Strong Pound, AstraZeneca Limit FTSE 100 Gains

LONDON (Alliance News) - Stocks in London were higher on Thursday at midday, amid a flood of UK company results, with gains in the FTSE 100 index being limited by a stronger pound after the US Federal Reserve's latest statement left investors sceptical over further interest rate hikes in 2017.

The FTSE 100 index of large caps was up 0.1%, or 4.74 points, at 7,457.06. The FTSE 250 index was up 0.6% at 19,871.50 points, while the AIM All-Share index was up 0.2% at 985.57.

The BATS UK 100 index was up 0.1% at 12,659.36, and the BATS 250 was up 0.5% at 18,080.73. The BATS Small Companies was up 0.2% at 12,163.48.

AstraZeneca, down 16%, was by far the biggest blue-chip faller. The drugmaker said it performed in line with its expectations for the half year, with profit up year-on-year, but shares fell on the news that its Imfinzi drug did not meet a primary endpoint of progression-free survival compared to chemotherapy.

The firm also said total revenue for the period was USD10.46 billion, down 12% from USD11.72 billion the year before. Pretax profit was USD1.07 billion, up 55% from the USD693.0 million reported the year before. The company kept its interim dividend of 90.0 cents per share unchanged, while it reiterated its guidance for the full year.

At the other end of the index was Diageo, up 6%, the best FTSE 100 performer. The alcoholic beverage firm said its full-year profit increased and confirmed the launch of a share buy-back programme.

For the financial year ended June 30, pretax profit increased to GBP2.83 billion from from GBP2.36 billion the previous year, on revenue of GBP12.10 billion, up from GBP10.49 billion. Operating profit grew to GBP3.56 billion from GBP2.84 billion. It declared a final dividend of 38.50 pence per share, bringing the total dividend for the year to 62.20p, up from 59.2p last year.

Pest control firm Rentokil Initial was up 4.5%, after reporting a pretax profit of GBP606.3 million for the six months to June 30, leaping from GBP91.8 million the prior year. The profit figure was bolstered by a GBP462.5 million net profit on the disposal of businesses during the year.

Fashion retailer Next was up 3.5% after being upgraded by Jefferies to Hold from Underperform.

Anglo American was up 3.6%. The multi-commodity miner said its first-half profit attributable to equity shareholders was USD1.42 billion, compared to last year's loss of USD813 million. It resumed its dividend payout at 48 cents per share for the first half, equal to 40% of first half underlying earnings. Anglo had previously scrapped the payout so it could focus on reducing debt during a slump in commodity prices.

Commercial property firm Land Securities was up 2.3% after selling its interest in a property on Fenchurch Street in London to LKK Health Products Group, for a headline price of GBP641.3 million. Completion is expected to take place at the end of August and is unconditional.

After costs of sale, the top up of unexpired rent free periods and other commitments, the Land Securities expects to receive GBP634.5 million in net proceeds, of which GBP475.0 million will be returned to shareholders at 60 pence per share, and the balance to repay short-term debt.

Smith & Nephew was up 2.2%. The surgical device firm said revenue was flat in the second quarter but grew 3% on an underlying basis. This meant revenue for the first half to the start of July was USD2.33 billion compared to USD2.32 billion the year before, rising 3% on an underlying basis. Operating profit for the first half rose to USD414.0 million from USD357.0 million. The interim dividend of 12.3 cents was maintained from the previous year.

British American Tobacco was another gainer, up 1.8%. For the six months ended June 30, the tobacco giant's pretax profit fell to GBP3.03 billion to from GBP3.43 billion the previous year. However, revenue increased about 16% to GBP7.71 billion from GBP6.67 billion at current rates of exchange, which the BAT said reflected the translational foreign exchange tailwind due to the relative weakness of sterling against other major currencies.

BAT declared an interim dividend of 56.50 pence per share, up from 51.30p, which will be paid on September 28.

In the FTSE 250, Indivior was up 12% after the durgmaker raised its full year guidance, following an increase in half year net revenue, net income, and pretax profit.

Mitchells & Butlers was up 6.5%, after the restaurant and pub operator, which owns the Harvester chain, said trading since the end of the first half had been strong. Like-for-like sales growth was 2.6% in the third quarter ended July 22.

Weir Group was the biggest mid-cap faller, down 4.3%. For the six months ended June 30, the engineering firm posted a 12% rise in pretax profit to GBP92.0 million from GBP82.0 million the previous year, although on a constant currency basis pretax profit fell 8%. Weir maintained the interim dividend at 15.00 pence per share, which will be paid on November 3.

In mainland Europe, the CAC 40 index in Paris was marginally up and the DAX 30 in Frankfurt was down 0.5%, both hurt by a stronger euro. The single currency was quoted at USD1.1712 compared to USD1.1634 at the European equities close on Wednesday.

Wall Street was called for a positive open on Thursday, with the Dow Jones Industrial Average pointed up 0.1%, the S&P 500 index seen up 0.2% and the Nasdaq Composite called up 0.5%.

The Nasdaq Composite , primarily tech-focused, is expected to be helped by the outstanding results released on Wednesday after the US equities close by social media giant Facebook when trading starts later Thursday. E-commerce giant Amazon and tech giant Intel release second-quarter results on Thursday.

All three major New York indices would extend the gains from Wednesday, when they all finished at all-time highs, boosted by a weaker dollar.

"The dollar is under pressure again on Thursday after the Federal Open Market Committee statement on Wednesday failed to convince traders that the pace of tightening won't slow in the years ahead. While the Fed did suggest that the unwinding of its balance sheet will begin relatively soon, it also repeatedly referred to inflation running below target, a concern that has been highlighted by policy makers in recent months," said Oanda senior market analyst Craig Erlam.

The US central bank monetary policy committee noted that the economic data has continued to show moderate expansion and a strengthening labour market since early June. Inflation, measured through both price surveys and consumer spending, remains below the Fed's 2% goal.

The Fed left its benchmark interest rate unchanged at a range of 1.00% to 1.25%, after implementing a hike of 0.25 percentage points in June for the third time since December.

The pound was quoted at USD1.3147 at midday, compared to USD1.3060 at the London equities close on Wednesday.

The economic calendar on Thursday is US-focused, with the Chicago Fed National Activity index, weekly jobless claims, monthly wholesale inventories and goods trade balance figures all coming out at 1330 BST.

Already out in the economic calendar, UK retailers reported pick up in sales during July, exceeding expectations for minimal growth, the latest monthly Distributive Trades Survey from the Confederation of British Industry revealed.

A balance of 22% reported an increase in sales in July, exceeding economists' forecast of 10%.

Looking ahead, retailers expect steady expansions in both sales and orders in the year to August. A balance of 20% expects sales volume to increase next month.