EU Negotiator Barnier Warns Of Brexit "Deadlock"

LONDON (Alliance News) - The FTSE 100 was edging toward Wednesday's two-month at midday Thursday following the conclusion of the UK's fifth round of Brexit negotiations, with the pound falling on a lack of progress and "deadlock" in some areas, having benefitted from a weaker dollar earlier in the day.

The pound was quoted at USD1.3183 Thursday midday, falling from an intraday high of USD1.3265 ahead of the conclusion of the fifth round of Brexit negotiations and hitting an intraday low of USD1.3168 during the press conference.

Sterling was quoted at USD1.3200 at the London equities close on Wednesday.

"The pound reacted poorly to what [Michel] Barnier had to say, the European chief negotiator for Brexit stating that the two sides had reached a 'very disturbing' ‘deadlock' over the issue of the UK's payments to the EU. These comments overshadowed Barnier's claim that 'decisive progress is within our grasp over the next two months', as well as the news that an agreement had been reached over Ireland," said Spreadex analyst Connor Campbell.

The FTSE 100 index was up 0.2%, 15.69 points higher at 7,549.50 midday Thursday. The FTSE 250 index was up 0.1% at 20,191.28, and the AIM All-Share index was up 0.5% at 1,028.83.

The BATS UK 100 index was up 0.2% at 12,829.02. The BATS 250 was also up 0.2% at 18,415.85, while the BATS Small Companies 0.2% higher at 12,473.55.

UK Brexit Secretary David Davis and the EU's chief negotiator Michel Barnier held their end of talks press conference on Thursday amid little sign of concrete progress.

At the conference, Barnier said disagreements remain on the rights for EU citizens in the UK after the country leaves the bloc in 2019. The EU's negotiator also said talks have reached "deadlock" on the UK's withdrawal bill.

Davis said existing settled EU citizens in the UK will have an easy registration, and that the Good Friday agreement between the Republic and Northern Ireland is to be protected "in all regards".

In other economic news, UK banks tightened conditions for unsecured lending to households and are expected to reduce its availability significantly at the end of the year, the latest Credit Conditions Survey from the Bank of England showed Thursday.

Meanwhile, availability of secured credit to households increased slightly in three months to mid-September and lenders forecast its availability to be unchanged in the fourth quarter.

In London, blue-chip pay-TV broadcaster Sky was up 2.0% after it saw a "strong start to the year", with first quarter like-for-like revenue up 5% to GBP3.3 billion and an 11% increase in earnings before interest, tax, depreciation and amortisation to GBP582 million.

The firm said it added 160,000 new customers in the period, up 51% on a year before.

"Against the backdrop of pressure on consumer spending and lower spend on UK television advertising, we were particularly pleased with our own Ebitda growth of 15% in our Established Business," said Chief Executive Jeremy Darroch.

"Looking ahead, despite the uncertainty in the broader consumer environment, we remain on track with our plans and enter the busy second quarter trading period focused on delivering our clear strategy for growth," Darroch added.

In London, easyJet was up 2.8%. The budget carrier is negotiating with Air Berlin to possibly acquire the remaining 20 to 30 aircraft from the insolvent German carrier, which last year ran up a loss of about EUR782.0 million and has debts totalling nearly EUR1.20 billion.

Meanwhile, Deutsche Lufthansa is to buy large parts of its rival Air Berlin, Lufthansa Chief Executive Carsten Spohr confirmed, with plans to invest EUR1.50 billion in taking over 81 Air Berlin aircraft - about half of the carrier's fleet - and hiring 3,000 of its employees.

Just Eat was towards the top of the FTSE 250, up 4.6%. The UK Competitions & Markets Authority provisionally concluded that Just Eat's acquisition of Hungryhouse does not raise competition concerns, given that Hungryhouse is significantly smaller in size and the industry is evolving.

The CMA added that the entry of firms such as Deliveroo, UberEATS and Amazon "generally present a greater competitive challenge to Just Eat than Hungryhouse, and this is likely to grow as they expand".

The deal between the UK's two largest online takeaway ordering platforms was struck in December, with Just Eat purchasing Hungryhouse from Delivery Hero Holding for an initial GBP200.0 million in cash, with a further GBP40.0 million payable subject to performance.

In May, the takeover was referred to the CMA for an in-depth merger investigation.

"There seems to be no shortage of investors willing to order the shares, with the key ‘takeaway' being its exposure to a London market that seems ripe for further expansion and relatively immune from consumer spending worries," said IG chief market analyst Chris Beauchamp.

N Brown was down 3.6% after swinging to a loss in the first half of its financial year due to exceptional costs booked in the period, despite a rise in revenue through organic growth.

The online and catalogue-based fashion retailer reported a pretax loss of GBP27.6 million for the 26 weeks ended September 2, turning from a profit of GBP21.1 million the year before, despite revenue rising to GBP453.4 million from GBP429.4 million.

The loss was a result of exceptional costs of GBP54.9 million, as a result of GBP40.0 million in customer redress for historic insurance products and store closures, and also GBP13.8 million booked in costs for store closures.

Mid-cap gold miner Acacia Mining was down 1.5%. Acacia said it produced 191,203 ounces of gold and sold 132,787 ounces of gold during the third quarter of 2017.

The firm said production was ahead of expectations at Buzwagi, at 69,097 ounces in the third quarter, driven by strong grades. Meanwhile, production at North Mara of 72,011 ounces in the period and Bulyanhulu of 50,094 ounces was hit, as previously flagged, by work permit issues and moving to reduced operations respectively.

But sales were below production due to the ban on the export of gold and copper concentrate produced at Bulyanhulu and Buzwagi from Tanzania. In March this year, the Tanzanian government banned all exports of metal concentrate out of the country in an effort to keep processing activities in the country.

Acacia has all three of its producing gold mines within Tanzania, two of which - Buzwagi and Bulyanhulu - produce both concentrate and dore.

In European equities, the CAC 40 index in Paris was down 0.1% and the DAX 30 in Frankfurt up flat early Thursday.

Data released earlier on Thursday showed eurozone industrial production growth accelerated to a nine-month high in August.

Industrial production rose 1.4% month-on-month in August, faster than the 0.3% increase seen in July, marking the biggest growth since November 2016 when output grew 1.6%. The August reading also beat forecasts for a monthly 0.6% increase.

On a yearly basis, growth in industrial production improved to 3.8% from 3.6% in July, with output forecast to climb 2.6%.

The euro was quoted at USD1.1853 Thursday midday, firm at USD1.1847 at the European equities close on Wednesday.

Later Thursday, European Central Bank President Mario Draghi will be speaking at the annual meetings of the World Bank Group and the International Monetary Fund in Washington DC at 1530 BST.

Stocks in New York are called for a flat to lower open on Thursday, with the Dow Jones Industrial Average, S&P 500 index and Nasdaq Composite all pointed down 0.1%.

The economic events calendar for Thursday has US producer prices at 1330 BST. Also in the US, earnings season continues "in earnest", IG's Beauchamp said, with Citigroup and JP Morgan due to release their third-quarter results.

"More than anything else this week, the beginning of the third quarter reporting period should be credited with keeping equity markets in check. While some weakness is to be expected as the numbers filter through in coming weeks, it would take a truly abysmal season to disrupt the pre-Christmas rally," added Beauchamp.