28th Nov 2016 12:11
LONDON (Alliance News) - Share prices were weak in London and elsewhere in Europe at midday on Monday amid investor concerns ahead of an OPEC meeting on Wednesday and the Italian referendum on Sunday.
The FTSE 100 index was down 0.7%, or 49.73 points, at 6,791.02. The FTSE 250 was down 0.7% at 17,483.99, and the AIM All-Share was down 0.1% at 819.72.
The BATS UK 100 index was down 0.7% at 11,487.34, the BATS 250 down 0.6% at 15,869.50 and the BATS Small Companies down 0.3% at 10,955.74.
In Europe, the CAC 40 in Paris was down 0.7% and the DAX 30 in Frankfurt down 0.8%.
Wall Street will have its first full day of trading following the Thanksgiving holiday last week. Futures indicate the Dow Jones Industrial Average and S&P 500 down 0.3% and the Nasdaq Composite down 0.2%. New York posted small gains in a half-day session on Friday.
The fall in oil prices late on Friday continued to take its toll on London trade on Monday. At the stock market close Friday, Brent crude traded at USD47.46 a barrel. On Monday, the slide continued with the North Sea benchmark hitting a low of USD46.26 a barrel, but rebounded to USD46.93 at midday.
Members of the Organisation of the Petroleum Exporting Countries are due to meet in Vienna on Wednesday to discuss plans to limit production to lift low oil prices. The aim of the meeting is to come to a final agreement about how to share the burden of limiting total production to between 32.5 million and 33.0 million barrels per day, a plan that OPEC had decided upon in principle in September.
"This now looks to be a forlorn hope with Iraq and Iran both unwilling to cut too deep, while Saudi Arabia would be unlikely to act alone. For a cut to work Russia, who aren't members of OPEC, would also need to cut sharply as well and they seem only willing to freeze production at current levels, which suggests that any meaningful deal may well not happen," said Michael Hewson, chief market analyst at CMC Markets.
Royal Dutch Shell 'B' shares were down 1.7% and 'A' shares were down 1.2%. BP was down 1.0%.
Banking stocks also were weak ahead of Sunday's constitutional referendum in Italy. Proposed reforms would reduce the veto powers of the upper chamber of parliament and those of regional administrations to speed up decision making. Supporters say this would make Italy more stable, while critics fear a weakening of democratic checks and balances.
Italian Prime Minister Matteo Renzi is staking his political future on the referendum, and a 'No' vote could see him depart. Renzi has proposed resolutions to restructure Italy's struggling banking system, which could fall apart without him.
"Fears are that an Italian dissent and resulting market turmoil would dissuade already gutsy investors from daring to participate in desperately needed recapitalisations within a very troubled EUR4 trillion banking system. If they don't, Brussels may be forced to step in and wind them up whatever the cost to all investors, not just shareholders," commented Mike van Dulken, head of research at Accendo Markets.
In London, Royal Bank of Scotland Group was down 2.7%, Lloyds Banking Group down 2.0%, and Barclays down 1.4%.
JD Sports Fashion was the biggest gainer in the FTSE 250, up 3.8% after the sportswear retailer said it has bought outdoor clothing and equipment retailer Go Outdoors Topco for GBP112.3 million.
Go Outdoors owns 58 stores across the UK, the majority of which are situated in out-of-town retail parks. In the year ended January 31, it made revenue of GBP202.2 million and a pretax profit of GBP4.9 million.
JD said the acquisition will complement its interest in the outdoor market through its Blacks, Millets, Ultimate Outdoors and Tiso businesses, which in the year to the end of January had combined revenue in excess of GBP155 million, with 182 stores trading at the year end.
London-focused property developer Capital & Counties Properties said its estate is on course to meet its estimated rental value target for the end of 2017, as it has seen strong levels of leasing activity in Covent Garden in 2016 to date.
The group said that, in the period from the beginning of July to Monday, leasing activity at Covent Garden had been positive. The company said that 2016 to date has set a "new record" for leasing activity at Covent Garden, with 84 leases transacted, representing GBP11.2 million of income. The stock traded up 2.5%.
A number of mid-cap stocks were suffering from broker downgrades. Man Group was the worst performer, down 4.5%, after the hedge fund manager was cut to Neutral from Outperform by Exane BNP.
Pets At Home Group was down 3.6%, after Goldman Sachs cut the pets products and services company to Neutral from Buy.
Kainos Group expressed confidence in meeting market expectations for its full year, although it said market conditions in the UK National Health Service are expected to remain challenging in the short term.
The IT and software firm flagged that, in addition to the challenging conditions expected to continue in the NHS, a potential for continued uncertainty as a result of the UK's vote to leave the European Union. However, it is confident its overall performance is on track to meet market expectations.
The stock was the worst performer in the FTSE All-Share, down 7.2%.
Still ahead in the economic calendar, European Central Bank President Mario Draghi will be speaking at the European Parliament in Brussels at 1400 GMT. In the US, the Dallas Fed manufacturing business index is at 1530 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2016 Alliance News Limited. All Rights Reserved.
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