LONDON MARKET MIDDAY: Banks Rise As RBS Reports Strong Annual Results

LONDON (Alliance News) - Stocks in London were higher at midday Friday amid US-China trade breakthrough hopes, with the FTSE 100 given a further boost by gains from banks following robust earnings from Royal Bank of Scotland.China and the US will meet for another round of trade negotiations in Washington, Chinese state media said, after two days of talks failed to resolve their trade disagreements ahead of a March 1 tariff deadline. The official Xinhua news agency announced the new talks after Chinese President Xi Jinping met with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer in Beijing."This faint whiff of progress was enough to cause the markets to reverse the losses that had come after the double-hit of Donald Trump's 'national emergency' chat and China's inflation-slowdown," said Spreadex analyst Connor Campbell.The FTSE 100 index was up 30.24 points, or 0.4%, at 7,227.25. The FTSE 250 was up 24.01 points, or 0.1%, at 18,922.21, and the AIM All-Share was down 0.1% at 910.57.The Cboe UK 100 was up 0.3% at 12,270.81, while the Cboe UK 250 was up 0.1% at 16,866.89 and the Cboe UK Small Companies down 0.2% at 11,206.26.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 1.0% and 0.6% respectively at midday.On the London Stock Exchange, Coca-Cola HBC was the best blue chip performer, up 4.0%, as the soft drinks bottler clawed back some of its losses on Thursday after it warned that growth in some markets will slow in 2019. The stock closed down 8.6% on Thursday.Royal Bank of Scotland was up 2.0% after the state-backed lender reported "strong progress" in 2018, posting its second consecutive year of profit and rewarding shareholders with a special dividend. It, however, warned it may not yet be out of the woods due to further expected strategic costs in 2019. The bank's attributable profit for 2018 came in at GBP1.62 billion, beating consensus of GBP1.42 billion. In 2017, when RBS reported its first profit in a decade, the figure was GBP752 million. Net interest income for 2018 was GBP8.66 billion, against GBP8.65 billion consensus and GBP8.99 billion a year prior. RBS declared a 7.5 pence per share special dividend for 2018, and will pay a final dividend of 3.5p. Combined with the bank's 2.0p interim payout, the year's total payout is 13p. The UK government holds a 62.4% stake in RBS, but shareholders recently backed company plans to buy back up to GBP1.5 billion worth of shares from the government.In addition, RBS said it remains "comfortable" with its 2020 return on tangible equity target of more than 12% but recognises its cost-income ratio target of less than 50% is "increasingly challenging". RBS blamed Brexit for the doubt. "Brexit, of course, casts a shadow over a bank like RBS, which is deeply plugged into the UK economy and therefore sensitive to any shocks which mean customers can't pay back their loans. The volatile political situation is particularly keenly felt by the RBS share price because the Labour party has proposed breaking the bank up to create a number of local public banks," said Hargreaves Lansdown analyst Laith Khalaf. Peers Lloyds and Barclays, which both report full year results next week, were up 1.1% and 0.9% respectively. Tesco was up 1.7% after the UK's largest supermarket said its adoption new financial reporting standard IFRS 16 will have no real economic effect on the business, but it will increase reported operating profit while reducing pretax profit. Tesco added that the new reporting standard on accounting for leases will not affect sales or cash flow, nor how the business is run. At the other end of the large cap index, Standard Life Aberdeen was the worst performer, down 5.8% at 234.15p, after Mitsubishi UFJ Trust & Banking Corp sold its entire stake in the blue chip asset manager.Mitsubishi UFJ sold 148.6 million shares, or 5.9% stake, at around 234p each, worth GBP349.3 million in total.In the FTSE 250, Centamin was up 5.0% after the gold miner reported a doubling of the resource at one project and a maiden resource at another, both in the Ivory Coast. The resource at the Doropo project has risen by more than double, to 2.1 million ounces indicated gold and 800,000 ounces inferred. At the other end of the midcaps, Plus500 was the worst performer, down 13% after the contract-for-difference provider said JPMorgan Asset Management Holdings reduced its stake below the minimum threshold for disclosure. Prior to the transaction, which took place on Wednesday, JPMorgan held 5.6% of Plus500. In addition, Plus500 could have misled investors over losses from client trading, the Times reported on Friday. In its 2017 annual results, the Times said, the company stated it had not suffered any losses from client trading activity. However, it actually took a USD103 million hit, the newspaper continued, with Plus500 only discovering the error on Tuesday this week, the same day it issued a profit warning for 2019. The stock is down 45% over the past week. The pound was higher, quoted at USD1.2825 at midday, compared to USD1.2777 at the London equities close Thursday, following upbeat UK retail sales data.UK retail sales rose in January and beat market expectations as shoppers took advantage of discounts following a disappointing Christmas. Retail sales increased by 1% last month following a 0.7% decline in December, according to the Office for National Statistics. This beat the consensus forecast of just 0.2% growth. On an annual basis, retail sales grew 4.2%, which was the highest rate since December 2016. In the three months to January, the quantity bought increased by 0.7%."The UK retail number was really robust - a real relief - despite the Brexit chaos. Consumers are providing full support for the economy and this is the only hope for the sterling bulls. The currency jumped on the back of this data and crossed above the critical level of USD1.28 but there are still doubts if the current move will last because Brexit clouds are still very dark and all eyes will remain on Westminster," said ThinkMarkets analyst Naeem Aslam.The euro was flat, at USD1.1274 at midday, against USD1.1275 at the European equities close Thursday, after figures from the statistical office Eurostat showed the eurozone's trade surplus came in below economists' expectations for December.The seasonally adjusted trade surplus fell to EUR15.6 billion from EUR15.8 billion in November. Economists had expected a surplus of EUR16.3 billion.Stocks in New York were set for a flat open, with soft drinks maker PepsiCo set to report earnings before the market open in New York. Major stock indices ended mixed on Thursday after a report from the Commerce Department which unexpectedly showed a substantial decrease in US retail sales in December."I always find it a little strange when traders overreact to single economic releases and think that there's likely more behind the move, even if this appears to be the catalyst. The markets have been on a very good run this year and I think it's natural that we're maybe seeing some profit taking," said Oanda senior market analyst Craig Erlam.