17th Apr 2015 15:58
LONDON (Alliance News) - London's main equity indices ended lower Friday amid a broader equities sell-off across Europe and the US, after China allowed fund managers to lend shares for short-selling in a move meant to increase the supply of shares in the market amid a recent sharp rally in Chinese stocks.
The London market had flat-lined for most of the morning session after Bloomberg suffered technical issues that caused an outage on its terminals for about two-and-a-half hours, a problem that prompted the British government to delay a GBP3 billion debt issue that was meant to take place in the morning until the afternoon.
However, markets then quickly slid as the Securities Association of China said it would allow fund managers to lend shares for short-selling, and will also expand the number of stocks investors can short sell, in a bid to raise the supply of securities in the market. However, the regulator will also clamp down on over-the-counter margin trading.
The Shanghai stock market had closed Friday?s session up another 2.2%, leaving the benchmark at its highest level since March 2008. However, the regulator's move sent Hang Seng China stock futures down after the equities market had shut.
The FTSE 100 ended lower for a second consecutive session, down 0.9% at 6,994.63, meaning it fell 1.3% for the week as a whole. The index closed with only eight stocks in positive territory, and closed below the 7,000 mark for the first time since April 9.
Meanwhile, the FTSE 250 closed down 0.9% at 17,572.43, also lower for a second consecutive session, while the AIM All-Share managed to close higher for a ninth consecutive session, up 0.1% at 749.68.
European stocks also dropped sharply Friday, with the CAC 40 in Paris down 1.6% and the DAX 30 in Frankfurt down 2.6%.
"This is in part due to growing concerns over the future of Greece, where bond yields have jumped ahead of another key finance ministers? meeting next Friday. If the Greek government fails to come to an agreement with the [International Monetary Fund] then that could put the country in a technical default, which would undoubtedly rattle the markets," said Forex.com analyst Fawad Razaqzada.
The IMF ruled out allowing the cash-strapped country to delay scheduled debt repayments, while the European Commission voiced dissatisfaction over talks with Athens to solve Greek financial woes. IMF chief Christine Lagarde said that a delay in Greek payments would constitute "additional financing" to Athens, while German Finance Minister Wolfgang Schaeuble also refused further concessions to Greece.
Greek Prime Minister Alexis Tsipras reportedly said he was "firmly optimistic" that there will be an agreement with creditors by the end of April. As per the Eurogroup accord on February 20, Greece must reach an outline funding agreement with its lenders at the Eurogroup meeting on April 24.
Wall Street was also lower when the European stock markets closed, with the DJIA down 1.4%, the S&P 500 down 1.1% and the Nasdaq Composite down 1.5%.
The pound got a temporary boost against major currency pairs after the UK unemployment rate fell to the lowest level since 2008. The ILO jobless rate came in at 5.6% in the three months to February, down from 5.8% in September to November, data from the Office for National Statistics showed, meeting economists' expectations.The ONS also said that the employment rate rose to 73.4% in the period, marking the highest figure on record. The rate was 72.4% at the same time last year.
However, average earnings of employees increased 1.7% including bonuses, missing expectations of a 1.8% increase. Excluding bonuses, earnings rose 1.8% in three months to February, surpassing expectations of a rise of 1.7%, and higher than the 1.6% rise seen in the three months to January.
The pound rose to its highest level against the dollar in four weeks, touching a high of USD1.5053, but sterling erased some of the gains against the greenback following US inflation and consumer sentiment data, and was trading at USD1.4937 when the London equity markets closed.
The US Labor Department said the consumer price index edged up by 0.2% in March, matching the increase seen in February. Economists had expected the index to rise by 0.3%. Core consumer prices, which exclude food and energy prices and are more closely watched by the Federal Reserve, rose by 0.2% for the third consecutive month, in line with economists' expectations. The annual rate of core price growth ticked up to 1.8% in March from 1.7% in February.
Meanwhile, consumer sentiment in the US improved by more than expected in April, according to the University of Michigan. The report showed that the preliminary reading of the consumer sentiment index for April came in at 95.9 compared with the final March reading of 93.0. Economists had expected the index to edge up to 94.0.
Amongst individual stocks in London, Rolls-Royce Holdings had been amongst the best performers in the FTSE 100 for much of the day, although it fell towards the end of the session and closed down 0.2%. The jet engine and power turbine company confirmed it has won its largest ever order, worth USD9.2 billion, to provide engines and support services to Emirates for 50 Airbus A380 aircraft, a deal that breaks the stranglehold that a rival engine maker had on providing engines for the airline's fleet of superjumbo aircraft.
Broker ratings changes drove the movers in the FTSE 250. Qinetiq Group was the best performer, up 3.8% after Barclays raised it to Overweight from Equal Weight. Meanwhile, Hunting, up 2.2% at 614.00p, was raised to Conviction Buy from Buy by Goldman Sachs, which also lifted its price target to 709.00 pence from 622.00p.
Debenhams was up 3.3% at 87.65p, having hit a 16-month high at 89.00p, as Citigroup raised it to Buy from Neutral, following the company's better-than-expected interim results on Thursday.
Rotork ended down 4.1% after Barclays cut it to Equal Weight from Overweight.
Meanwhile, Poundland Group, down 1.3%, said it is still considering whether or not to go ahead with its GBP55 million deal to acquire its rival 99p Stores, after competition authorities referred the move for a so-called Phase II review earlier this month.
Evraz was the worst performer in the mid-cap index, down 6.7%, ahead of the release of its first quarter production results due on Monday at 0700 BST.
Also in the corporate calendar Monday, HSS Hire Group and North Midland Construction publish full-year results.
In the economic calendar Monday, the German producer price index is due at 0700 BST.
By Daniel Ruiz; [email protected]
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
HuntingDebenhamsEvrazQinetiqRotorkRolls-RoyceHss HireNorth Midland ConstructionPLND.L