LONDON MARKET OPEN: London Stocks Rises, Brexit Uncertainty Hits Pound

LONDON (Alliance News) - Stocks in London on Friday opened broadly higher on Friday, as growing Brexit uncertainty reversed gains experienced by sterling on Thursday following April retail sales.

The FTSE 100 index was up 0.4%, or 28.20 points, at 7,744.33 early Friday. The mid-cap FTSE 250 index was up 0.4%, or 89.61 points at 21,079.19. The AIM All-Share index was broadly flat, down 0.56 points at 1,056.51.

The Cboe UK 100 was up 0.1% at 13,139.33, the Cboe UK 250 was up 0.3% at 19,300.84, and the Cboe UK Small Companies was down 0.4% at 12,072.00.

"FTSE support derives from sterling weakness, reversing yesterday’s retail sales inspired jump, after Brexit talks broke down in acrimony in Brussels. UK ultimatums on unrestricted access to the Galileo satellite project were criticised as 'fantasy', the UK wanting membership benefits without corresponding responsibilities. BoE Governor Carney also warned last night that a disorderly Brexit might require another interest rate cut to support the economy," said Michael van Dulken, head of research at Accendo Markets.

Carney suggested a "disorderly" Brexit transition period may force the Bank of England to cut interest rates or pump money into the economy to stabilise it. The UK central bank's current projections are based on a smooth transition when Britain leaves the European Union, he said in a speech on Thursday, before warning that "a sharper Brexit could put monetary policy on a different path".

Addressing the Society of Professional Economists, he said that if that happened the bank's Monetary Policy Committee would face "a trade-off between the speed with which it returns inflation to target and the support policy provides to jobs and activity". He added: "On this path, the MPC can be expected to set policy to manage any trade-off using the framework it applied following the referendum."

Sterling was quoted at USD1.3343 early Friday, lower than USD1.3381 at the London equities close on Thursday, ahead of UK first quarter GDP figures at 0930 BST.

In a light company news day, broker ratings dominated market movers. At the top of the FTSE 100 early Friday was United Utilities up 3.2%, as CFRA raised its target price for the water firm to 800 pence from 700p, while retaining its Hold rating.

The second best performer in the blue-chip index was Old Mutual, up 0.9% as the insurer prepares for shareholders to vote on the managed separation of the group and acquire UK court approval for the scheme.

Back in October 2016, Old Mutual said it intended to separate its four constituent business, allowing its wealth management and emerging markets businesses to be spun off into individual listed companies, listed on both the London and Johannesburg stock exchanges. Old Mutual Wealth will be separated through a demerger, and Old Mutual Emerging Markets will be transferred to a new holding company based in South Africa.

Old Mutual Ltd, Old Mutual's sub-Saharan African insurance, savings, and asset management business is expected to list on the Johannesburg and London Stock Exchange on June 26 as well as have secondary listings in Malawi, Namibia and Zimbabwe.

Also in the green in the FTSE 100 was Intertek, up 1.1%. This was following Goldman Sachs raising its price target for the quality assurance and safety testing firm to 5,510 pence from 5,350 pence, with a Neutral rating.

The price target boost came after Intertek reported on Thursday over 4% growth in constant-currency revenue for the first four months of 2018, driven by organic growth and the benefits from acquisitions.

Prudential, up 0.8%, as Deutsche Bank raised its price target for the insurer to 2,275 pence from 2,250p, keeping its Buy rating.

At the bottom of the large caps was Royal Mail, down 3.7%. This was after Berenberg cut the mail company to Sell from Hold.

In the FTSE 250, waste and water services provider Pennon Group sat at the top with a 5.9% rise. This was as its annual profit jumped on a slight increase in revenue as it continued to up its dividend due to its "strong performance".

The water company posted, for the financial year ended March, pretax profit rise of 25% to GBP262.9 million from GBP210.5 million. The company's revenue increased 3.7% to GBP1.40 billion from GBP1.35 billion.

Pennon say the increase was driven by its South West Water business posting higher revenue on net tariff increases and customer demand. Its waste management business, Viridor, increased its energy recovery facility earnings growth.

Cranswick was up 3.1% as Berenberg raised its price target to 3,625 pence from 3525p, while keeping its Buy rating.

GVC was 2.4% higher after its total net gaming revenue for the year to date increased 7% despite the impact of UK regulation changes and bad weather as it looks forward to new opportunities in the US.

In the US, the Supreme Court judgement striking down a federal law banning the practice of legalised sports gambling, "presents the potential for a significant expansion in the regulated sports betting market". GVC said it is evaluating a number of potential opportunities to expand its presence in the US as a result.

Languishing at the bottom of the index was Centamin, down 15% as the miner reported that total underground production from the Sukari Gold Mine in Egypt was 10% below forecasts, leading to a revised production guidance from Sukari to 505,000 and 515,000 ounces from 580,000 reiterated earlier in May.

The euro was quoted at USD1.1691 early Friday, lower from USD1.1728 at the European equities close Thursday.

In mainland Europe, the CAC 40 in Paris was up 0.2% while the DAX 30 in Frankfurt was up 0.5% early Friday.

In Asia on Friday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong is down 0.5%.

In the economic events calendar on Friday, UK preliminary first quarter gross domestic product figures are due at 0930 BST and in the US the advance report on durable goods and University of Michigan consumer survey are due at 1330 BST and 1400 BST.