cancel the shares that were purchased. After this, the government's stake, held via UK Government Investments Ltd, will be 48.1%, falling from 50.6%.

At one point, the government had an 81% stake in NatWest, following a GBP45.5 billion bailout by UK taxpayers.

Oil majors BP and Shell ended down 2.8% and 2.3% respectively, tracking spot oil prices lower.

Brent oil was quoted at USD111.48 a barrel at the equities close, plunging from USD120.08 at the close Friday.

Oil prices dived Monday as Shanghai's phased Covid lockdown reignited fears over Chinese energy demand, with China being the world's largest crude consumer.

"Oil prices started this week trading lower after news of the lockdown in the financial hub of Shanghai shook markets with prospects of further economic slowdowns and supply chain issues," said XTB analyst Walid Koudmani.

Elsewhere in London, Ted Baker closed down 4.2% at 120.85 pence. The fashion retailer confirmed it received, and rejected, two unsolicited, non-binding takeover proposals from Sycamore Partners Management.

The first offer was for 130.00 pence per share on March 18, with a second coming four days later at 137.50p per share.

The company said it is "focused on delivering value for Ted Baker's shareholders well in excess of the price offered by Sycamore".

The dollar was higher across the board. The pound was quoted at USD1.3090 at the London equities close, down from USD1.3185 at the close Friday. The euro stood at USD1.0973 at the European equities close, down from USD1.0987.

Against the yen, the dollar was trading at JPY123.32, up sharply from JPY122.06 late Friday. The greenback hit a high of JPY123.56 in early trade - its highest level since 2015.

Stocks in New York were mostly higher at the London equities close as investors monitor the latest developments over the war in Ukraine.

The DJIA was down 0.4%, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.6%.

The US proposed to spend USD6.9 billion to help Ukraine fend off Russia's invasion and support NATO member countries under a budget proposal President Joe Biden's administration released Monday.

The funds would represent Washington's latest allocation of defense aid after Russia's shock invasion of its neighbour last month, and would be used to "enhance the capabilities and readiness of US forces, NATO allies, and regional partners in the face of Russian aggression," the White House said.

Gold stood at USD1,937.20 an ounce at the London equities close, lower against USD1,955.60 late Friday.

The economic events calendar on Tuesday has UK mortgage approvals at 0930 BST.

The UK corporate calendar on Tuesday has annual results from soft drinks maker AG Barr and interim results from housebuilder Bellway.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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