MARKET COMMENT: FTSE 100 Posts Biggest Weekly Loss For Six Weeks

LONDON (Alliance News) - The FTSE 100 closed lower Friday, ensuring that it posted its biggest weekly loss for six weeks, but individual stocks were again in focus as the broader index traded a tight range ahead of the long weekend.

"The Federal Reserve, quantitative easing, and low rates are stopping stocks going too far down, but slower economic growth in China, the US, and Europe are stopping them going too far up," said Jasper Lawler, a market analyst at CMC Markets.

After a broadly positive run since early April, the FTSE 100 posted its biggest weekly decline for six weeks, closing down 0.6% for the week, and ending down 0.1% on the day at 6,815.75 on Friday.

Conversely, the FTSE 250 closed up 0.2% at 15,706.03 Friday, ending the week 2% higher, and ensuring that it outperformed the blue-chip index every day this week. The AIM All-Share index closed up 0.6% at 801.45, and up 0.6% for the week.

In Europe, the CAC 40 in Paris closed up 0.3, and up 0.8% for the week, while the DAX 30 in Frankfurt closed up 0.5%, and up 1.4% for the week.

On Wall Street, at the UK equity market close, the DJIA and S&P 500 are up around 0.3%, and the Nasdaq Composite is up 0.4%.

Tullow Oil was one of the heaviest fallers in the FTSE 100 Friday, closing down 1.2%. The oil and gas exploration company said a well it was drilling in a potential oil field in Ethiopia had hit water bearing reservoirs. The company said it would now move the rig to drill a new exploration well in a completely separate sub-basin at the South Omo block in Ethiopia. It will drill the Gardim-1 wildcat exploration well in the south-eastern corner of the Chew Bahir basin.

Barclays ended the day up 1.3%, despite getting a GBP26.0 million fine from UK regulators for failings surrounding the London Gold Fixing. One of its former traders was also banned for trying to influence the price-setting process just one day after the bank was fined for its role in the London interbank offer rate rigging scandal.

FTSE 100-listed Anglo American and FTSE 250-listed Lonmin closed up 2.3% and 5.4%, respectively, after South African platinum miner Impala Platinum Holdings, Lonmin, and Anglo American Platinum, a subsidiary of Anglo American, said that talks with the Association of Mineworkers and Construction Union are continuing over major strikes which have crippled the platinum sector in the country.

The parties said that the three-day talks, which began on Wednesday, are continuing under the auspices of the South African Labour Court, which is trying to mediate a resolution to the wage strike which has now continued for four months. They said that all of the parties involved have embraced the new talks and they share a common goal to help resolve the dispute.

Go-Ahead Group ended the day as the biggest FTSE 250 riser, closing up 9%. The bus and rail operator jumped after the UK government awarded a giant new rail franchise covering a swathe of southeast England to the Govia joint venture majority owned by Go-Ahead.

The new franchise combines the current Southern franchise, which runs routes between London and the south coast, with the Great Northern Franchise to the north of London, connecting them with the Thameslink franchise that runs north to south across London. The Thameslink route is currently going through a GBP6.5 billion upgrade.

The Department for Transport said the new seven-year deal for the combined franchise, the largest awarded in terms of passenger numbers since the UK railway was privatised in the 1990s, will start in September.

Govia, which is 65% owned by Go-Ahead, and 35% by Keolis, which itself is a joint venture majority owned by French state rail operator SNCF, said it expects to make revenue of about GBP350 million from the franchise between September of this year and June 2015.

The franchise win is "great" for Go-Ahead, said Joe Spooner, an analyst at Jefferies. The deal offers strong earnings per share accretion potential and opens up new dividend opportunities, the analyst says.

However, the franchise outcome is a "disappointment" for FirstGroup, Spooner says. The deal means FirstGroup has lost the First Capital Connect franchise - which comprises the Thameslink and Great Northern sections of the new franchise - it has operated since 2006. Furthermore, Spooner believes that approximately 4.00 pence "of hope" may have been priced into FirstGroup's shares for a franchise win, which should now be unwound.

Stagecoach Group also failed in its bid to win the deal.

Despite plummeting 6% in early trading, FirstGroup managed to recover its losses and then some as the session progressed, eventually closing up 1.3%. Stagecoach closed flat.

BTG was another big mid-cap riser, closing up 6.4%, after it said that the US Food and Drug Administration had cleared the use of its EkoSonic endovascular system for the treatment of pulmonary embolism.

In the AIM All-Share index, Rose Petroleum's shares more than doubled Friday, after the natural resources company said it had received positive economic analysis and reserve reports for its Mancos and Paradox oil and gas projects in Utah in the US.

In the forex market, the dollar edged higher. At the close of the UK equity market, the pound trades at USD1.6841, while the euro trades at EUR1.3633.

There are no UK or US macroeconomic data or company reports scheduled for Monday owing to the Spring Bank Holiday in the UK and Memorial Day holiday in the US.

However, there is data from Germany, where the forward-looking Gfk consumer confidence survey for June is released at 0700 BST.

On Tuesday, French and Italian consumer confidence data are released at 0745 BST and 0800 BST, respectively. The British Bankers' Association releases its mortgage approvals reading for April at 0930 BST.

In the US, durable goods data are published at 1330 BST, with the Redbook index due at 1355 BST. The US housing price index is released at 1400 BST, at the same time as S&P/Case-Shiller home price indices information. Later on, the preliminary reading of the US Markit services purchasing managers' index is released at 1445 BST. The latest reading of US consumer confidence is scheduled for 1500 BST, at the same time as the Federal Reserve Bank of Richmond's manufacturing index.

It is a quiet day in the corporate calendar Tuesday. FTSE 250-listed Aveva Group provides full-year results.

By James Kemp; jameskemp@alliancenews.com; @jamespkemp

Copyright 2014 Alliance News Limited. All Rights Reserved.