CIR.L Share News (CIR)

LONDON (Alliance News) - Stocks in London were mixed Wednesday midday, with the pound and the FTSE 100 consolidating several days of gains ahead of the UK referendum on European Union membership taking place on Thursday.

On the final day of political campaigning for the vote, IG analyst Joshua Mahony said "there is a tangible feeling of uncertainty and anxiety permeating through financial markets this morning".

"The difficulty is whether to believe the polls or the markets. History has shown us that despite the best efforts of pollsters to truly represent what would happen on the day, they have also got it wrong in the past," Mahony noted. "With that in mind, it is likely to be the case that the truth lies somewhere between polls and markets".

A new telephone poll by Survation, on behalf IG found the Remain camp at 45% compared to 44% for Leave, with 11% still undecided. This marked an increase of two points for Leave from the last Survation poll for the Mail on Sunday, which had Remain at 45% and Leave at 42%.

Polls of polls, which aggregate the results of multiple opinion polls, show a similarly split picture ahead of the vote. The Daily Telegraph's barometer, which is based on the average of the last six polls released, has the two level-pegging at 50% apiece, taking out undecided voters.

The FTSE 100 index was adding 0.3%, or 20.03 points, at 6,246.58. Meanwhile, the FTSE 250 was down 0.2% at 16,953.21 and the AIM All-Share was off 0.2% at 719.73.

With the blue-chip index higher Wednesday for the fourth consecutive trading session, market participants seem to believe that the Remain campaign will win the vote. Survation noted the IG EU Referendum Barometer, an indicator of what traders are predicting will happen in the referendum, shows a 75.5% chance of the UK voting to Remain, against a 24.5% chance of a vote to Leave.

The pound was holding gains made in an impressive rally on Monday, when it experienced its best session in eight years, after declining sharply last week as polls gave the Leave campaign the lead.

Having touched a high on Tuesday of USD1.4783, a level it hasn't seen since early January, sterling is quoted at USD1.4670 at midday Wednesday, compared to USD1.4661 at the London equities close on Tuesday.

"This week's pound performance marks a remarkable recovery from the lows struck last Thursday, arguably marking a major shift in the market's perception of the likely outcome of tomorrow's referendum," SpreadEx analyst Connor Campbell said.

Insurance and housebuilding stocks were among the best performers in the FTSE 100, with RSA Insurance Group up 2.3% and Taylor Wimpey up 1.8%.

However, at the other end of the index, Associated British Foods was missing the gains, down 3.3%, after Morgan Stanley downgraded the food, ingredients and retail group to Equal Weight from Overweight.

In contrast to the large-cap index, the mid-cap FTSE 250 was seeing more news-driven stock price movements. Specialty chemicals company Elementis was the worst mid-cap performer, down 6.6%, after saying its earnings for 2016 are set to miss market expectations amid difficult conditions for its chromium division.

The company, which manufactures additives used in industrial, personal care and oilfield drilling markets, said that while sales and margins in its North American chromium business are set to be broadly in line year-on-year, market conditions outside the North American market are proving challenging.

Elementis's specialty chemicals company peer Synthomer was down 4.6%, after UBS cut its recommendation on the stock to Sell from Neutral. The Swiss bank said it expects Synthomer to de-rate as the market prices in further medium- and long-term challenges.

Meanwhile, shares in Debenhams were down 4.2%. The department store chain said its annual pretax profit is set to meet its guidance, though it slightly pulled back its margin forecasts as like-for-like sales declined in the 15 weeks to June 11. Debenhams said the trading environment in the UK has been weaker since the turn of the year, particularly for clothing.

Among mid-caps in the green, Circassia Pharmaceuticals was up 7.3% at 104.10 pence, once more among the best mid-cap performers, following the 66% decline suffered on Monday.

The biopharmaceutical company's shares had pulled back 6.7% on Tuesday, rebounding from the losses seen Monday, when it had said a late stage study for its key cat allergy treatment failed to achieve its primary endpoint, as the treatment and a placebo used in the study proved equally effective. Having started trading in London in March 2014, the stock hit a record low of 87.00p on Monday.

Safestore Holdings was up 2.9% Wednesday, after saying it expects to complete the GBP44.4 million acquisition of Space Maker on July 29. The self-storage provider announced the deal in March and said the acquisition is set to be immediately earnings accretive. It added the purchase will support its future dividend-paying capacity. Like Safestore, Space Maker also provides self-storage facilities.

Meanwhile, shares in Grainger were adding 1.5% after JPMorgan upgraded the residential landlord to Overweight from Neutral.

In Europe, the CAC 40 index in Paris was up 0.2%, while the DAX 30 in Frankfurt was adding 0.5%.

In Asia, the Nikkei 225 index in Tokyo closed down 0.6%, the Shanghai Composite ended up 0.9%, while the Hang Seng in Hong Kong rose 0.6%.

In New York, stocks are called for a positive open, with the Dow 30, S&P 500 and Nasdaq 100 indices all seen up 0.1%.

Still ahead in the economic calendar, the focus will be on the US housing market with MBA mortgage applications at 1200 BST, housing price index at 1400 BST and existing home sales at 1500 BST. Federal Reserve Chair Janet Yellen will complete the second day of her testimony to Congress at 1500 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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