29th Aug 2014 10:00
LONDON (Alliance News) - UK stocks indices are narrowly mixed Friday morning after the day's key European economic indicator, the eurozone consumer price index, met expectations.
By mid-morning Friday, the FTSE 100 was trading up 0.1% at 6,811.92 and the AIM All-Share up 0.2% to 780.2, but the FTSE 250 has fallen by 0.2% to 15,881.22.
European stocks fell significantly on the inflation news but are still currently reporting gains, with the CAC 40 and the DAX up 0.1%.
Eurozone consumer inflation has slowed, growing only 0.3% in August, compared to from 0.4% in July. However this met economists' expectations, who anticipated that falling energy prices had dragged inflation down. The core inflation figure - which excludes food, energy, alcohol and tobacco - marginally surpassed expectations growing 0.9% year-on-year, up from the July figure and consensus of 0.8%.
?The Eurozone is slipping deeper into [European Central Bank President] Mario Draghi?s 'danger zone' and the measures introduced by the ECB in June clearly haven?t worked," said Dennis de Jong, managing director at UFX.com. ?The Bank said it was prepared to take further action when required and although it has delayed embarking on a full programme of quantitative easing, that surely has to be its last throw of the dice.?
On the London Stock Exchange, Tesco leads the FTSE 100 fallers, with its shares down 5.8%. The company said it has brought forward the start date for its new chief executive, David Lewis, and has tasked him with conducting a review of the whole group, after it slashed its interim dividend, cut its capital expenditure plans, and said it expects trading profit to be significantly lower than last year.
Tesco said trading conditions remain challenging and its ongoing investments in its customer offer - which includes big price cuts - have weighed on its expected performance. It said it was uncertain about how fast the benefits of the investments it is making would flow through in the second half of its financial year.
It said it now expects its trading profit in the current financial year that ends in February 2015 to be between GBP2.4 billion and GBP2.5 billion, and trading profit for the first half ending August 23 to be about GBP1.1 billion. That's a significant drop from the GBP3.32 billion trading profit it posted in the whole of its last financial year, and the GBP1.59 billion in trading profit it posted in the first half of that year.
It also said it expects to set an interim dividend of 1.16 pence, 75% below last year's interim dividend.
The news has caused the other listed UK grocers to decline as well. Wm Morrison is down 4.3%, Sainsbury's is down 3.1%, and Marks & Spencer Group is down 2.3%, all amongst the heaviest fallers in the FTSE 100 index.
Meanwhile, Exova is the heaviest faller on FTSE 250 after reporting a much wider pretax loss in the first half, as costs related to its initial public offering combined with weak performance in some markets. The testing and advisory services group said its pretax loss in the six months to June 30 hit GBP38.1 million, nearly four times the GBP10.3 million loss reported a year earlier. Revenue in the period was down to GBP134.7 million, against GBP138.4 million last year. The company's shares are down 12%.
By Neil Thakrar; [email protected]
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Related Shares:
TescoMarks & SpencerMRW.LSainsbury'sEXO.L