(Alliance News) - Equities in London failed to sustain gains into Thursday despite further data showing price pressures may finally be easing in the US.
The FTSE 100 index closed down 41.20 points, or 0.6%, at 7,465.91. The FTSE 250 down 52.57 points, or 0.3%, at 20,245.43, and the AIM All-Share closed up 8.58 points, or 0.9%, at 928.36.
The Cboe UK 100 ended down 0.6% at 746.21, the Cboe UK 250 closed down 0.4% at 17,572.40, and the Cboe Small Companies ended down 0.9% at 14,461.05.
In European equities on Thursday, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt ended slightly lower.
Data on Thursday showed the US producer price index rose by 9.8% in July on an annual basis, easing from an 11% rise in June. The latest reading was lower than the market forecast, cited by FXStreet, of 10%.
Producer prices fell 0.5% in July month-on-month, following a 1.0% increase in June. It was the first time prices fell since April 2020 amid a drop in gasoline prices.
The factory price data came just a day after consumer price inflation softened more-than-expected to an annual rate of 8.5% in July, from 9.1% in June.
Despite this, European markets saw momentum fade as Thursday afternoon progressed.
"After the gains of yesterday, which saw markets in Europe close at two-month highs, today has been much harder going despite the continued resilience of US markets. While US inflation appears to be easing...the prospect of something similar happening in Europe appears to be harder to envisage," said Michael Hewson, chief market analyst at CMC Markets.
In the UK, faced with the prospect of soaring energy prices this autumn, Prime Minister Boris Johnson has appealed to electricity companies to act "in the national interest".
Following roundtable talks in Downing Street, the prime minister said the government will continue to work with the sector – however there was no new announcement of immediate help for hard-pressed families.
The crisis meeting was called after analysts warned earlier this week that average annual household energy bills are set to top GBP4,200 by the start of next year.
In Germany, Chancellor Olaf Scholz promised further measures to shield Germans from soaring inflation but also vowed not to stray from Germany's famed fiscal discipline.
Scholz gave no details of the measures or when they would apply but said that "we have to put together an overall package that includes all population groups".
Inflation in Germany reached 7.5% in July, fractionally lower than the 7.6% recorded in June, fuelled mainly by energy prices that have soared following Russia's invasion of Ukraine.
The pound and the euro slipped on Thursday after getting a boost from a weaker post-CPI dollar on Wednesday.
The pound was quoted at USD1.2205 at the London equities close Thursday, down compared to USD1.2253 at the close on Wednesday. The euro stood at USD1.0328 at the European equities close, easing from USD1.0349 at the same time on Wednesday.
Against the yen, the dollar was trading at JPY132.79, up compared to JPY132.41 late Wednesday.
Brent oil was quoted at USD98.87 a barrel at the London equities close Thursday, up from USD94.77 late Wednesday. Gold was quoted at USD1,789.51 an ounce at the London equities close, down against USD1,799.85 at the close on Wednesday.
Stocks in New York were higher at the London equities close, with the DJIA up 0.5% - lifted by a 5.2% share price rise for Walt Disney - the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.1%.
In London, GSK and its consumer health spin-off Haleon weighed on the FTSE 100 for the second day in a row, closing down 10% and 4.9% respectively on Zantac litigation worries.
Ranitidine, sold under the name Zantac, was sold over-the-counter in the US by French drugmaker Sanofi and was originally manufactured by GSK.
The product was withdrawn after the US Food & Drug Administration, in 2019, warned that Zantac contained levels of NDMA, a probable human carcinogen - a substance which has been linked to cancer.
In late 2019, Sanofi recalled the over-the-counter treatment in the US and Canada over possible contamination fears. By April 2020, the FDA had ordered the drug and all its generics be withdrawn from drugstore shelves.
Deutche Bank's Emmanuel Papadakis commented: "This topic is not new: it has arrived in investor consciousness in recent days it seems, but been rumbling on in the background for a few years. What is true is that it is approaching visibility in the form of first cases. We don't think the evidence points to this as another glyphosate, but it is very possible we may see a liability of some USDbn magnitude."
Shares in Sanofi closed down 3.3% in Paris.
Also dragging on the FTSE 100 was Spirax-Sarco Engineering, falling 2.9% after reporting a lower profit due to manufacturing input cost rises.
Pretax profit in the half-year to June 30 fell to GBP138.5 million from GBP150.0 million a year ago. Revenue grew 17% to GBP750.1 million from GBP643.7 million, but this increase was more than offset by widening costs due to inflation.
At the top of the blue-chips was Entain, rising 3.7%. The Ladbrokes owner left annual guidance unchanged and declared a dividend for the first time since the onset of Covid-19, with the bookmaker promising a "progressive" payout going forward.
Entain said it was implementing a new dividend policy. It is proposing a progressive dividend, starting with a total dividend of GBP100 million for 2022, to be paid to shareholders in equal instalments in respect of the first half and annual results.
Entain declared an interim dividend of 8.5 pence per share, which would be its first payout since the onset of the pandemic.
Coca-Cola HBC added 3.3% after saying its first half was "strong" despite a severe drop in profit, knocked back by the significant costs involved in exiting from Russia.
In the six months to July 1, net profit was down 34% at EUR152.9 million from EUR233.1 million. Operating profit slumped 21% to EUR275.7 million from EUR350.1 million.
Net sales revenue in the first half were up 30% to EUR4.21 billion from EUR3.25 billion, as group volume was up 18% in the first half to 1.33 billion cases from 1.13 billion the year prior.
In the FTSE 250, Network International rose 16% after reporting strong interim results, reconfirming its annual outlook after revenue jumped more than 30%.
In the first half of 2022, pretax profit doubled to USD37.3 million from USD17.0 million. Underlying net income was up 58% to USD34.3 million from USD21.8 million. Revenue jumped 31% to USD205.0 million from USD156.4 million. By geography, revenue in the Middle East was up 22%, while Africa revenue was up 56%.
On AIM, Revolution Beauty tumbled 29% after warning that its auditors have raised "certain accounting issues" that could have a "material impact" on the results for the year it has previously communicated.
"In the event that material adjustments are required, the group profitability for FY22 could be materially reduced across a number of potential adjustments including stock and bad debt provisioning and revenue recognition. Once these issues have been fully resolved and agreed between the auditors and management a further announcement will be made," the firm said.
Friday's UK corporate calendar has half-year results from sports betting and gaming company Flutter Entertainment and online betting firm 888 Holdings.
The economic calendar on Friday has UK GDP at 0700 BST, eurozone industrial production at 1000 BST and the US Michigan consumer sentiment index at 1500 BST.
By Lucy Heming; lucyheming@alliancenews.com
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