12th Aug 2014 16:18
LONDON (Alliance News) - UK stock indices ended mixed Tuesday, failing to find any real direction after Monday's strong rally, while appetite for equities across Europe was held back by disappointing economic sentiment surveys.
The FTSE 100 closed fractionally lower at 6,632.42, the FTSE 250 fractionally higher at 15,465.81, and the AIM All-share ended up 0.3% at 755.77.
"The FTSE's optimism from Monday has been dented today by a combination of global macro issues and troubling German economic data," said IG market analyst Alistair McCaig.
Major European markets performed worse that the London markets following disappointing ZEW surveys, with the French CAC 40 closing down 0.9%, and the German DAX closing down 1.2%.
The German ZEW economic sentiment survey has been on a constant decline sine the end of last year when the reading peaked at 62.0. The pace of decline accelerated in August, with the survey returning a reading of just 8.6, down from 27.1 in July and missing economists' expectations for a print of 18.2.
German investor confidence has been dented in recent weeks, and the German stock market is almost 10% lower than its peak above 10,000 about six weeks ago. The ongoing tension between Ukraine and Russia, and the resultant sanctions on the Russian economy, have been weighing particularly heavily on Germany, which has strong strong trade links with Russia.
The eurozone ZEW survey of economic sentiment also slipped further than expected in August, to 23.7, from 48.1 in July and compared with a forecast of 41.3.
The crashing eurozone confidence remains a concern for UK investors, given that the eurozone is the UK's largest trading partner.
Russia on Tuesday dispatched almost 300 lorries to deliver aid to civilians trapped in the conflict zone in eastern Ukraine, but the government in Kiev said that it would not let Russian vehicles enter its territory amid speculation about their load.
At the close of the European markets, US equity indices were also lower. The DJIA was down 0.3%, the Nasdaq 0.4% lower, and S&P 500 was down 0.3%.
In individual stock news, Just Eat closed up almost 10%, the biggest increase in the FTSE 250. In its maiden interim results after its April flotation, the online takeaway food company reported a 58% jump in revenue to GBPGBP69.8 million, from GBP44.1 million in the first-half of 2013, sending its pretax profit up to GBP8.6 million, from GBP3.1 million. The results were well received by investors with the stock rising to 240.0p, but the shares are still below the IPO price of 260p.
Prudential closed up 2.2% after the company raised its interim dividend by 15% to 11.19 pence per share, although Prudential did join the list of companies citing the strength of the pound as weighing on translated earnings abroad. Prudential made a GBP1.52 billion operating profit in the six months ended June 30, compared with GBP1.42 billion last year. It reported an 18% increase in operating profit in the US, or 28% at constant rates, a 10% increase in the UK, helped by higher levels of bulk annuity transactions, and a 2% rise in Asia, or 19% at constant exchange rates.
BAE Systems gained 1.0% as the UK government confirmed that it has won a GBP348 million contract to build offshore patrol vessels for the Royal Navy at the company's shipyards in Glasgow. The vessels will be built at BAE's Clyde shipyards in Scotland, safeguarding around 800 jobs according to the Ministry of Defence.
Al Noor Hospitals Group gained 3.4% after it posted an 84% rise in pretax profit to USD45.6 million in the first half of 2014, from USD24.8 million a year earlier, buoyed in part by a 25% rise in revenue to USD224.8 million, from USD179.5 million. The big jump in profit was driven by higher outpatient volumes and a rise in revenue-generating doctors, leading the company to pay a 3.7 pence per share interim dividend.
Hargreaves Lansdown was the worst FTSE 100 performer, falling 2.9% after UBS initiated coverage on the stock with a Sell rating and a price target more than 20% below Monday's close, saying that the market "significantly overestimates" the potential for new business at the retail stock broker.
Hargreaves Lansdown was a key beneficiary of the UK Retail Distribution Review, which brought in new regulation that made financial advice more expensive to come by for some, encouraging more "do-it-yourself" investing, in which Hargreaves is a market leader. However UBS says the market is over-estimating how much new business the company will win, given that it is now 18-months since the new regulation came into effect. The company is also facing stiff competition from new entrants to the market offering lower prices, the bank said.
FTSE 250-listed Ophir Energy lost 3.8% after being downgraded to Hold and suffering a 34% price cut to 230p by Societe Generale. Ophir shares have been on a downward trend since the failure of its drilling programme in Gabon, West Africa in March, and Soc Gen says the group now lacks exposure to high-impact frontier exploration.
A much busier day in the economic calendar lies ahead on Wednesday. Japanese GDP and the minutes from the latest Bank of Japan policy meeting are due for release just before middnight UK time, followed by a raft of Chinese data including industrial production and retail sales. Also ahead of the European open, German inflation data is due at 0700 BST.
The UK economy will come sharply back into focus after the markets have opened, with the latest unemployment numbers and all-important average earnings data due at 0930 BST. Bank of England Governor Mark Carney will then deliver a speech and the central bank's quarterly inflation report at 1030 BST.
Interim results are scheduled Wednesday from G4S, Admiral Group, Michael Page International, EnQuest, and Brit Group. Glencore will issue an interim management statement.
By Jon Darby; [email protected]; @jondarby100
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