London close: European and US concerns weigh on Footsie

15th May 2014 16:59

- FTSE closes down 37.60 points at 6,840.89- Eurozone GDP misses expectations, Italy, France disappoint- Russia says oil must be paid for- Telecoms, airlines falltechMARK 2,757.75 -1.26%FTSE 100 6,840.89 -0.55%FTSE 250 15,616.54 -2.24%The City ended today's session on a downbeat note, weighed by the outlook for the Eurozone's economic growth, a mixed bag on the corporate earnings front, and traders looking to take profits after the 14-year high achieved by the benchmark FTSE 100 earlier in the week. To take note of, even in the US market commentary was attributing the day's losses to that weakness in the European data. Most often US capital markets tend to show very scant interest in data out on the Continent.The top tier index ended today's session down 37.60 points at 6,840.89. Much of today's focus was on gross domestic product (GDP) data released in the Eurozone, with the figure for the region as a whole rising by 0.2%, less than the 0.4% analysts had expected. The growth was primarily driven by Germany, which came in at 0.8% quarter-on-quarter, compared to 0.4% previously and expectations of 0.7%. Meanwhile, France was flat, compared to the anticipated 0.2%, while Italy fell -0.1%, against the predicted 0.2% figure. GDP in the Netherlands plummeted by 1.4% no less.Jasper Lawler, a Market Analyst at CMC Markets UK, said: "A distinct two tiers has opened up again in Europe with Germany in tier one and everyone else in tier two. "GDP data is backward looking but prospects for next quarter would clearly be better if you're not coming off zero or negative growth rates for the present one." For its part, Barclays Research said the data "disappointed", adding that the reading had pushed down its annual forecast for 2014 to 1.2% from 1.3% previously.Explaining its decision, it continued: "We believe that today's weak outcome is another argument for further European Central Bank (ECB) easing at the June meeting. Together with subdued inflation confirmed for April, very likely downwards revision to the ECB inflation projections in updated staff forecasts due next month, and probably disappointing credit data, today's release signals that the euro area recovery remains fragile, still facing a lot of impediments. "In our view, a cut in all official rates is the most likely action at the June meeting (small cut in the refi rate to 0.1% accompanied by a cut in the deposit rate to -0.1%), although we do not think this would be enough to weaken the euro further."Gas should be paid for, Russia saysOver in Eastern Europe, Russia's Prime Minister, Dmitry Medvedev, today said that it was "necessary to pay for delivered energy supplies". Speaking at a conference on energy, he added: "I hope all countries understand this, all consumers like those present and those who are not present for whatever reason at the forum, including Ukraine. Payments in general should not be linked to politics in any way."Over in the US, stocks declined sharply as investors weighed a barrage of mixed economic data, including a pick-up in inflation, an unexpected drop in jobless claims - to their lowest since before the financial crisis began in 2007 - and a slide in industrial production due to payback from the harsh winter as output from the utilities sector slumped. 10-year Treasury yields Stateside fell sharply following that data to the 2.5% mark. That came ahead of a report due to be released tomorrow on US economic confidence, which is expected to show an increase in the outlook for the world's biggest economy in May.The University of Michigan's sentiment index is expected to come in at 84.5 this month, up from 84.1 in April, according to forecasts. Mixed bag on the company fronteasyJet was the lowest flyer on the FTSE 100 today, with readacross from Thomas Cook providing turbulence on the back of a fall in revenues, which contracted as disruption in Egypt continued to weigh. The concerns about the situation in Russia and its threats about oil supply are also likely to be linked. Barratt Developments continued to slide lower on the back of the Bank of England's inflation report, in which its Governor, Mark Carney, said it would "look hard at the degree of affordability" of mortgages when deciding when to increase interest rates, which according to Westhouse Securities, resulted in "nervousness" amongst investors. Old Mutual was lower after first-quarter gross sales growth was limited to just 12% due to adverse currency movements. Growth would have been 24% at constant currencies.Meanwhile, 'safe haven' stock Unilever, Morrison and Tesco were making gains. Diageo was rising on reports it is planning to scrap its regional hub structure, "with activities previously managed at regional level in Africa, Asia Pacific and Latin America, moving to our markets, to global or ceasing altogether". According to Marketing Magazine, the company said the changes will simplify the business and drive efficiencies. "This will allow us to invest savings in growth opportunities for our brands and markets, fund future efficiency programmes and expand operating margin," it added. On the second tier, Dixons Retail and Carphone Warehouse were both lower after revealing they have agreed on an all-share merger valuing the combined entity at £3.8bn.Michael Hewson, Chief Market Analyst at CMC, said that "today's disappointing share price performance [indicates] that investors aren't buying it, and to be honest neither do I".He continued: "Dixons revenues look set to remain fairly flat over the next three years at around £7.5bn, while profit estimates look optimistic, unless they pare down on costs. "As for Carphone Warehouse they've been down this road before with US electrical retailer Best Buy in 2008 and by 2011 Best Buy was packing its bags back to the US. Maybe the timing was bad with the financial crisis, but Best Buy is a much better retailer than Dixons, and the fact they couldn't make that work doesn't bode well for this particular merger." Notably, as a merger of equals, neither set of shareholders will receive a premium as they would do in an acquisition. FTSE 100 - RisersMorrison (Wm) Supermarkets (MRW) 205.20p +4.53%Fresnillo (FRES) 860.50p +2.87%Tesco (TSCO) 302.55p +2.11%Diageo (DGE) 1,909.50p +1.68%Sainsbury (J) (SBRY) 332.80p +1.56%AstraZeneca (AZN) 4,726.50p +1.56%Friends Life Group Limited (FLG) 306.30p +1.26%HSBC Holdings (HSBA) 625.00p +1.21%BAE Systems (BA.) 416.50p +1.14%Unilever (ULVR) 2,687.00p +1.13%FTSE 100 - FallerseasyJet (EZJ) 1,550.00p -6.74%International Consolidated Airlines Group SA (CDI) (IAG) 365.70p -5.97%ITV (ITV) 169.60p -5.30%Barratt Developments (BDEV) 357.80p -5.09%Old Mutual (OML) 199.10p -4.92%St James's Place (STJ) 748.50p -4.89%CRH (CRH) 1,601.00p -4.82%Lloyds Banking Group (LLOY) 73.76p -4.33%Sports Direct International (SPD) 730.00p -4.26%Travis Perkins (TPK) 1,669.00p -4.08%FTSE 250 - RisersXaar (XAR) 784.00p +2.22%Laird (LRD) 289.80p +2.04%Infinis Energy (INFI) 206.00p +1.93%Kier Group (KIE) 1,676.00p +1.82%Vesuvius (VSVS) 451.10p +1.37%Workspace Group (WKP) 572.00p +0.53%Amlin (AML) 462.40p +0.41%BlueCrest AllBlue Fund Ltd. GBP Shares (BABS) 179.00p +0.22%Personal Assets Trust (PNL) 33,260.00p +0.18%BlackRock World Mining Trust (BRWM) 480.50p +0.10%FTSE 250 - FallersThomas Cook Group (TCG) 156.10p -12.60%Dixons Retail (DXNS) 45.67p -10.28%Carphone Warehouse Group (CPW) 301.30p -8.08%Grafton Group Units (GFTU) 558.50p -6.76%Bwin.party Digital Entertainment (BPTY) 118.60p -6.69%Playtech (PTEC) 602.50p -6.23%Ocado Group (OCDO) 303.00p -6.22%Man Group (EMG) 89.95p -5.96%Howden Joinery Group (HWDN) 316.20p -5.56%Victrex plc (VCT) 1,757.00p -5.03%NR