Barclays Share News (BARC)

LONDON (Alliance News) - UK stocks ended mixed Wednesday, with investors focusing on the long-awaited European Central Bank monetary policy meeting on Thursday, but the FTSE 100 ended higher supported by a late rally in oil prices after US crude stockpiles data.

The FTSE 100 ended up 0.3%, or 20.88 points, at 6,146.32.

The FTSE 250 ended down 0.4%, or 62.42 points, at 16,591.61 and the AIM All-Share closed down 0.1%, or 0.68 points, at 699.35. In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt finished up 0.5% and 0.3%, respectively.

Stocks in New York were higher at the London close, with the DJIA up 0.4%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.3%.

London's blue-chip index reached a much higher level around midday, when it rose to 6,174.82 points, not far from 6,242.32, its highest level so far in 2016.

The index made much of those gains after the Office for National Statistics revealed that UK industrial production increased for the first time in three months in January as the expansion in manufacturing offset a sharp reduction in oil and gas extraction.

Industrial output grew 0.3% on a monthly basis, reversing December's 1.1% decline, but slightly slower than an expected 0.4% increase. Overall production growth was underpinned by a 0.7% rise in manufacturing output, following three consecutive monthly declines. Economists had forecast 0.2% growth after a 0.3% fall in December.

The pound rose against the dollar following the data, but gave back some of its gains afterwards. Sterling was quoted at USD1.4226 at the London equities close, having stood at USD1.4218 at the close Tuesday.

Though investors are already focusing on the ECB monetary policy meeting Thursday and analysts warning about some risk aversion in the market, the FTSE 100 managed to finish the session brightly green, supported by a surge in crude prices.

Oil prices rose sharply after data from the US Energy Information Administration showed that crude stockpiles in the US decreased in the week ended March 4. The report said US crude oil inventories rose by 3.8 million barrels last week, with economists expecting a decline of 3.6 million. Though it was ahead of expectations, the reading came after last week's much higher rise of 10.4 million barrels.

Brent was at USD40.95 a barrel at the London close, higher than the USD40.03 a barrel from Tuesday's close. The North Sea Benchmark reached a high of USD41.04 following the data. Meanwhile, the gold price was standing at 1,254.01 an ounce at the London close, compared to USD1,268.52 at the close Tuesday.

IG analyst Chris Beauchamp noted stock markets continue to oscillate in relatively tight ranges.

"In one sense, this is due entirely to the ECB – no one wants to get caught out with aggressive positioning ahead of a potentially decisive meeting tomorrow," said Beauchamp.

The ECB meeting will be the main focus Thursday, with the monetary policy decision scheduled to be announced at 1245 GMT, while ECB President Mario Draghi will start his press conference at 1330 GMT.

Analysts widely expect the ECB to announce a deposit rate cut, as well as an increase in the size and duration of its asset purchases programme, but they differ on the likely mixture of stimulus measures. A 10 basis points cut to the deposit rate is expected by many analysts, but others such as Berenberg and Societe Generale expect an even deeper cut of 20 basis points.

Ahead of the decision, the euro was quoted at USD1.1017 at the London equities close, slightly lower than the USD1.1042 quoted at the close Tuesday.

SocGen analyst Anatoli Annenkov said markets are "increasingly unconvinced" about the ECB's power, and believes "we are approaching the 'effective' limit of the central bank's tools". Annenkov said the are "no limits to ECB's willingness, but clear limits to its effectiveness".

In London blue-chip insurer Prudential ended up 3.4% after it surprised the market with its first special dividend since 1970, as operating profit grew in all three of its main regions in 2015.

The results marked an opportunity for Prudential to reassure the market over fears about China's economic slowdown and its effect on Asian and global growth, and the company responded by beating analyst expectations.

The company increased its full-year ordinary dividend to 38.78 pence per share from 36.93p. Prudential declared a special dividend of 10p on top of that payment, after its UK life business provided a likely one-off boost to earnings from balance sheet actions related to new Solvency II insurance rules in the EU. Net profit rose to GBP2.58 billion in 2015 from GBP2.22 billion in 2014.

