London close: FTSE ends higher, led by Barclays

UK stocks ended slightly higher on Friday as well-received corporate results from Barclays offset a slump in commodity producers.

Barclays topped the FTSE 100 risers list after the bank reported a better-than-expected drop in first half pre-tax profits. The market noted that core operations in the UK returned a profit.

The report led other financials higher including Standard Life, Royal Bank of Scotland, Legal & General, Schroders and Prudential.

International Consolidated Airlines also flew higher as it reported a rise in first half operating profits and revenue despite the impact of terrorist attacks and strikes.

On the downside, a drop in oil prices weighed on Royal Dutch Shell and BHP Billiton with Brent crude down 1.6% to $42.01 per barrel and West Texas Intermediate down 0.34% to $41.00 per barrel in afternoon trade.

Pearson led the fallers after half year sales at the educational publisher declined further than expected.

On the macro-economic front, data showed the US economy grew much less than expected in the second quarter.

US gross domestic product grew at an annual rate of 1.2% compared to 0.8% growth in the first quarter and expectations for a 2.6% increase, according to preliminary data released by the Commerce Department. First-quarter growth was revised down from a previous estimate of 1.1%.

Personal consumption rose at a rate of 4.2% in the second quarter, while spending on services was up 3%.

The Commerce Department also released annual revisions, which showed the economy grew 2.6% in 2015 from the year before. This was the biggest yearly gain since 2006.

Dennis de Jong, managing director at UFX.com, said: “Memories of the US economy being shaken by China’s meltdown and rock bottom oil prices seem a long time ago now, but today’s GDP numbers show the world’s largest economy is facing a new set of challenges in sluggish growth and weak spending.

“Regaining momentum in the wake of an unsettled European market will be the next challenge for Janet Yellen and Co. If the US economy can get back on track and prove to be resilient in the face of Brexit then Yellen may just think it’s time for another interest rate hike come Autumn.”

Meanwhile, consumer sentiment in the US deteriorated a touch more than expected in July amid concerns about the UK’s vote to leave the European Union. The University of Michigan’s final reading of the consumer sentiment index fell to 90.0 from 93.5 in June and 93.1 in July last year. Economists had been expecting a decline to 90.5.

In the eurozone, economic growth slowed in the second quarter as expected. According to a preliminary flash estimate by Eurostat, eurozone gross domestic product grew 0.3% in the second quarter compared to 0.6% growth the previous quarter, in line with consensus estimates.

Eurostat also revealed in its flash estimate for July that inflation in the eurozone came in higher than expected. Inflation hit 0.2% in July, marking its highest level since the end of last year and up from 0.1% in June. Economists had pencilled in a 0.1% increase.

The eurozone unemployment rate was unchanged in June at 10.1%, Eurostat said, in line with economists’ expectations. It remained at the lowest rate recorded in the bloc since July 2011.

In Japan, the central bank kept interest rates steady on Friday but said it would increase its purchases of exchange-traded funds to an annual pace of Y6trn from Y3.3trn. The Bank of Japan also doubled the size of a lending programme for local companies to $24bn.

The announcement came as official data showed Japan remained in deflation in June. The consumer price index fell 0.4% year-on-year in June, flat on the previous month and in line with expectations.

Core CPI, which strips out fresh food, worsened to a 0.5% year-on-year decline from a 0.4% contraction in May. Economists had predicted it would remain unchanged.

Looking ahead to next week, the Bank of England’s policy decision on Thursday will be in focus with many analysts expecting the central bank to cut interest rates. The BoE also releases its August Inflation Report.

Market Movers

FTSE 100 (UKX) 6,724.39 0.05%
FTSE 250 (MCX) 17,282.15 0.17%
techMARK (TASX) 3,474.88 0.15%

FTSE 100 - Risers

Barclays (BARC) 155.45p 6.11%
Paddy Power Betfair (PPB) 8,835.00p 4.00%
Standard Life (SL.) 302.90p 3.66%
Schroders (SDR) 2,618.00p 3.44%
Capita (CPI) 960.00p 2.67%
Legal & General Group (LGEN) 205.90p 2.64%
easyJet (EZJ) 1,042.00p 2.46%
TUI AG Reg Shs (DI) (TUI) 984.50p 2.29%
Prudential (PRU) 1,337.00p 2.26%
SABMiller (SAB) 4,420.00p 2.22%

FTSE 100 - Fallers

Pearson (PSON) 883.50p -8.92%
Rolls-Royce Holdings (RR.) 792.50p -4.63%
Royal Dutch Shell 'B' (RDSB) 2,002.00p -2.41%
Informa (INF) 714.00p -2.12%
Royal Dutch Shell 'A' (RDSA) 1,944.00p -2.04%
BHP Billiton (BLT) 944.70p -1.70%
SSE (SSE) 1,516.00p -1.62%
National Grid (NG.) 1,083.50p -1.59%
Intertek Group (ITRK) 3,625.00p -1.49%
Anglo American (AAL) 830.50p -1.44%

FTSE 250 - Risers

Indivior (INDV) 295.30p 8.37%
Kaz Minerals (KAZ) 159.00p 7.36%
Restaurant Group (RTN) 354.70p 5.85%
UBM (UBM) 671.50p 5.70%
International Personal Finance (IPF) 268.00p 5.64%
Shawbrook Group (SHAW) 188.60p 5.13%
Vesuvius (VSVS) 369.20p 4.35%
Wizz Air Holdings (WIZZ) 1,549.00p 3.82%
Henderson Group (HGG) 231.00p 3.63%
IMI (IMI) 1,070.00p 3.38%

FTSE 250 - Fallers

Essentra (ESNT) 485.00p -22.59%
Laird (LRD) 293.30p -11.66%
Countrywide (CWD) 248.00p -5.78%
Acacia Mining (ACA) 559.50p -4.77%
Berendsen (BRSN) 1,275.00p -4.64%
Countryside Properties (CSP) 226.80p -4.26%
Debenhams (DEB) 56.05p -3.78%
Rank Group (RNK) 222.50p -3.22%
Pets at Home Group (PETS) 243.90p -2.71%
Cranswick (CWK) 2,345.00p -2.49%