STOCKS MIXED; OIL FIRMS AND BANKS DRAG FTSE 100

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LONDON (Alliance News) – Stocks in London were mixed after the open on Monday morning, with the FTSE 100 weighed down by oil producers ahead of the Organization of the Petroleum Exporting Countries meeting later this week in Vienna.

Also among the early movers, shares in large-cap Chilean miner Antogastasta shares were in favour after the sale of a mine for USD52 million, while Aberdeen Asset Manager was the best mid-cap performer despite reporting a drop in profit in its latest financial year, with its funds suffering outflows in volatile markets.

Sportswear retailer JD Sports Fashion was higher as well, after saying it has bought outdoor clothing and equipment retailer Go Outdoors Topco.

The FTSE 100 index was down 0.8%, or 60.33 points, to 6,780.42 just after the London open. The FTSE 250 was up 0.1% at 17,603.42, and the AIM All-Share was up 0.3% at 820.54.

The BATS UK 100 index was down 0.8% at 11,467.35, the BATS 250 was down 0.4% at 15,897.50, and the BATS Small Companies was flat at 10,983.50.

In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.7%.

In Asia, the Japanese Nikkei index closed down 0.1%, the Shanghai Composite ended up 0.5% and the Hang Seng in Hong Kong closed up 0.5%.

The OPEC meeting in Vienna, scheduled for Wednesday, comes after OPEC agreed to cap production at 32.5 million barrels per day in September, at a meeting in Algiers.

Panmure Gordon analyst Colin Smith said OPEC has set itself a production target of 32.5 million to 33.0 million barrels, with markets “sceptical” of what OPEC will actually be able to deliver.

“On balance, we expect that OPEC will agree a cuts methodology and we demonstrate how, on past form, it would be reasonable to expect implementation of 600,000 barrels of cuts. That might not be quite enough to fully balance or tighten the market in 2017 but even so, we believe it would likely get a positive response in the market pushing oil at least into USD50 per barrel territory,” said Smith.

The market for Brent oil has seen some volatility recently, reaching a high near USD50 on Tuesday last week, but hitting lows around USD46 a barrel overnight Monday. After the London equities open on Monday, the North Sea benchmark was quoted at USD46.90 a barrel. At the close on Friday, Brent stood at USD47.46 a barrel.

The meeting on Wednesday comes after OPEC member Saudi Arabia said on Friday it will not attend scheduled talks with non-OPEC countries on Monday, putting some pressure on crude prices. The meeting was planned to discuss the contribution of producers outside of the oil cartel to a potential cap.

London-listed oil producers were firmly in the red on Monday morning, with Royal Dutch Shell ‘A’ shares down 1.7% and BP down 1.5%.

Banks also were acting as a drag for the blue-chip index, with Royal Bank of Scotland Group down 2.4%, while Barclays and Lloyds Banking Group were both down 1.3%.

Gold miners were tracking the precious metal price higher, with Fresnillo, Randgold Resources and Polymetal International up 2.3%, 1.5% and 2.2%, respectively. Gold was quoted at USD1,193.13 an ounce at the open, compared to USD1,180.28 an ounce at the London equities close on Friday.

Antofagasta was up 0.4%. The FTSE 100 miner said that, following the closure of the Michilla copper mine in Chile at the end of last year, it has agreed to sell the mine and related assets to Haldeman Mining Co. Antofagasta will sell Minera Michilla to the medium-sized Chilean mining company for a total of USD52 million.

JD Sports was up 3.3% after saying it bought outdoor clothing and equipment retailer Go Outdoors Topco for GBP112.3 million. Go Outdoors owns 58 stores across the UK, the majority of which are situated in out-of-town retail parks. In the year ended January 31, it made revenue of GBP202.2 million and a pretax profit of GBP4.9 million.

JD Sports will also acquire net debt of around GBP16 million as part of the acquisition. JD Sports said the acquisition will complement its interest in the outdoor market through its Blacks, Millets, Ultimate Outdoors and Tiso businesses, which in the year to the end of January had combined revenue in excess of GBP155 million, with 182 stores trading at the year end.

Aberdeen was up 2.3%. The firm booked a pretax profit of GBP221.9 million for its financial year ended September 30, down from GBP353.7 million the prior financial year. The Asia-focused asset management company’s net revenue for the financial year was GBP1.01 billion, down from GBP1.17 billion in the prior financial year.

Aberdeen declared a final dividend of 12.0 pence per share, making its total dividend 19.5p, both maintained at their levels from the prior financial year.

CYBG was 2.8% higher after the bank was raised to Buy from Neutral by Goldman Sachs.

On the flipside, shares in Halma were down 3.4%, after the safety and environmental technology company was downgraded to Sell from Hold by Liberum.

In the economic calendar, eurozone consumer confidence is at 1000 GMT, just before a speech by European Central Bank President Mario Draghi at the European Parliament in Brussels. In the US, the Dallas Fed manufacturing business index is at 1530 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2016 Alliance News Limited. All Rights Reserved.

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