LONDON MARKET MIDDAY: Miners And Banks Weigh On Mixed Markets

LONDON (Alliance News) - Stocks in London were mixed on Monday midday, with the FTSE 100 index of large caps seeing its gains limited by miners and banks, while the market awaits a speech by US Federal Reserve Chair Janet Yellen after the London close.

The FTSE 100 was up 0.1%, or 5.46 points, at 7,017.10. The FTSE 250 was down 0.1% at 17,772.86, while the AIM All-Share was slightly higher at 825.56.

The BATS UK 100 was up 0.3% at 11,856.94, the BATS 250 was up 0.2% at 16,168.02 and the BATS Small Companies was up 0.2% at 10,515.20.

The FTSE 350 mining sector index was down 0.8%, while the FTSE 350 banks sector index was down 1.3%, the two worst performing sectors at midday.

Miners were being hit by a fall in metals prices. Although the prices of other commodities such as gold and oil were firm compared to their level at the close on Friday, prices of zinc and copper were seeing declines of 2.5% and 1.5% respectively from Friday.

Gold was quoted at USD1,137.40 an ounce against USD1,139.21 an ounce on Friday, while Brent oil was at USD55.36 a barrel compared to USD55.11 a barrel.

Banks were giving back the strong gains made after the Fed on Wednesday lifted US interest rates for the second time since the financial crisis. The hike was expected, but the Fed also hinted at more rate hikes in 2017 than previously indicated. Higher interest rates removes low-rate pressure on income for banks and allows lenders to improve their finances and lending margins.

At 1830 GMT, Yellen makes a speech on the state of the US jobs market at the University of Baltimore. It will be Yellen's first appearance since her press conference following the rate increase.

Before Yellen's speech, the US economic calendar brings flash Markit services and composite purchasing managers' index readings at 1445 GMT.

New York stocks were called for a higher open, with the Dow Industrials, the S&P 500 index and the Nasdaq Composite all pointed up 0.2%.

In Europe, the CAC 40 in Paris was down 0.2% and the DAX 30 in Frankfurt was flat.

Germany's business sentiment improved in December, survey data from Ifo Institute for Economic Research showed. The business sentiment index rose to 111.0 in December from 110.4 in November. The score was expected to rise to 110.9.

The current conditions indicator climbed to 116.6 in December. Economists had forecast the reading to rise to 116.2 from November's 115.9. At the same time, the expectations index improved marginally to 105.6, in line with expectations, from 105.5 a month ago.

Eurozone construction output increased in October after a decline in September, figures from Eurostat showed. Construction output rose 0.8% month-on-month in October, reversing a 0.8% drop in September. On an annual basis, construction output rose 2.2% in October, following a 1.9% gain in September.

On the London Stock Exchange, Capita was up 1.5%, among the best performers in the FTSE 100. The outsourcer said the BBC has agreed to extend the partnership covering television licence collections for a further two years until June 2022. The current contract between the two has been running for eight years and was due to expire in June 2020.

Capita Chief Executive Andy Parker said the company now collects GBP3.70 billion in licence fees on behalf of the BBC, and said efficiencies had been delivered over the contract that have reduced collection costs to below 3.0 pence in every pound.

Meanwhile, BP was up 0.8%. The oil major unveiled two deals in Africa and the Middle East to replenish its reserves. On Saturday, BP said it has acquired a 10% stake in the ADCO onshore oil concession in the United Arab Emirates after signing an agreement with the Supreme Petroleum Council of the Emirate of Abu Dhabi and the Abu Dhabi National Oil Co.

Separately on Monday, BP said it has signed a deal with Kosmos Energy to partner on what it called world-class discoveries in Mauritania and Senegal and to cooperate on future exploration. BP said it has signed a deal with Kosmos Energy to take a 62% working interest in the company's exploration blocks in Mauritania and a 32.49% stake in exploration blocks in Senegal.

On the downside, Carnival was down 1.6%, after the cruise operator was downgraded to Hold from Buy by Berenberg.

In the FTSE 250, Drax Group was up 7.4%, the best mid-cap performer. Societe Generale raised the power generation company to Buy from Hold after Drax indicated an approval of state aid for its biomass contract for difference. The UK government has committed to paying Drax GBP100 per megawatt unit generated from the new biomass unit, and the European Commission gave the green light to the state aid after scrutinising the contract on offer for the past two years.

On December 6, Drax said it had conditionally agreed to buy business energy provider Opus Energy but said the deal was reliant on the approval from the European Commission. SocGen said an approval by the European Commission could potentially lift Drax's share price by over 100 pence, while also providing wider benefits.

In the Main Market, Canadian Overseas Petroleum was down 75% after the oil and gas company said a well drilled in an exploration block which it partially owns discovered no oil.

By Daniel Ruiz; danielruiz@alliancenews.com

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