LONDON MARKET OPEN: Stocks steady as banking worries ease

(Alliance News) - Stock prices in London opened mixed on Tuesday, amid reduced concern about the stability of the banking sector, as the Bank of England governor is set to testify to Parliament about the collapse of Silicon Valley Bank.

The FTSE 100 index opened 31.0 points, 0.4%, higher at 7,502.77. The FTSE 250 was down 9.63 points, 0.1%, at 18,519.99, and the AIM All-Share was down 0.96 of a point, 0.1%, at 797.52.

The Cboe UK 100 was up 0.3% at 750.04, the Cboe UK 250 was down 0.1% at 16,116.69, and the Cboe Small Companies was slightly higher at 13,296.82.

In European equities on Tuesday, the CAC 40 index in Paris was up 0.7%, while the DAX 40 in Frankfurt was up 0.6%.

"A relief ripple is helping stocks make some gains amid hopes that the volatility, which has wracked the banking sector, has eased off," said Hargreaves Lansdown's Susannah Streeter.

The dollar was weaker, as the pound recovered the USD1.23 level.

Sterling was quoted at USD1.2327 early Tuesday, up from USD1.2268 at the London equities close on Monday. The euro traded at USD1.0829, higher than USD1.0782. Against the yen, the dollar was quoted at JPY131.20 down versus JPY131.50.

"The pound could well be in focus today with Bank of England Governor Andrew Bailey set to brief MPs later this morning on the Silicon Valley Bank situation with respect to its UK operations," said CMC Markets' Michael Hewson.

Bailey will address the UK's Treasury Committee at 0945 BST, having spoken at the London School of Economics on Monday evening.

"Governor Andrew Bailey stressed in his speech in London last night that interest rates may have to move higher if there were signs of persistent inflationary pressure," noted HL's Streeter.

According to the latest British Retail Consortium-NielsenIQ tracker, UK shop price inflation accelerated to 8.9% in March from 8.4% in February. It takes the inflation rate to a new high, the BRC said.

Non-food price inflation quickened to 5.9% in March from 5.3% last month. Food price inflation picked up to 15% in March from 14.5% in February. Fresh food price inflation accelerated to 17% from 16.3%.

They were the highest-ever rates of price inflation for food and fresh food in the UK, the BRC said.

In the FTSE 100, Ocado was up 2.5%.

Ocado gave an update on its first quarter. In the 13 weeks to February 26, the online grocer and warehouse technology firm said retail revenue was up 3.4% year-on-year to GBP583.7 million, as average selling prices rose 8.3% to GBP2.75.

Average customer numbers grew 14% to 951,000, while average basket values edged up 0.2% to GBP124, but average basket sizes fell 7.5% to 45.

Ocado left guidance unchanged from the end of February, expecting mid-single digit growth in revenue, and "marginally" positive earnings before interest, tax, depreciation and amortisation.

"Any number of pressures are being brought to bear amid a tightening trading environment. Ocado does not immediately register as a discount name and, in the current environment where a cost of living crisis is seeing many search solely for value, there has been an impact," said interactive investor's Richard Hunter.

Gold was quoted at USD1,952.23 an ounce early Tuesday, down a touch from USD1,956.69 on Monday.

Brent oil was trading at USD78.21 a barrel, higher than USD75.91.

BP added 1.6%, as it announced plans to form a joint venture with Abu Dhabi National Oil Co to focus on gas development in areas of mutual interest, including the east Mediterranean.

As part of this, the two firms have offered to take NewMed Energy private.

Alcohol beverage maker Diageo slipped 0.6% as it said that, after 10 years in post, CEO Ivan Menezes has decided to retire from June 30.

The firm's chief operating officer, Debra Crew, will become its new CEO from July 1. Crew is the former CEO of Reynolds American, after holding other senior roles at the cigarette maker. She spent five years at snacks and soft drinks maker PepsiCo, where she served in positions including president of North America Nutrition.

United Utilities fell 1.7% as it warned annual revenue will be around 1% lower than previous guidance, due to lower consumption.

In the FTSE 250, Synthomer plunged 14%.

The chemicals firm said it swung to an annual pretax loss of GBP47.6 million, compared to a profit of GBP283.9 million a year before. Revenue from continuing operations rose 11% to GBP2.38 billion from GBP2.14 billion.

Synthomer said it was continuing to see "subdued levels of demand across most of [its] end markets and geographies", but expected things to improve in the second half.

The firm had suspended dividend payments back in October.

Elsewhere, 888 Holdings fell 1.8%.

This follows news that three gambling businesses owned by William Hill will pay a total of GBP19.2 million fine for "widespread and alarming" social responsibility and anti-money laundering failures.

The Gambling Commission said the settlement was the largest in its history.

An 888 spokesperson stressed the settlement related to a period when the businesses were under previous ownership and management.

"After William Hill was acquired, the company quickly addressed the identified issues with the implementation of a rigorous action plan," they said.

On AIM, Unbound Group shares surged 90% to 7.60 pence.

The footwear retailer said it was in discussions with clothing company WoolOvers Group about a potential takeover offer at 10.5p per share.

Unbound said it would be minded to accept an offer on such terms, which represents a hefty premium to Monday's closing price of 4p.

In the US on Monday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.6% and the S&P 500 up 0.2%. Banking stocks rallied but tech stocks struggled, with the Nasdaq Composite down 0.5%.

In Asia on Tuesday, the Nikkei 225 index closed up 0.2%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong was up 1.1%. The S&P/ASX 200 in Sydney closed up 1.0%.

In Tuesday's economic calendar, there is a US consumer confidence survey at 1500 BST, after a house price index reading at 1400 BST.

By Elizabeth Winter, Alliance News senior markets reporter

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