LONDON (Alliance News) - UK stocks are trading higher Wednesday, recovering some of the ground lost on Tuesday, but are being held back slightly by weaker-that-expected UK industrial and manufacturing production data.
At mid-morning, the FTSE 100 trades up 0.2% at 6,718.44, the FTSE 250 is slightly higher at 16,926.00, and the AIM All-Share is up 0.1% at 712.28.
European stocks are considerably outperforming London, with the CAC 40 in Paris up 1.8% and the DAX 30 in Frankfurt up 1.7% at 11,698.20, resuming its run of record highs.
UK industrial and manufacturing output declined unexpectedly in January, data from the Office for National Statistics revealed. Industrial output slid 0.1% month-on-month, following a 0.2% drop in December. Economists had forecast a 0.2% rise for January. On a yearly basis, industrial output increased 1.3% in January.
Similarly, UK manufacturing output declined 0.5%, confounding expectations for a 0.2% rise. In December, output had increased 0.1%.
"The volatile monthly changes should not be over-interpreted, but with German manufacturing flat and French manufacturing down only marginally in January, we cannot exclude that sterling?s current strength against the euro may hurt the export-dependent sector," says Christian Schulz, senior economist at Berenberg.
The pound declined against the dollar immediately after the data but managed to recover shortly thereafter, maintaining its relative resistance to the dollar's strength against other major currencies. Sterling currently trades at USD1.5058.
The euro continued to trade lower against other major currencies after European Central Bank President Mario Draghi declared the launch of the ECB's quantitative easing programme on Monday as a success.
In a speech at the Center of Financial Studies in Frankfurt, Draghi noted that the asset purchases, including sovereign debt, are unconventional, but they are not unorthodox or new. The stimulus undertaken by the ECB has been effective, Draghi said, adding that it could stabilize inflation.
The euro declined to a fresh 12-year low against the dollar of USD1.0579, while sterling rose to a seven-year high against the euro at EUR1.4228.
Domino Printing Sciences leads the FTSE 250 gainers, up 31%. The inket and laser printer maker said its has reached a deal to be acquired by Japanese electronics company Brother Industries Ltd for GBP1.03 billion. The offer is at 915 pence in cash per Domino share, which it said its a premium of around 26.9% to its closing price of 721.0 pence Tuesday. The stock currently trades at 947.50 pence.
Domino's Pizza Group, up 6.5%, is the second biggest gainer in the index, after being upgraded by Barclays to Overweight from Equal Weight. The bank believes the pizza delivery company can build on its competitive edge over its peers.
BWIN.Party Digital Entertainment is another top gainer in the FTSE 250, up 1.9%, despite saying it swung to a loss in 2014, hit by a writedown on its poker operations as that business suffered a 29% decline in revenue due to the loss of its Greek market and challenging conditions in several other markets.
The online gaming company reported a pretax loss of EUR97.9 million for 2014 compared with a EUR44.9 million profit in 2013, as revenue dropped to EUR611.9 million from EUR652.4 million. It booked a EUR104.4 million non-cash impairment charge, mainly for the poker operations writedown.
The company's shares have seen some weakness recently, falling 31% year-to-date.
Cairn Energy is the biggest faller in the FTSE 250, down 20%. The company said late Tuesday that it is disputing a draft assessment order from the Indian Income Tax Department calling for it to pay USD1.6 billion plus interest and any penalties for the fiscal year 2006-7 in an effort to "protect its legal position and shareholder interests".
N Brown is the second biggest midcap decliner, down 13%. The online, catalogue and stores retailer warned that pretax profit from continuing operations will be below its guidance and current market expectations of GBP88 million in the recently-ended financial year, after it further reduced prices in the fiscal fourth quarter to clear stock and compete in the fashion sector.
Hikma Pharmaceuticals is another big faller, down 4.5%. The drugmaker posted a rise in pretax profit for 2014, as strong growth in its injectibles business helped offset declines in its branded and generics businesses, and it forecast revenue growth of 6% at constant currency for 2015.
However, Augustin Eden, research analyst at Accendo Markets, says the company is likely to be trading down because of a "storming US dollar which the company says could dent 2015 revenues by around 3%".
Still ahead in the economic calendar is US MBA mortgage applications for the week ending March 6 at 1100 GMT, and the National Institute of Economic and Social Research's estimate for UK GDP growth at 1500 GMT.
Futures indicate US shares for a higher opening with the DJIA and the Nasdaq 100 both pointed up 0.3%, and the S&P 500 up 0.4%.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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Dominos (DOM)
Hikma Pharmaceuticals (HIK)
Capricorn Energy PLC (CNE)
Brown Group (BWNG)