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(Alliance News) - The FTSE 100 took a breather Thursday as Brexit trade worries returned to the headlines.

"UK listed stocks are underperforming today, as traders look ahead to a double whammy of resurgent Brexit fears and an October end to the furlough scheme," IG's Senior Market Analyst Joshua Mahony said.

The FTSE 100 index closed down 94.50 points, or 1.5%, at 6,185.62 Thursday. The mid-cap FTSE 250 index lost 164.99 points, or 0.9% to finish at 17,924.59. But the AIM All-Share index advanced 0.2% to 956.80.

The Cboe UK 100 index closed down 1.5% at 617.13. The Cboe 250 ended down 0.5% at 15,352.96, but the Cboe Small Companies closed up 2.0% at 9,630.38.

Mahony continued: "With stocks coming off a strong run, today provides a breather despite an impressive jobless claims report out of the US. With initial jobless claims dropping below one-million for the first time since March, there is a feeling we are finally moving into a more normalised state of affairs despite the absence of a fresh stimulus bill. With both sides seemingly at a stalemate over the next stimulus package, it does provide a potential future boost for bulls to look ahead to. While the S&P 500 has retreated just below all-time highs, there is a feeling it is a case of when, not if, we see that breakout take place."

Stocks in New York were mixed at the London equities close on Thursday, with stimulus concerns hurting the Dow Jones Industrial Average. The DJIA was down 0.2%, the S&P 500 index was slightly higher, but the Nasdaq Composite was up 0.8%.

Washington continues to drag its heels on approving a new coronavirus virus relief package, with both sides are blaming each other for the lack of progress.

Treasury Secretary Steven Mnuchin said House Leader Nancy Pelosi would not budge unless the Democrats' demand for spending of at least USD2 trillion is met. That is well down from the USD3.5 trillion initially proposed by Democrats but Republicans say they are unwilling to shift from their USD1 trillion plan.

"Until the Republicans raise their offer, it appears that talks will remain on hold as the Senate goes on recess today for the rest of the month. All this still looks like brinkmanship to us, but the risk of a no deal is rising. At the very least, a deal now looks unlikely until mid-September," analyst at BBH Markets commented.

In mainland Europe, the CAC 40 index in Paris lost 0.6%, while the DAX 30 in Frankfurt gave back 0.5%.

The pound was quoted at USD1.3084 at London equities close Thursday, up from USD1.3044 Wednesday's close in London.

IG's Mahony said: "Brexit talks look set to resume once again next week, with the continued stalemate expected to bring further anxiety of UK traders despite an optimistic tone from negotiators. The UK chief negotiator David Frost signalled the potential for an agreement by September, although the prospect of an all-encompassing deal in such a short space of time seems optimistic at best. While the pound has been gaining ground against the dollar over recent months, there is a distinct possibility that we will see these Brexit fears dictate price action in the absence of a deal."

The euro was priced at USD1.1830, up from USD1.1794. Against the yen, the dollar was quoted at JPY106.90, soft from JPY106.94 in London.

In London, bookmaker GVC Holding added 1.8%, but reported it is withholding its interim dividend after a tough first half of 2020, with the cancellation of sporting events and the closure of high-street betting shops hurting performance.

Peers Flutter Entertainment and William Hill gained 2.8% and 2.6%, respectively.

Isle of Man-based sports-betting and gaming firm GVC swung to a pretax profit in the first half ended June 30 of GBP24.8 million from a loss of GBP12.3 million a year prior. However, on an underlying basis, pretax profit was down 75% to GBP55.4 million from GBP212.1 million.

Net gaming revenue fell 11% in the half to GBP1.61 billion from GBP1.81 billion year on year.

GVC Holdings saw strong growth before Covid-19 hit, after which lockdown restrictions knocked performance.

The subsequent migration of retail customers into online due to lockdowns saw strong net gaming revenue growth for the Online division, which was 19% ahead year on year.

The company said it decided not to pay an interim dividend given the continuing market uncertainty.

Just Eat Takeaway.com added 1.1%, after rising 3.7% rise on Wednesday following a well-received set of interim results.

At the other end of the FTSE 100, a handful of shares traded ex-dividend. Phoenix Group lost 3.7%, Legal & General 3.6%, Aviva 3.1%, GlaxoSmithKline 2.4%, while Royal Dutch Shell 'A' shares closed down 3.7% and Shell 'B' down 3.6%.

In the midcaps, Watches of Switzerland jumped 24% - topping the index - after the luxury timepiece retailer said it delivered a strong performance in its maiden year as a public company.

The company reported revenue was up 6% to GBP819.3 million for the financial year ended April 26, from GBP797.7 million in financial 2019, and adjusted pretax profit was GBP49.4 million, up 86% from GBP26.5 million.

Going into financial 2021, Watches of Switzerland said it remained positive expecting revenue in a range between GBP840 million to GBP860 million, on the basis of a continued strong luxury watch market in the UK and US.

Revenue expectations also come as the firm slowly grows sale revenue as stores re-open, up 7.4% in July versus a year ago, climbing on a 83% drop in May.

Just Group added 8.1% as the retirement products firm reported profit more than doubled in its first half, benefiting from low interest rates, despite revenue falling.

Just Group posted pretax profit of GBP304.5 million in the six months to June 30, a jump from GBP125.3 million a year earlier. Just Group noted this was helped by "investment and economic profits due to the fall in interest rates and stable underlying operating profit".

Gross premiums written fell 10% year-on-year to GBP746.2 million and net premium revenue was down by a third to GBP677.7 million.

Total revenue, which also includes net investment income, was down 11% to GBP1.81 billion from GBP2.04 billion.

The company noted its solvency coverage ratio improved to 145% from 141% at the end of December.

At the other end of the FTSE 250, National Express lost 16% as the bus and train operator swung to a bruising loss during its first-half. The company recorded pretax loss swung to GBP122.2 million in the six months to June 30 from a GBP88.4 million profit a year earlier. While revenue dropped 23% to GBP1.03 billion from GBP1.34 billion.

There was no interim dividend, as previously guided, following a 5.16p payout a year ago. There is also no annual profit guidance, due to Covid-19 uncertainty.

In commodities, Brent oil was trading at USD45.18 a barrel Thursday evening, soft from USD45.26 a barrel at the close Wednesday. Gold was quoted at USD1,947.60 an ounce, slightly lower from USD1,948.50 an ounce at the close Wednesday.

In Friday's economic calendar, there is China industrial production and retail sales due overnight. In the morning, there is a French consumer price index print at 0745 BST, followed by eurozone GDP reading at 1000 BST. Then in the afternoon, there is US retail sales at 1330 BST, with industrial production at 1415 BST and the Michigan consumer sentiment index at 1500 BST.

A quiet UK corporate calendar on Friday sees retail and leisure real estate developer NewRiver REIT issue first quarter results.

By Paul McGowan; paulmcgowan@alliancenews.com

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