17th Jan 2014 10:45
LONDON (Alliance News) - UK stock indices are struggling to hold onto higher ground Friday, in the face a some negative company reports, but the pound has received a big boost from unexpectedly strong UK retail sales.
By mid-morning Friday, the FTSE 100 is up 0.2% at 6,833.00, the FTSE 250 is flat at 16,212.80 and the AIM All-Share is up 0.1% at 884.73.
UK retail sales increased by 5.3% year-on-year in December, accelerating from the 1.8% rise in November and outpacing economists expectations of 2.6% growth. On a monthly basis sales were up by 2.6%, beating expectations of just 0.4% and growing much faster than the 0.1% seen in November.
The numbers from the Office of National Statistics show the strongest monthly growth since 2004. The figures are also much stronger than those released earlier in the month from the British Retail Consortium that reported sales growing at just 1.8% annually. The BRC numbers cover just major high street chains.
"Lower inflation and rising take-home pay, with increased levels of hours worked are combining to provide a robust backdrop for the UK consumer," says Shore Capital economic analyst Gerard Lane.
Consumers account for over 70% of UK GDP. Given this, as well as the dearth of UK data in recent sessions, the huge rise in retail sales over the December period has sent the pound flying, instantly gaining more than 0.5% against other majors to trade at new highs for the week. Against the dollar the pound now trades at USD1.6435, while against the euro the pound is quoted at EUR0.8275.
Within UK equities, William Hill is leading the blue-chip fallers, down 2.8% after joining rival Ladbrokes in warning that football results had gone badly against it in the second week of this year, taking some of the sheen off otherwise strong trading results. The bookmaker warned that it recorded a GBP13 million loss in week two of 2014 after an unusually high number of odds-on favourites won their matches.
Royal Dutch Shell shares also have fallen, currently down 2.5%. The oil major has issued a profit warning, saying its fourth quarter results are expected to be significantly lower than recent levels of profitability having been hit by a range of issues including weak industry conditions in downstream oil products, higher exploration expenses and lower upstream volumes.
Still to come in the data calendar Friday, US Housing Starts numbers at 1330 GMT and Industrial Production data at 1415 GMT, followed by the Reuters/Michigan Consumer Sentiment index at 1455 GMT.
Well ahead of the New York opening bell, US futures are relatively flat, in line with the calm European markets.
By Jon Darby; [email protected]; @jondarby100
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
WMH.LLAD.L