LONDON MARKET MIDDAY: Stocks Consolidate Gains After Four-Day Rally

LONDON (Alliance News) - Stock prices in London were slightly lower Wednesday midday, consolidating gains following four consecutive trading sessions that ended higher, with aerospace and power engineer Rolls Royce leading blue-chip gainers after a broker upgrade.

The FTSE 100 was down 0.2%, or 16.10 points, at 6,835.20. The leading 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 was down 0.2% at 17,661.63 point Wednesday, and the AIM All-Share index was down 0.1% at 776.56.

Rolls-Royce Holdings shares were up 3.2%, after the stock was upgraded by Morgan Stanley to Equal Weight from Under Weight.

Prudential was up 1.4%. The life insurer 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 Pru 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.

Shares in fellow investment manager and life insurer Legal & General Group were 1.1% higher. They were recovering some ground after a 5.5% decline on Tuesday, when a cautiously upbeat outlook from L&G failed to stop the stock sinking, as investors remain concerned about the blow that UK pension funds may face from Brexit.

"Market confidence appears to be sky high," said IG analyst Joshua Mahony, "portraying a picture of calm and stability". However, the analyst noted that "there is a degree of uneasiness" personified by the sharp gains in so-called safe-havens such as gold.

Gold miners Randgold Resources and Fresnillo were up 2.0% and 1.5%, respectively, tracking the rise in the precious metal's price. Gold was quoted at USD1,353.34 an ounce, compared to USD1,340.00 an ounce at the London equities close on Tuesday. The metal was recovering some of the ground lost after the dollar strengthened significantly following an upbeat US job report released on Friday.

Conversely, Brent crude was down, dragging FTSE 100-listed oil producers with it. The North Sea benchmark was quoted at USD44.51 a barrel, compared to USD45.25 at the equities close Tuesday. Brent fell late Tuesday, after the American Petroleum Institute reported that crude oil stocks rose in the week ending August 5. API said its crude oil inventories rose by 2.1 million barrels last week, compared to a 1.3 million barrel fall in the week before

Royal Dutch Shell 'A' shares were down 1.0%, while BP was down 0.5%.

Hikma Pharmaceuticals was another decliner, down 1.2%. The Jordan-founded drug company was downgraded to Buy from Strong Buy by Charles Stanley. Meanwhile, Smith & Nephew shares were down 1.3% as the medical device maker was cut to Equal Weight from Underweight by Barclays.

In the FTSE 250, G4S was the biggest gainer, up 16%, 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.

Paysafe Group shares were up 7.6%. 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.

Television and film producer Entertainment One was up 7.4% after saying it had rejected a takeover offer from broadcaster ITV which valued Entertainment One around GBP1.03 billion. Shares in ITV were up 0.1%.

Meanwhile, Regus was down 5.1%. The office space provider was downgraded to Hold from Buy by Numis after it reported on Tuesday a slowdown in revenue growth in the second quarter of 2016 due to global macro-economic uncertainty.

In mainland Europe, the CAC 40 index in Paris was down 0.4% and the DAX 30 in Frankfurt was down 0.5%.

In Asia, the the Nikkei 225 index in Tokyo closed down 0.2%, and the Shanghai Composite ended up 0.2%. In Hong Kong, the Hang Seng index added 0.1%.

In New York, stocks were called for a positive open, with the Dow 30 index pointed up 0.1%, and the S&P 500 and the Nasdaq 100 indices both seen up 0.2%. In the US corporate calendar, fashion retailers Ralph Lauren and Michael Kors provide second-quarter updates before the Wall Street open.

Still in the economic calendar, the US JOLTS job openings are at 1500 BST, with June job openings expected to be 5.52 million, up from the 5.50 million reported in May. EIA crude oil stocks data are also in the afternoon, at 1530 BST.

By Daniel Ruiz; danielruiz@alliancenews.com and Lucy Heming; lucyheming@alliancenews.com

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