26th Nov 2015 16:53
LONDON (Alliance News) - Mining stocks were in favour Thursday helping UK equity indexes close higher, with copper prices rising after news that Chinese regulators are considering a probe into short-sellers in local metals markets.
On a day of thin trading volumes due to the US Thanksgiving Day holiday, the FTSE 100 closed up 0.9% at 6,393.13. The FTSE 250 index ended up 0.6% at 17,216.40 and the AIM All-Share closed flat at 730.02.
European stocks rallied after a report that the European Central Bank is mulling the implementation of a two-tier charge on banks parking their cash with the ECB and widening its bond buying program.
ECB officials considered various options, including the buying of bonds of towns and regions, as well as charging a two-tier penalty on banks amassing money with the ECB, according to Reuters. They even discussed the purchase of rebundled loans at risk of non-payment in preparatory meetings, although such a measure looks unlikely for the time being, it added.
The report helped support analyst expectations of a bumper stimulus package by the ECB in its next policy announcement on December 3. The CAC 40 in Paris closed up 1.1% and the DAX 30 in Frankfurt ended up 1.3%.
The euro traded the dollar at USD1.0612 at the London close, while the pound traded the greenback at USD1.5118.
In London, mining stocks outperformed with Glencore, up 4.3%, Antofagasta, up 3.8%, and Anglo American up 3.6%, all amongst the best performers. This was after a Bloomberg report stated Chinese regulators are considering a request from a metal industry group to probe short-selling in domestic metal contracts amid recent price declines.
Regulators have begun to collect some records of trading activity following a request from the China Nonferrous Metals Industry Association, according to people who asked not to be identified because they aren't authorized to speak publicly on the matter.
The news supported the price of copper and saw the FTSE 350 Mining sector index closing up 1.4%.
The notable exception to the mining sector rally was BHP Billiton, which ended as the worst-performing FTSE 100 stock, down 2.8%. The Anglo-Australian miner moved to quell an accusation that the waste which was released by the tailings dam burst at the Samarco mine in Brazil was toxic.
A probe conducted by the United Nations claimed the waste from the mine spill is toxic and said the steps taken by BHP and Vale to prevent harm were not sufficient. BHP responded that the tailings released into the Rio Doce were comprised of clay and silt material from the washing and processing of earth containing iron ore, which is naturally abundant in the local area. It added that, based on available data, the tailings are chemically stable.
Additionally Thursday, JPMorgan cut its rating on BHP shares to Underweight from Neutral and slash its price target to 750 pence from 1,300p. SocGen cut its price target for BHP to 915p from 1,050p. BHP shares closed at 829.9569p, hitting an intraday low of 825.50p, its lowest price in six years.
Elsewhere in the commodity space, at the London close gold was quoted at USD1,071.50 an ounce, while Brent oil was at USD45.25 a barrel.
Marston's transformation plan appeared to be paying off as the pub company and brewer swung to a profit in its recently-ended financial year, following a programme of pub disposals and new openings, much to the delight of analysts.
The brewer of Pedigree and Hobgoblin ale is trying to improve the quality of its estate by building new pubs and disposing of weaker performing ones, and on Thursday, it said the three-year transformation plan is now largely complete.
Marston's said it made a pretax profit of GBP31.3 million in the year ended October 3, after suffering a GBP59.2 million pretax loss the year before, as revenue rose to GBP878.6 million from GBP815.3 million. Marston's will pay a total dividend of 7.0p, up 4.5% on the prior year. The company's shares closed up 6.0%.
SSP Group was another strong performer in the FTSE 250, also ending up 6.0%. The company swung to a profit in its recently-ended financial year as it recovered from losses it made the prior year and revenue rose slightly on the back of new contract openings and higher passenger numbers.
SSP, which operates food and beverage outlets in travel locations, said it made a pretax profit of GBP76.8 million in the year ended September 30, after suffering a GBP13.5 million pretax loss the year before when it booked exceptional costs relating to restructuring and its IPO.
Paypoint closed down 6.9% after it reported a considerable drop in first-half pretax profit, as the payments company booked an GBP18.2 million goodwill impairment charge on the online payments business it is in the process of selling.
Pretax profit plunged to GBP3.2 million in the six months ended September 30, compared with GBP22.5 million in the corresponding half the prior year. PayPoint lifted its interim dividend to 14.2 pence per share from 12.4p and said the increase "anticipates double digit growth in the dividend for the year as a whole and reflects our confidence in the business and its long term prospects".
Still ahead in the economic calendar is a raft of data from Japan. There is inflation, unemployment and household spending data at 2330 GMT, before foreign investment numbers at 2350 GMT.
On Friday, the second estimate of UK third quarter GDP is expected at 0930 GMT alongside total business investment. Later in the morning there are eurozone consumer and business confidence index readings at 1000 GMT, before the EU financial stability review at 1100 GMT and German Gfk consumer confidence survey at 1200 GMT.
In the UK corporate calendar, utility infrastructure company Pennon Group reports half-year results, alongside car dealership group Caffyns and Real Estate Credit Investments. Private equity investor SVG Capital issues a trading statement, while café operator Patisserie Holdings and media group and digital publisher Future both issue full-year results.
By Neil Thakrar; [email protected]; @NeilThakrar1
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