LONDON MARKET CLOSE: Strong UK Data Offset By Weak China Numbers

LONDON (Alliance News) - Stocks in London ended mixed Wednesday after better-than-expected UK industrial production data were offset by weak trade data from China and the news that the World Bank has cut its global economic growth forecasts.

The big-cap FTSE 100 rose 0.3%, or 16.99 points, to 6,301.52. The FTSE 250 of mid-caps fell 0.1%, or 17.53 points, to 17,177.85, and the AIM All-Share added just 0.25 points, to close at 744.64.

Strong UK industrial production data weren't enough to boost investor sentiment. Data from the Office for National Statistics showed that industrial output advanced 2% in April from March, when it grew 0.3%. Economists had forecast a marginal 0.1% increase. On a yearly basis, industrial production rebounded to 1.6% growth following a 0.2% shrinkage in March.

The pound spiked up following the data and touched an intraday high of USD1.4600. However, sterling fell afterwards, being quoted at USD1.4550 at the London equities close, compared to USD1.4570 at the same time Tuesday.

Despite the positive UK industrial data, investors moods were already dampened earlier in the day by Chinese trade data, which reignited worries about the Asian giant's economy. The General Administration of Customs said exports slid 4.1% year-over-year in May, only slightly worse than economists' expectations for a 4.0% decline but accelerating from a 1.8% fall in April. This was due to weaker overseas demand for Chinese goods.

At the same time, imports dropped 0.4% in May from a year ago, much slower than the 6.7% fall expected by economists and the 10.9% fall registered in April.

This was, however, what pushed London-listed mining stocks to lead the blue-chip gainers on Wednesday. The FTSE 350 Mining Sector index rose 2.9%, as the imports numbers "offered a beacon of hope" about China's economy, Accendo Markets Head of Research Michael van Dulken said.

Meanwhile, the World Bank trimmed its global growth outlook due to sluggish growth in advanced economies, stubbornly low commodity prices, weak global trade, and diminishing capital flows.

The global economy is forecast to grow 2.4% this year instead of the 2.9% projected in January, the official lender said in its June Global Economic Prospects report. The growth outlook for next year was trimmed to 2.8% from 3.1%. Nonetheless, the pace of expansion is expected to pick up to 3.0% by 2018.

Oil companies also ended among the biggest raisers in the FTSE 100, with Royal Dutch Shell 'A' shares up 2.6%. Analysts at Barclays said Shell has enough levers to pull to ensure it can reduce debt, sustain its dividend payments and deliver moderate growth, making the investment case for the oil major "straightforward" and its shares "materially undervalued".

Meanwhile, BP shares ended up 1.3%. Oil producers benefited from higher crude prices, as Brent oil hit a new 2016 high at USD52.49 a barrel, its highest level since early October. The North Sea Benchmark was quoted at USD52.18 a barrel at the close, higher than the USD51.10 seen late Tuesday.

This in turn hit air carriers, with easyJet and International Consolidated Airlines Group ending firmly in the red, down 2.0% and 1.8%, respectively.

"Rising commodity prices have provided a boost to the FTSE, which has outperformed its European counterparts owing to the disproportionately large number of energy and mining firms in the index," said IG analyst Joshua Mahony.

Gold stood at USD1,261.37 an ounce at the London close, higher than USD1,241.18 an ounce late Tuesday.

Outside commodities-related stocks, Coca-Cola HBC rose 2.8% to 1,449.40 pence. French bank Societe Generale lifted its price target on the company to 1,890p from 1,740p after the soft drinks bottler held a Capital Markets presentation on Monday. Shares in Coca-Cola HBC have gained 8.2% since the group said it expects an "improving external environment" to support growth in its markets over the period to 2020.

Grocer J Sainsbury said it made a solid start to its current financial year, reporting transaction growth across channels, even as it remains cautious on the outlook in a competitive grocery sector. The supermarket chain shares ended up 0.4%, though they spent most of the session drifting between gains and losses.

The FTSE 100-listed grocer said like-for-like retail sales in the 12 weeks to June 4 fell 0.8% excluding fuel and were down 1.0% including fuel. Total retail sales were up 0.3% excluding fuel and down 0.1% including fuel in the quarter.

In the FTSE 250, 3i Infrastructure ended as the best mid-cap performer, up 5.7% at 176.50p. The infrastructure investment group said it has raised a total of GBP385.0 million to fund the completion of previous investments and to fund new deals.

Workspace Group added 3.9% after the flexible office-space provider hiked its dividend by 25% as it reported rises in both its property valuation and rental income over its financial year that ended March 31. Workspace posted a final dividend of 10.19 pence per share, taking its full-year dividend to 15.05p per share, up 25% from the 12.04p per share paid for the year prior.

In Europe, the CAC 40 in Paris ended down 0.6% and the DAX 30 in Frankfurt fell 0.7%. The euro was quoted at USD1.1392 at the close, compared to USD1.1347 at the same time Tuesday.

Conversely, shares in the New York were higher at the London close, with the Dow 30 up 0.3%, the S&P 500 and the Nasdaq Composite both up 0.2%.

The Shanghai market will be closed Thursday and Friday due to the Dragon Boat Festival, and the Hong Kong market will also be closed Thursday.

In the economic calendar Thursday, China's consumer and producer price indices are at 0230 BST. Trade data from Germany are due at 0700 BST, while the UK's goods trade balance is at 0930 BST. In the US, initial and continuing jobless claims are at 1330 BST, while wholesale inventories are at 1500 BST.

In the UK corporate calendar, Auto Trader Group, Wincanton, Monks Investment Trust, Volex, Flybe Group, First Property Group, and Hardy Oil & Gas release full-year results. Bellway, Home Retail Group, PZ Cussons, Source Bioscience, and Amryt Pharma publish trading statements.

By Daniel Ruiz; danielruiz@alliancenews.com

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