LONDON MARKET OPEN: Resource Stocks Lead Gainers As Oil Recovers

LONDON (Alliance News) - Shares in London were higher Friday morning, with resource stocks leading the gainers as the oil prices take back some of their Thursday losses.

The FTSE 100 was up 0.8%, or 50.59 points, at 6,187.48. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.6% and 0.5%, respectively.

"Oil prices continue to get excited by the April 17 Doha meeting despite a chance of a production freeze deal looking slim to say the least with Iran saying 'No' and Saudi Arabia saying 'Only with Iran'. Desire is there, but as in break-up speak 'it's complicated'," said Accendo Markets head of research Mike van Dulken.

Brent oil was at USD40.11 a barrel shortly after the London equities open, higher than the USD38.93 a barrel at the close on Thursday.

Investors will keep a close eye later Friday on the US Baker Hughes oil rig count, scheduled for after the London equities close at 1800 BST.

Resource stocks were among the best performers in the FTSE 100, with Anglo American up 2.7%, Glencore up 2.4%, Rio Tinto up 2.3% and BHP Billiton up 2.2%. Oil company BP was up 1.3%, while Royal Dutch Shell's 'A' shares were up 1.1%.

Also among risers was Vodafone Group, after Deutsche Bank added the telecommunications company to its Short Term Buy List, according to traders.

Banks were also brightly green, with Standard Chartered up 2.1%, Royal Bank of Scotland Group up 1.6% and Lloyds Banking Group up 1.2%.

European banking stocks were hit Thursday after the ECB minutes "appeared to leave the door open to further negative interest rates, despite fears from some members about the adverse impacts on bank profitability," said CMC Markets analyst Jasper Lawler.

In its meeting on March 10, the ECB cut the main refinancing rate, which the central bank uses to boost liquidity, by five basis points to a record low 0.0%. The already-negative deposit rate was cut by 10 basis points to -0.40%, while there was a surprise five-basis-point cut to its marginal lending facility rate to 0.25%.

In the accounts, the ECB policymakers said they decided that a limited cut was appropriate as prospect of further cut cannot be ruled out if the inflation outlook deteriorates. Governing Council members broadly supported a further cut in the deposit facility rate and stressed the importance of communication and the link to the formulation of forward guidance.

The euro was at USD1.1354 after the open Friday. The single currency hit a high of USD1.1453 on Thursday but retreated following the release of the ECB accounts, standing at USD1.1373 at the London equities close.

Information services company Experian was the worst blue-chip performer early Friday, down 1.0%, after being downgraded to Reduce from Buy by HSBC. Meanwhile, insurer Schroders was cut to Neutral from Outperform by Exane BNP, sending its shares down 0.2%.

The FTSE 250 was up 0.4% at 16,781.27, while the AIM All-Share was up 0.1% at 717.83.

Hikma Pharmaceuticals and Vectura Group said the new drug application for their fluticasone propionate and salmeterol inhalation powder has been accepted for filing by the Food & Drug Administration in the US.

The two pharmaceutical companies are working together on the inhalation powder, which is a generic version of GlaxoSmithKline's Advair Diskus, which is used to treat asthma and to maintain treatment of airflow obstruction and reducing exacerbations in patients with chronic obstructive pulmonary disease.

Shares in Hikma were up 1.0%, while Vectura Group was the best mid-cap performer, up 5.0%. In the FTSE 100, GlaxoSmithKline shares were down 0.1%.

At the other end of the FTSE 250, DFS Furniture was down 5.3% at 303.20 pence. Private equity firm Advent International said it agreed to sell a 14.1% stake in the sofa retailer for GBP90.0 million. Advent agreed to sell 30.0 million shares at 300.00 pence per share to institutional investors, leaving the private equity firm with a 24.1% stake in DFS, held through 51.4 million shares. Shares in DFS closed at 320.90p on Thursday.

UK manufacturing and industrial production data and trade balance are due at 0930 BST, while UK's NIESR gross domestic product estimate is due at 1500 BST.

"The CBI Industrial Trends survey and the manufacturing Purchasing Manager's Index output index both send the signal of some fall in manufacturing output in February," said analysts at French bank Societe Generale. "Accordingly, we predict that manufacturing production fell by 0.3% month-on-month in February after a rise by 0.7% month-on-month in January. Meanwhile, the trade deficit should stay within its narrow range, widening slightly from GBP3459 million to GBP3700 million in February".

In Asia on Friday, the Japanese Nikkei 225 index closed up 0.5%. In China, the Shanghai Composite ended down 0.8%, while the Hang Seng index in Hong Kong is down 0.2%.

By Daniel Ruiz; danielruiz@alliancenews.com

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