MARKET COMMENT: M&S Leads Gainers In A Flat FTSE 100

LONDON (Alliance News) - London's main stock indices are mixed mid-morning Thursday ahead of the long Easter weekend, but Marks and Spencer Group is the best-performing stock in the FTSE 100 after its UK general merchandise business returned to growth after three years.

The FTSE 100 is flat at 6,812.78, while the FTSE 250 is up 0.6% at 17,224.75 and the AIM All-Share index is down 0.2% at 714.18.

Marks & Spencer is up 5.7% at 559.64, its highest level since January 2008, after the retailer reported UK sales growth that beat analysts' expectations, driven by strong online growth and the first rise in general merchandise sales for three years, although its international sales fell due to the crisis in Russia and Ukraine and issues in its Turkish franchise business.

The retailer reported 1.6% growth in group sales for the 13 weeks to March 28, as a 2.7% rise in UK sales offset a 3.8% decline in international sales. In the UK, food sales grew 3.7%, or 0.7% on a like-for-like sales basis, with record Valentine's Day sales. General merchandise sales, meanwhile, grew 1.3% and 0.7% on a like-for-like basis, the first growth in three years. Online sales grew 13.8%.

BTG is the best performer in the mid-cap index, up 5.4%. The healthcare company said it expects its revenue in the financial year that ended on Tuesday to be above the guidance range it had previously provided of GBP345 million to GBP360 million, including revenue from the PneumRx acquisition that was completed in early January. It also expects revenue to grow strongly in the year that has just begun to between GBP410 million and GBP440 million on a constant currency basis.

The FTSE 350 mining sector index is down 1.2% after the iron ore price came under more pressure. In the FTSE 100, BHP Billiton is down 2.2%, Glencore is down 1.7%, while Antofagasta and Anglo American are down 1.6%. In the FTSE 250, Vendanta Resources is down 1.7% and Kaz Minerals is down 0.7%.

"Earlier this week, we wrote that many watchers of the space were expecting iron ore to fall as low as USD45 a tonne. The price certainly continues to trend in that direction: yesterday, the key USD50 a tonne psychological mark was breached, with the iron ore price falling to USD49.53 a tonne. The situation was helped by speculation in the press that up to 40% of steel capacity has been marked for closure," says Shore Capital analyst Yuen Low.

UK construction sector growth slowed more-than-expected in March due to a slower increase in output and new orders, while confidence rose to the highest level for just over nine years, survey data from Markit Economics showed Thursday. The Chartered Institute of Procurement & Supply/Markit construction Purchasing Managers' Index fell to 57.8 in March from 60.1 in the previous month. It was forecast to drop to 59.8. However, any reading above 50 indicates expansion in the sector

The pound retreated against the dollar following the data release, and trades at USD1.4802.

European indices are also mixed, with the CAC 40 in Paris flat and the DAX 30 in Frankfurt down 0.1%.

Greece submitted a new set of economic reforms to European authorities on Wednesday, marking the most comprehensive effort yet taken by the country's newly-elected left-wing government to unlock the EUR7.2 billion in bailout fund it will need to prevent it from going bankrupt, the Financial Times reports.

The 26-page document, seen by the FT, will rely on plans to crack down on tax evasion and fraud in order to raise as much as EUR6 billion this year. The measures include raising EUR875 million from audits of offshore bank transfers and EUR600 million from a new lottery scheme aimed at compelling Greek consumers to demand value-added tax receipts.

"The latest Greek reforms proposal looks like it will be deemed insufficient in more bad news for the debt-ridden country; the further we enter April without a resolution, the sweatier the Greek brows will be getting as the Athenian coffers gradually are replaced with tumbleweed," says Spreadex analyst Connor Campbell.

Oil prices rose overnight after four workers were killed and about 10 were injured in a blast and resulting fire on a Mexican oil rig in the Gulf of Mexico, the state-controlled firm Petroleos Mexicanos (Pemex) said. The injured in the accident, which prompted the evacuation of about 300 workers, were taken to hospitals in Ciudad del Carmen on the Mexican mainland.

Pemex Chief Executive Emilio Lozoya travelled to the area in the Gulf of Mexico to supervise efforts to put out the fire. Navy personnel were assisting Pemex staff in the effort. Pemex said that eight firefighting boats were on hand to fight the fire on the Abkatun rig in the Campeche Sound in south-eastern Mexico.

Oil prices have pared some of the overnight gains, but Brent crude is still trading higher on the day at around USD57.07 a barrel, while US benchmark West Texas Intermediate is trading at USD49.95 a barrel.

In the US, Initial jobless claims data is due to be released at 1330 BST, with economists expecting a slight increase of 285,000, but this will be a pre-cursor to the US employment report due out on Good Friday.

"Tomorrow's US Non-Farm Payrolls are likely to initiate movement in futures trading into the weekend with the US and UK markets on holiday," says Accendo Markets analyst Augustin Eden.

US futures point to a lower opening, with the DJIA set to open down 0.3%, the S&P 500 down 0.4% and the Nasdaq 100 down 0.5%.

By Daniel Ruiz; danielruiz@alliancenews.com

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