London close: FTSE closes higher as oil prices gain

The FTSE 100 closed higher on Friday as oil prices rose following reassuring comments from the International Energy Agency.

The International Energy Agency said there are signs that “prices might have bottomed out” and there “may be light at the end of what has been a long, dark tunnel”.

The Paris-based organisation said in its monthly report that it expects that oil production outside the OPEC cartel will fall by 750,000 barrels a day this year -150,000 barrels a day more than it estimated last month - easing concerns about the supply glut.

At 1616 GMT, Brent crude rose 0.15% to $40.11 per barrel and West Texas Intermediate increased 0.99% to $38.22 per barrel.

Meanwhile, investors continued to digest Thursday’s ECB policy announcement.

The ECB unexpectedly slashed its main interest rate by 5 basis points (bps) to 0.00% and increased quantitative easing by €20bn to €80bn per month, starting in April. The market had priced in a €10bn increase to asset purchases.

The ECB also cut the deposit facility rate by 10bps to -0.40% and the marginal lending facility rate to 0.25% from 0.30%.

Equities had closed in the red on Thursday despite the bigger-than-expected stimulus package but the markets seemed to have a more positive view on Friday.

“Overall it looks like the ECB has been given a vote of confidence, even if it took 24 hours for the result to come through,” said Chris Beauchamp, senior market analyst at IG.

In the UK, the Office for National Statistics said the total trade deficit narrowed to £3.459bn in January from a revised £3.699bn in December.

The deficit in goods alone narrowed to £10.289bn from a revised £10.450bn, in line with economists' forecasts.

However, the goods trade deficit with the European Union widened to a record high of £8.090bn in January from £7.428bn as British imports increased.

The British Chambers of Commerce cut its forecasts for UK economic growth this year, blaming the global slowdown. The BCC has forecast gross domestic product will rise 2.2% in 2016 and increase 2.3% in 2017, compared to December projections for 2.5% growth this year and next.

“Our forecast should stand as a wake-up call,” said Adam Marshall, acting director general of BCC. “The UK’s economic performance is reasonably good when measured against our main competitors, but it’s only mediocre when compared against long-term trends.”

Across the Atlantic, import prices fell for an eighth straight month in February although less than analysts had expected. The Labor Department said import prices dropped 0.3% last month after a revised 1.0% decrease in January. Analysts had pencilled in a 0.7% slide.

In company news, Aviva’s shares continued to gain a day after reporting a 20% increase in full year operating profit that was better than expected.

Old Mutual edged lower as the company said it will separate its four underlying businesses - Old Mutual Emerging Markets (OMEM), Nedbank, Old Mutual Wealth (OMW) and OM Asset Management (OMAM). The group also reported annual revenue fell 12% to £13.7bn and adjusted pre-tax operating profit rose 4% to £1.7bn, although it was up 11% at constant exchange rates.

Marks & Spencer slumped as Bank of America Merrill Lynch downgraded the stock to ‘underperform’ from ‘neutral’ and slashed the price target to 385p from 480p saying a recovery in apparel remains elusive.

Marshalls rallied after it posted a 57% rise in full year pre-tax profit to £35.3m on the back of an 8% jump in revenue as it completed the first phase of its plans to return to profits.

Pensions provider Just Retirement was also a high riser after it said six-month pre-tax profits rose to £26.1m compared to a £9.2m loss the same period a year ago.

Acacia Mining was weaker after UBS downgraded the stock to ‘neutral’ from ‘buy’ on the back of share price strength and uncertainty over the Bulyanhulu mine.

Looking ahead, the Federal Open Market Committee meets on 16 March. The Federal Reserve is widely expected to stand pat on rates but the announcement will be eyed for any clues on the path for interest rates.

The Bank of England will meet on 17 March and is also anticipated to keep policy unchanged.

Market Movers

FTSE 100 (UKX) 6,138.03 1.68%
FTSE 250 (MCX) 16,597.98 1.30%
techMARK (TASX) 3,082.45 0.82%

FTSE 100 - Risers

Aviva (AV.) 494.70p 6.20%
St James's Place (STJ) 894.00p 4.75%
Hargreaves Lansdown (HL.) 1,273.00p 4.43%
Standard Chartered (STAN) 467.80p 4.30%
RSA Insurance Group (RSA) 452.80p 4.19%
CRH (CRH) 1,936.00p 4.14%
Hammerson (HMSO) 568.00p 4.12%
Barclays (BARC) 165.80p 3.69%
3i Group (III) 437.90p 3.67%
Royal Bank of Scotland Group (RBS) 229.60p 3.56%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 397.50p -2.26%
Old Mutual (OML) 181.90p -1.83%
Randgold Resources Ltd. (RRS) 6,310.00p -0.79%
Schroders (SDR) 2,689.00p -0.37%
Shire Plc (SHP) 3,781.00p -0.11%
Ashtead Group (AHT) 785.00p 0.00%
SABMiller (SAB) 4,220.50p 0.04%
United Utilities Group (UU.) 894.00p 0.28%
Rexam (REX) 612.00p 0.41%
Unilever (ULVR) 3,095.50p 0.45%

FTSE 250 - Risers

Marshalls (MSLH) 335.00p 11.11%
IP Group (IPO) 173.70p 6.50%
Vedanta Resources (VED) 332.70p 6.12%
Crest Nicholson Holdings (CRST) 526.50p 4.67%
Weir Group (WEIR) 1,037.00p 4.59%
Genus (GNS) 1,474.00p 4.54%
Hiscox Limited (DI) (HSX) 956.50p 4.25%
Henderson Group (HGG) 254.80p 4.08%
Amec Foster Wheeler (AMFW) 497.20p 4.08%
TR Property Inv Trust (TRY) 288.50p 3.78%

FTSE 250 - Fallers

Ted Baker (TED) 2,790.00p -2.89%
Restaurant Group (RTN) 396.90p -2.63%
OneSavings Bank (OSB) 249.40p -2.62%
Acacia Mining (ACA) 265.60p -2.32%
PayPoint (PAY) 717.50p -2.11%
Paddy Power Betfair (PPB) 9,320.00p -1.95%
Petrofac Ltd. (PFC) 929.00p -1.54%
Mediclinic International (MDC) 921.50p -1.39%
Circassia Pharmaceuticals (CIR) 259.30p -1.33%
Halfords Group (HFD) 402.70p -1.20%