British shares inched up on Thursday with energy stocks leading timid gains, trading without strong direction with ex-divs weighing. The FTSE 100 gained 0.1 percent as the market awaited further details of negotiating positions of Britain and the European Union after they formally embarked on complex talks towards Brexit on Wednesday. Britain was to set out its plan for converting EU laws into domestic law in a White Paper later in the day, and EU Council President Donald Tusk was set to send out negotiating guidelines to the 27 member states by Friday.
Investors called for a renewed focus on fundamentals ahead of a long divorce process, after markets had a muted reaction to the formal Brexit trigger. “We have got a minimum of two years, and realistically much longer, to figure out how it all falls into place,” said Ian Williams, economics and strategy analyst at Peel Hunt.
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“We are in completely uncharted territory, many things can change. So from an equity standpoint, all you can do is take a step back and look at your companies and at the macro picture.” Energy stocks were the biggest contributors to gains on the day, as global crude prices ticked up with supply disruptions in Libya lifting the market.
SSE, however, was a top faller after the British energy supplier said dividend cover for its 2017/18 financial year would be at the lower end of guidance. The London Stock Exchange, fresh from disappointment over a planned merger with Deutsche Boerse scuppered by the EU antitrust regulator, was up 1.4 percent, a top gainer. “While a takeover of LSEG is not central to our positive thesis, we acknowledge that industry consolidation and the takeover potential should provide valuation support and is helpful to our positive thesis,” RBC said, resuming coverage of the stock with an ‘outperform’ rating. Ashtead was the top FTSE gainer, up 3.6 percent.
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Liberum initiated coverage of the construction equipment rental company with a ‘buy’, saying rental penetration in the U.S. market would drive growth for its North American segment, which contributes 86 percent of revenue.”The upside potential from increased rental penetration in the U.S. market is yet to be fully reflected in Ashtead’s share price, in our view,” Liberum analysts said. Old Mutual, Schroders, Smith & Nephew, and Prudential all fell 1.4 to 1.7 percent as they went ex-dividend.
Among mid-caps, Petra Diamonds was the top gainer, up 6.5 percent after it refinanced its debt. Small-cap Carr’s Group dropped 17 percent, set for its worst losses in 16 years after the agriculture and engineering firm cut its expectations for full-year performance.
(Reporting by Helen Reid; Editing by Tom Heneghan)