Diploma Share News (DPLM)

LONDON (Alliance News) - London and other European markets closed higher Wednesday, boosted by a rebound on Wall Street, which returned to the green after several negative sessions.

Stocks shrugged off another day of market declines in Asia, where the Nikkei 225 close down 0.4%, while the Hang Seng lost 1.2% and the Shanghai Composite 0.2%. Stocks had traded much lower earlier in the day but recovered some of their losses throughout the session, ahead of a holiday weekend in China.

The Shanghai market will be closed both Thursday and Friday, while Hong Kong will close Thursday only, to mark the 70th anniversary of China's victory over Japan in World War II.

The FTSE 100 ended up 0.4% at 6,083.31 points and the FTSE 250 up 0.3% at 16,885.73, while the AIM All-Share finished flat at 730.46. Europe's major indices also ended higher, with the CAC 40 in Paris and the DAX 30 both up 0.3%.

At the London close, US stocks were higher, with the Dow Jones Industrial Average up 0.8%, the S&P 500 up 0.7% and the Nasdaq Composite up 1.0%. Wall Street rebounded from several days ending in negative territory, with indices losing about 3% on Tuesday after manufacturing data from China intensified concerns about the world's second largest economy.

IG analyst Joshua Mahony said markets were given support Wednesday by "somewhat limp" US ADP payrolls data.

Employment growth in the US private sector fell short of economists estimates in August, according to a report released by US payroll processor ADP. It said private sector employment climbed by 190,000 jobs in August following a downwardly revised increase of 177,000 jobs in July. Economists had expected employment to increase by 210,000 jobs.

Similarly, the US Commerce Department released a report showing that new orders for US manufactured goods rose by less than expected in the month of July. The report said factory orders climbed by 0.4% in July following an upwardly revised 2.2% jump in orders in June. Economists had expected orders to rise by 0.9% compared to the 1.8% increase that had been reported for the previous month.

Meanwhile, labour productivity in the US jumped by more than previously estimated in the second quarter, the US Labor Department revealed in a report. Labor productivity surged up by 3.3% in the second quarter, from the previously reported 1.3% growth. Economists had expected the pace of growth to be upwardly revised to 2.8%.

Spreadex analyst Connor Campbell said that the miss in the ADP jobs report could suggest that "maybe, just maybe," the US Federal Reserve will not be ready for an US interest rate hike in the next meeting, scheduled for September 16-17.

IG's Mahony commented "we are certainly still in a place where bad news is seen as good news owing to the impact it has upon rate hike expectations".

At the weekend, US Fed Vice Chairman Stanley Fischer had left the door open to raising US interest rates this month, surprising some analysts who had expected the Fed to delay until later in the year due to concerns about the Chinese economy.

Meanwhile, crude oil prices took a hit after data Wednesday from the US Energy Information Administration showed that crude stockpiles in the US increased sharply in the week ended August 21. The report said US crude oil inventories rose by 4.7 million barrels last week, with economists expecting an increase of just 32,000 barrels.

At the London close, Brent oil prices stood at USD47.96, having traded at USD50.67 prior to the oil stocks data, while West Texas Intermediate was at USD43.49, standing at USD46.22 before. Oil prices also declined sharply on Tuesday following the weak economic data from China, giving up some of their strong weekend gains.

On the London Stock Exchange, oil-related stocks were amongst the biggest fallers in the FTSE 100, with Glencore down 1.2%, BP down 0.9% and Royal Dutch Shell 'B' shares down 0.7%. In the FTSE 250, Tullow Oil ended down 6.1%, while Ophir Energy closed down 6.9%.

Shell and BG Group said Wednesday the European Commission has given its unconditional approval for Shell's takeover of BG. Shell agreed a GBP47.0 billion deal to acquire BG back in April, and the deal has already secured approval from Brazilian competition authorities. It still has to get approvals from Australia and China for the deal. BG shares ended up 1.0%.

Elsewhere in London, Ashtead Group and Hikma Pharmaceuticals led the FTSE 100, closing up 6.4% and 4.4%, respectively.

The industrial equipment rental company said its pretax profit and revenue both surged higher in the first quarter of its financial year and said its full-year results look set to meet its expectations. It said pretax profit rose 23% in the quarter to the end of July to GBP155.4 million from GBP117.5 million a year earlier, as its revenue rose to GBP618.6 million from GBP457.9 million, driven by a rise in its rental revenue to GBP539.6 million from GBP417.7 million.

Shares in the pharmaceutical company rose to 2,322.00 pence, after Barclays raised its its price target on the company to 2,760.00p from 2,050.00p.

The bank, which reiterated its Overweight rating on Hikma, said the deal with US-based Roxane Laboratories transforms the UK-listed drug company's long-term growth profile. Barclays said that the deal for Roxane paves the way for growth opportunities in the future while expanding the company's presence in the US.

In the FTSE 250, Halfords Group ended as the biggest faller, down 8.8%. The car parts and bicycle retailer said its cycling sales have declined so far in the second quarter and will be below expectations for the period, though trading elsewhere in the business remains robust.

It said its cycling sales in the eight weeks from July 4 to August 28 were down 11% on a like-for-like basis against tough comparatives and will now be below its expectations for the second quarter.

Halfords was followed by Diploma, which ended down 7.8% after it said its revenue growth in the first nine months was held back by the slowdown in the oil and gas industry and sluggish European industrial markets and said its underlying operating margin will take a hit.

The technical products and services company said its revenue for the nine months to the end of September is expected to rise by around 9.0%, driven primarily by acquisitions but offset slightly by translational currency effects.

On AIM, online fashion retailer ASOS lost 4.2%, after it confirmed press reports that its chief executive and co-founder, Nick Robertson, is to step down after 15 years in the role with immediate effect. Robertson will be replaced by Nick Beighton, who joined the company in April 2009 as chief financial officer and who was last October promoted to the role of chief operating officer.

In the corporate calendar Thursday, Go-Ahead Group releases full-year results, and IAG publishes its August traffic statistics, while Redde releases half-year results. Meanwhile, Safestore Holdings issues a second-quarter trading statement, McColl's Retail Group provides an interim management statement, and Alumasc publishes half-year results.

In a busy economic calendar, Markit services and composite purchasing managers' indices for France and Germany are expected at 0850 BST and 0855 BST, respectively. The same for the eurozone are due at 0900 BST, while UK Markit services PMI is expected at 0930 BST. Eurozone retail sales are due at 1000 BST. At 1245 BST, the European Central Bank issues its late monetary policy decision.

In the US, Challenger job cuts data are due at 1230 BST, while continuing and initial jobless claims are expected at 1330 BST. US Markit services and composite PMI are due at 1445 BST, while US ISM non-manufacturing PMI is expected at 1500 BST. EIA natural gas storage is due at 1530 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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