Energy companies SSE and Centrica ended up 2.2% and 1.0%, respectively, after upgrades from JPMorgan. SSE was raised to Overweight from Underweight, while Centrica was lifted to Neutral from Underweight.

Burberry Group ended down 6.3%, wiping out gains it made Tuesday spurred by a mystery investor.

On Tuesday, Burberry shares ended at the top of the blue-chip index, up 5.2%, after a report in the Financial Times said the company had asked its banks to investigate the identity of the owner of a 5.0% stake disclosed by HSBC. Burberry was thought to be concerned it may become a takeover target.

However Wednesday, Bloomberg reported that the disclosure made by HSBC Holdings that it was custodian of a stake in excess of 5.0% in the luxury goods retailer was part of a series of trades rather than a single investor building a stake.

Citing people familiar with the matter, Bloomberg said the HSBC disclosure was made after it executed trades for a number of clients, briefly taking its holding above the 5.0% threshold.

Standard Chartered also finished in the red, down 2.3% after Investec cut his rating on the stock to Sell from Hold. Investec had raised concerns about the bank's revenue outlook ahead of the release of its 2015 results, and is forecasting that operating income will fall to USD13.84 billion in 2016 and to USD13.71 billion in 2017.

Shares in the emerging markets lender have risen by 23% over the past two weeks, after slumping when the bank reported its first annual loss since 1989 for 2015, hurt by a 15% drop in underlying operating income to USD15.44 billion.

Meanwhile, peer Barclays said it will not break up and sell off its African business assets, The Wall Street Journal reported, citing the company's chief executive, Maria Ramos. The report comes after Barclays, which owns about 62% of Barclays Africa Group, said last week that it plans to sell down its stake in the business. Some analysts have said that it would be easier to sell the group if it was broken down into its component parts, the report said.

Shares in Barclays ended down 2.0%.

Severn Trent dropped 0.8% after Citigroup cut the water utility company to Sell from Neutral.

Cairn Energy ended as the best performer in the mid-cap index, up 11% at 188.25 pence, its highest level so far in 2016. The oil and gas company said it has successfully completed its second appraisal well offshore Senegal, adding it is "delighted" with the test results.

At the other end of the index, Restaurant Group sunk 23% after the company took a bearish view on its outlook for 2016, as like-for-like sales look set to remain depressed and revenue growth will be driven solely by new store openings. The caution came as the group posted pretax profit, revenue and like-for-like sales growth in 2015, plus a hike to its dividend, as the new store openings proved a boon.

Panmure Gordon cut its rating on Restaurant Group to Hold from Buy. Analyst Anna Barnfather was disappointed a bounce back failed to materialise in current trading, leading her to take a more cautious stance on like-for-like sales growth going forward. Barnfather also highlighted that the group's new stores in retail park locations were suffering from lower footfall against refurbished competition.

Shares in security services provider G4S ended down 13% after it booked more provisions on troublesome legacy contracts in the UK, hit by the sharp rise in the number of asylum seekers it has to house, as pretax profit dipped in 2015 and it outlined plans to offload more businesses.

In the UK corporate calendar Thursday, Home Retail Group and Fenner issue trading statements, while Aviva, WM Morrison Supermarkets, Aldermore Group, Cineworld, Stock Spirits Group, Ferrexpo, TT Electronics, Amec Foster Wheeler, Ibstock, Robert Walters, SafeCharge International, Charles Taylor, Ophir Energy, Restore, 32Red, Pantheon International, Michael Page International, Savills release full-year results.

In the economic calendar, China's consumer price index and producer price index are due at 0130 GMT. Germany's imports and exports data are due at 0700 GMT. In the US, initial and continuing jobless claims data are due at 1230 GMT, while EIA natural gas storage change data are at 1430 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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