LONDON MARKET OPEN: Oil Stocks Shine As Brent Tops USD33 A Barrel

LONDON (Alliance News) - Shares prices in London were slightly higher shortly after the open, shrugging off the declines seen in News York and Asian stocks, with oil companies benefiting from a rally in crude prices that started late Wednesday.

The FTSE 100 index was up 0.3% at 6,009.78 points, the FTSE 250 up 0.3% at 16,330.62 and the AIM All-Share up 0.2% at 687.43. In Europe, however, the CAC 40 in Paris was down 0.3%, while the DAX 30 in Frankfurt was down 0.4%.

North Sea benchmark Brent crude reached a peak of USD33.47 a barrel on Wednesday, standing at USD33.14 a barrel Thursday after the London equities open. Meanwhile, US benchmark West Texas Intermediate was quoted at USD32.28 a barrel, slightly below its Wednesday high of USD32.81 a barrel.

Royal Dutch Shell 'B' shares were up 1.9%, BG Group was up 1.2% and BP up 0.9%. Mid-caps Tullow Oil and John Wood Group were up 4.1% and 2.7%, respectively.

Anglo American was the best blue-chip performer, up 1.8%, despite the miner said production fell across most of its commodities during 2015, including its iron ore division in South Africa. The group said iron ore production from South Africa fell 7% year-on-year in 2015 to 44.9 million tonnes whilst the Minas Rio mine in Brazil produced a total of 9.2 million tonnes in the year after only producing a small amount in 2014.

Metallurgical coal production in the year rose 1% to 21.2 million tonnes whilst thermal coal production dropped 2% year-on-year to 33.8 million tonnes. Copper production decreased 5% in 2015 to 708,800 tonnes, whilst nickel production was down 19% to 30,300 tonnes.

Diamond production was also down for the year at only 28.7 million carats, falling 12% from 32.6 million carats in 2014. Platinum was the only commodity to experience a material rise in production for the year, increasing 25% to 2.4 million ounces.

SSE was up 0.8%. The power utility said adjusted earnings per share for its full financial year are expected to fall as it lost customers during 2015, but it said its dividend remains safe and will continue to at least grow in line with retail price inflation.

SSE said its adjusted earnings per share for the financial year ending on March 31 will come in "at least" at 115.0 pence, which would be down from the 124.1p reported in the previous financial year.

At the other end of the blue-chip index, Centrica was down 2.6% after Societe General downgraded the energy company to Sell from Hold. Meanwhile, shares in fellow blue-chip Aberdeen Asset Management also were among the worst performers, down 1.0% after cuts to its price target by JPMorgan, Exane BNP and SocGen.

In the FTSE 250, residential landlord Grainger was up 1.5% as it outlined plans to restructure the business to focus on the private rented sector and regulated tenancies, with non-core operations to be sold off.

The company said it will sell its Retirement Solutions equity release business and the rest of its business in Germany, a move which will cut its annual overheads by around 10%. This also will simplify the structure of the business, Grainger said, adding it will provide more details on these plans when it publishes its interim results in May.

The group will exit non-core development assets and will prioritise direct investments rather than fee generation.

Shares in Jimmy Choo were up 2.1% after the luxury goods retailer said its revenue grew in the fourth quarter of 2015 as it performed well despite the challenging environment for the sector.

The group said its net revenue grew 6.0% in the quarter to the end of December, up 7.0% in constant currencies, driven by a good performance by its shoes, which represent around three-quarters of its total revenue. Jimmy Choo said it made good progress on its men's shoes range in the quarter and said accessories volumes remained stable, with sales biased towards smaller bags.

Asian stocks were largely lower Thursday, with the Japanese Nikkei 225 index ending down 0.7% and the Shanghai Composite down 2.9%. The Hang Seng index in Hong Kong traded down for most of the session but recovered near the close, ending up 0.8%.

UK investors were digesting the US Federal Reserve decision on Wednesday to make no changes to it monetary policy, saying that it continues to closely watch global economic developments.

The Fed held its target range at 0.25% to 0.50% after hiking rates last month from the near-zero range that had been in place for seven years. The unanimous decision was warranted "given the economic outlook", the US Federal Open Market Committee said in its statement released after the London equities market close.

The US central bank said it is "closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation, and for the balance of risks to the outlook."

The Fed argued that its "monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2% inflation".

"Inflation is expected to remain low in the near term, in part because of the further declines in energy prices, but to rise to 2% over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further," said the Fed.

CMC Markets chief market analyst Michael Hewson said there was "no surprise" in the Fed's decision. However, Hewson noted "some contrasting reactions" to the statement that accompanied the decision.

"While crude oil continued to push higher as the US dollar weakened somewhat the accompanying stock market reaction was one of disappointment and a sharp move lower as equity markets decoupled from the oil price," Hewson said.

In New York, the Dow 30 closed down 1.4%, the S&P 500 down 1.1% and the Nasdaq Composite down 2.2%. US investors digested a poor revenue outlook from iPhone maker Apple, which released its fourth-quarter update on Tuesday after the US market close, while social network Facebook reported late Wednesday a 44% jump in revenue, above analysts estimates.

"The FOMC acknowledged the threat posed to the outlook for US labour markets and inflation from global and financial developments, but nevertheless left the door ajar for a March rate hike," said Societe Generale analyst Kit Juckes.

"This would have been a dovish policy statement if market pricing of the outlook for rates hadn't already moved significantly since the December FOMC meeting, but as it is, it will lead to heightened uncertainty about the March meeting and equity markets have judged it hawkish enough to sell-off sharply," Juckes added.

Headlining the economic calendar Thursday, there is the first reading of UK fourth quarter GDP at 0930 GMT. Eurozone economic climate survey results are at 1000 GMT. German inflation numbers are at 1300 GMT, before US initial and continuing jobless claims and durable goods orders, both at 1330 GMT, and US pending home sales at 1500 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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