By Carla Mozee and Sara Sjolin, MarketWatch

Barclays to raise dividend; U.K. growth estimate revised down

U.K. stocks ended lower on Thursday, underperforming the wider European stock markets as heavyweights such as British American Tobacco and BAE Systems declined after earnings.

Stocks were stuck in the red after data indicated U.K. economic growth wasn't as strong as previously estimated. Among the market's few advancers was banking heavyweight Barclays PLC after the release of its financial results.

How markets are moving

The FTSE 100 indexfell 0.4% to close at 7,252.39, partly erasing a 0.5% gain from Wednesday. By comparison, the pan-European Stoxx Europe 600 index ended 0.2% lower.

The pound rose to $1.3943 from $1.3919 late Wednesday in New York.

Check out: More investors looking to cut U.K. assets as Brexit uncertainty persists (http://www.marketwatch.com/story/more-investors-looking-to-cut-uk-assets-as-brexit-uncertainty-persists-2018-02-16)

What's driving markets

Equities in London had opened with steep losses, tracking declines in the U.S. on Wednesday after Federal Reserve meeting minutes suggested policy makers will raise borrowing rates at a faster-than-expected pace.

The account of the Fed's January meeting (https://www.federalreserve.gov/monetarypolicy/fomcminutes20180131.htm) showed officials see an "increased likelihood" of further interest rate hikes, heightening prospects of a rate rise in March. That news helped push the U.S. 10-year Treasury note yield up closer to the 3% mark, spooking investors out of stock.

However, stocks across Europe pared losses on Thursday afternoon as Wall Street rallied after upbeat data on the U.S. labor market (http://www.marketwatch.com/story/us-jobless-claims-drop-7000-to-222000-and-fall-back-to-45-year-low-2018-02-22).

Stock movers

British American Tobacco PLC (BATS.LN) (BATS.LN) fell 2.2%. The maker of Lucky Strike and Dunhill cigarettes (http://www.marketwatch.com/story/bat-2017-profit-soars-on-reynolds-american-buy-2018-02-22) said its pretax profit increased more than fourfold in 2017, on gains related to the acquisition of Reynolds American Inc. and credits related to U.S. tax reform. Volume of sales of cigarette and tobacco-heated products fell 2.6%.

BAE Systems PLC (BA.LN) dropped 2.7% after the defense company reported full-year earnings below forecasts (http://www.marketwatch.com/story/bae-systems-misses-profit-forecast-2018-02-22).

Barclays shares (BCS) surged 4.4% after the bank said it would more than double its dividend next year (http://www.marketwatch.com/story/barclays-swings-to-loss-vows-to-double-dividend-2018-02-22-34852558) even as the bank swung to a full-year loss of GBP1.9 billion ($2.64 billion).

Centrica PLC (CNA.LN) climbed 7.5% as the British Gas parent said it will cut 4,000 jobs by 2020 in an aim to reduce costs. Annual adjusted operating profit dropped 17% to GBP1.25 billion.

Anglo American PLC shares (AAL.LN) posted 2017 net profit of $3.17 billion (http://www.marketwatch.com/story/anglo-american-profit-almost-doubles-in-2017-2018-02-22), missing the $3.25 billion consensus estimate from FactSet. Shares of the miner traded lower earlier in the day, but closed 0.2% higher.

Economic data

The Office for National Statistics revised down its previous estimate of U.K. GDP growth (https://www.marketwatch.com/story/uk-economy-lagged-more-than-thought-in-2017-2018-02-22https:/www.marketwatch.com/story/uk-economy-lagged-more-than-thought-in-2017-2018-02-22) in the fourth quarter to 1.4% from 1.5% year-on-year. The shutdown of a major oilfield for repairs in December hit oil-and-gas production harder than first believed, the ONS said.

What strategists are saying

"That stock markets remain in a volatile state is perfectly illustrated by the latest session on Wall Street. Just as it seemed traders had acclimatized to inflation, rising interest rates and higher bond yields, the fears that caused this month's crash were reignited by minutes from the Federal Reserve's last meeting," said Lee Wild, Interactive Investors's head of equity strategy, in a note.

"Every downtrend has rallies that catch people off guard, and that is what we're seeing in Centrica [today]. While the FTSE 100 hasn't exactly soared over the past year, it is a stellar outperformer compared to the 40% fall in Centrica. The shares are still cheap on any number of metrics, which will probably see today's bounce run a bit further, but this is still one to avoid, even with a chunky dividend," said Chris Beauchamp, chief market analyst at IG, in a note.

 

(END) Dow Jones Newswires

February 22, 2018 13:05 ET (18:05 GMT)

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