LONDON (Alliance News) - UK stock lack direction Monday, with no data drivers ahead and the US markets closed for Martin Luther King Day. Banks continue to underperform, while precious metal miners have been boosted by a firmer gold price. With a quiet afternoon expected, investors are looking ahead to releases later in the week.
In early-afternoon trading, the FTSE 100 is flat at 6,828.30, the FTSE 250 is up 0.2% at 16,220.60 and the AIM All-Share is down 0.1% at 883.14.
US banks remain under pressure following Deutsche Bank's release of its fourth-quarter results that showed a surprise loss. The Frankfurt-based bank posted a pretax loss of EUR1.15 billion in the final three months of 2013 after it was forced to set aside EUR528 million for legal costs - bringing the total bill for the year to EUR2.5 billion.
Deutsche Bank's may reflect a weak performance in its fixed income, currencies and commodities business, said Shore Capital, which expects FICC income to represent 20% and 15% of Barclays and RBS's total 2013 income, respectively. RBS continues to lead the fallers on the FTSE 100, down 2.0%, while Barclays is the second biggest faller, down 1.3%. Bank of Georgia is also one of the heaviest fallers in the FTSE 250, down 3.0%.
Gold miners are providing a boost at the other end of the FTSE 100 movers. Randgold Resources and Fresnillo lead the blue chip gainers, up 4.6% and 4.9% respectively, boosted by a firmer gold price.
"The outlook for reduced support from the Federal Reserve combined with mixed US data has helped to underpin the greenback and undermine US equities, prompting some investors to move into European stocks and also precious metals," says Forex.com commodities analyst Fawad Razaqzada.
Gold trades at USD1,256.80 per ounce, continuing its break away from below USD1,200 per ounce that the yellow metal struggled at in late 2013, having dropped 28% over the year.
"The yellow precious metal has also been boosted on expectations that these cheaper prices may result into higher demand from China ahead of their New Year holidays which begin on 31 January," says Razaqzada.
With no data in the calendar and the US on holiday, a quiet afternoon in the markets is expected, with investors awaiting further drivers later in the week.
The economic focus for the UK this week is Wednesday, when markets get an UK unemployment update, along with the minutes from the Bank of England's most recent Monetary Policy Committee meeting.
Ahead of that, amid weekly dearth of US data, the economic focus on Tuesday will be the German ZEW Economic Sentiment survey.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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Bank Of Georgia Group (BGEO)
Barclays (BARC)