London close: Equities gain as Lloyds boosts banking sector

London stocks rallied on Thursday as Lloyds Banking Group provided a boost to banking shares after announcing a special dividend.

Lloyds restored confidence to the banking sector which has been beset by worries over bad loans and risks of a global slowdown in economic growth. The lender paid a £2bn dividend despite posting a fall in 2015 profit and having to cough up more cash to cover payment protection insurance mis-selling claims. Peers Royal Bank of Scotland, HSBC and Barclays were on the front foot following the results.

RSA Insurance was also a top riser after it reported a better-than-expected 43.3% jump in full year operating profit to £523m as its restructuring paid off in 2015.

Economic data

UK gross domestic product in the fourth quarter of 2015 was unrevised and in line with forecasts, rising 0.5% on the previous quarter and 1.9% year-on-year. It compares to third quarter GDP growth of 0.4% quarter-on-quarter and 2.1% year-on-year.

"The fact that quarterly UK GDP growth in the fourth quarter was left unrevised at 0.5% was expected, but nonetheless comes as a bit of a relief given the jitters about the global recovery at the moment," said Vicky Redwood, chief UK economist at Capital Economics.

Eurostat’s final reading on Eurozone inflation for January came in a little softer than originally estimated and still way off the European Central Bank’s target of just under 2%, adding weight to the argument for further stimulus. According to figures published on Thursday, the annual inflation rate in the euro bloc rose to 0.3% in January. This was below 0.2% the previous month and missed consensus and the initial estimate of 0.4%.

In the US, durable goods orders jumped 4.9% in January, beating analysts’ estimates for a 2.9% increase, the Commerce Department revealed.

US initial jobless claims rose more than expected in the latest week, according to Labor Department. Claims climbed to 272,000 in the week to 20 February from 262,000, more than the 280,000 that was pencilled in by analysts.

The US Federal Housing Finance Agency's monthly house price index increased 0.4% month-on-month, missing forecasts of 0.5%.

Meanwhile, oil prices continued to slide after data showed US crude inventories rose further, adding to concerns about the supply glut. US crude inventory rose by 3.5 million barrels last week, according to data from the US Energy Information Administration.

Brent crude fell 2.7% to $33.48 per barrel and West Texas Intermediate declined 2.9% to $31.22 per barrel at 1626 GMT.

Brexit

Secretary of state for work and pensions, Iain Duncan Smith, said that Prime Minister David Cameron’s deal with the European Union to reduce net migration would have no real impact.

Cameron is campaigning to keep Britain in the EU at a 23 June referendum on the basis of a new deal with the bloc address issues such immigration and benefits.

“If you do not control your borders my observation is that you get parties led by people like Marine Le Pen and others who feed off the back of this, and ordinary decent people feel life is out of control,” Duncan Smith said in an interview on the eve of the latest migration statistics.

The Office for National Statistics on Thursday estimated that net migration to the UK was 323,000 in the year to September, up 31,000 from the same period in 2013/14 but down on the record figure of 336,000 for the year to June 2015. The report showed 165,000 EU citizens came to the UK for work reasons.

Companies

Serco shares surged after it said its full year loss narrowed to £69.4m from £990.5m the previous year.

UBM gained after saying full year revenue and operating profit jumped 30.6% and 46%, respectively.

Capita slumped as it reported 2015 full year pre-tax profit fell to £112.1m from £292.4m the previous year, as the company was hit by business exits and impairment charges.

National Express jumped after reporting a 87% increase in pre-tax profit for the full year, driven by a rise in revenue across its fleet of divisions.

Beazley fell on news that the board was recommending re-locating the management of the group to the UK from Ireland.

Rio Tinto was in the red as Moody's downgraded the senior unsecured ratings of all rated entities within the group, including the mining giant’s subsidiaries to Baa1 from A3, with a ‘negative’ outlook.

Market Movers

FTSE 100 (UKX) 6,013.87 2.50%
FTSE 250 (MCX) 16,415.21 1.85%
techMARK (TASX) 3,167.53 2.59%

FTSE 100 - Risers

Lloyds Banking Group (LLOY) 70.64p 13.57%
RSA Insurance Group (RSA) 434.50p 10.14%
International Consolidated Airlines Group SA (CDI) (IAG) 558.50p 5.28%
Royal Bank of Scotland Group (RBS) 244.00p 5.13%
Barclays (BARC) 164.75p 5.10%
InterContinental Hotels Group (IHG) 2,604.00p 4.75%
Pearson (PSON) 804.50p 4.68%
BT Group (BT.A) 479.80p 4.66%
Sports Direct International (SPD) 399.40p 4.53%
Dixons Carphone (DC.) 437.00p 4.17%

FTSE 100 - Fallers

Capita (CPI) 1,010.00p -5.78%
Rio Tinto (RIO) 1,810.50p -3.39%
Randgold Resources Ltd. (RRS) 6,455.00p -2.93%
easyJet (EZJ) 1,495.00p -1.25%
Fresnillo (FRES) 990.00p -0.25%
Rexam (REX) 607.00p -0.00%
Worldpay Group (WI) (WPG) 291.80p 0.10%
Provident Financial (PFG) 3,230.00p 0.16%
SABMiller (SAB) 4,176.00p 0.23%
Antofagasta (ANTO) 477.60p 0.23%

FTSE 250 - Risers

Serco Group (SRP) 94.35p 15.48%
NMC Health (NMC) 900.00p 11.11%
National Express Group (NEX) 322.90p 9.35%
UBM (UBM) 581.50p 8.90%
Playtech (PTEC) 856.50p 6.60%
Just Eat (JE.) 389.20p 5.67%
Northgate (NTG) 382.30p 5.11%
FirstGroup (FGP) 91.30p 5.00%
Ocado Group (OCDO) 278.00p 4.98%
Close Brothers Group (CBG) 1,293.00p 4.95%

FTSE 250 - Fallers

Evraz (EVR) 65.25p -4.04%
Beazley (BEZ) 360.00p -3.51%
Circassia Pharmaceuticals (CIR) 272.10p -3.17%
Countrywide (CWD) 330.20p -3.17%
Riverstone Energy Limited (RSE) 801.00p -2.91%
Fidelity China Special Situations (FCSS) 121.20p -2.88%
Rotork (ROR) 152.70p -2.43%
Weir Group (WEIR) 881.50p -2.27%
esure Group (ESUR) 244.70p -2.16%
Michael Page International (MPI) 359.00p -1.91%