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London midday: RBS and IAG weigh but BT rallies after Ofcom let-off

Equity markets in London were a little weak around midday on Friday as results from RBS, British Airways parent IAG and bookmaker William Hill left investors disappointed.
The FTSE 100 was down 0.1% to 7,242.51, while the pound was flat against the dollar at 1.3959 and up 0.3% versus the euro at 1.1348.

In the absence of much macro news, corporate news was driving losses, with Royal Bank of Scotland under the cosh even as it clambered back into the black in 2017 for the first time in a decade. The taxpayer-owned bank took a hit in the fourth quarter from higher charges and warned of higher restructuring costs in 2018 and reminded of looming threat of US and UK regulatory settlements.

Joshua Mahony, a market analyst at IG, said: "RBS has seen a sharp decline at the open today, with the announcement of the first profit in a decade doing little to boost investor confidence. While the £752m profit stood in stark contrast to the £6.95bn loss last year, markets are wary of the impending DoJ fine which could easily overshadow today's profits.

"Coming off the back of positive earnings from Lloyds, there is a clear benefits of being free from any government stake, which will continue to loom over RBS until the stake is finally sold."

International Consolidated Airlines Group was also weaker as its reported 19% jump in full-year operating profit fell short of analysts' expectations.

Bookmaker William Hill fell after saying it swung to a £75m pre-tax loss in 2017 compared to a profit of £181m the year before.

Educational publisher Pearson reversed earlier gains to trade a touch lower after saying it swung to a full-year pre-tax profit of £421m from a £2.5bn loss the year before.

On the bright side, BT racked up strong gains as telecoms regulator Ofcom eased price controls on its network subsidiary Openreach.

Analyst Michael Hewson at CMC Markets noted: "Ofcom moderated its approach on the price controls on the company's Openreach division for access to the fibre broadband network. The original proposal mooted a charge of £11.23, but this has changed to £11.92 a potential net improvement of £80m over four years."

Standard Life Aberdeen rose after confirming the sale of its insurance arm to Phoenix for £3.2bn alongside its final results. Phoenix rallied on the news.

Life insurer Aviva was in the black after saying it has sold two more life and pensions joint ventures in Spain for £178m in cash, while Rightmove gained as it reported a 10% jump in full-year operating profit as revenue and customer numbers grew.

In broker note action, Barclays was reinstated at 'buy' at Cenkos Securities, while Lancashire was upgraded to 'neutral' at Credit Suisse.

Moneysupermarket was cut to 'hold' at Canaccord, BAE Systems was downgraded to 'underweight' at JPMorgan and Petrofac was cut to 'underweight' Morgan Stanley.



Market Movers

FTSE 100 (UKX) 7,242.51 -0.14%
FTSE 250 (MCX) 19,779.62 0.22%
techMARK (TASX) 3,322.87 -0.30%

FTSE 100 - Risers

BT Group (BT.A) 242.79p 4.49%
Standard Life Aberdeen (SLA) 396.90p 2.90%
British Land Company (BLND) 650.40p 1.98%
United Utilities Group (UU.) 676.80p 1.93%
Hammerson (HMSO) 478.40p 1.83%
Vodafone Group (VOD) 205.00p 1.56%
Severn Trent (SVT) 1,736.50p 1.55%
Land Securities Group (LAND) 951.10p 1.47%
British American Tobacco (BATS) 4,405.50p 1.17%
RSA Insurance Group (RSA) 638.00p 0.85%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 592.71p -4.80%
Royal Bank of Scotland Group (RBS) 270.20p -4.18%
BAE Systems (BA.) 569.00p -2.74%
Micro Focus International (MCRO) 2,023.00p -2.13%
St James's Place (STJ) 1,127.50p -1.40%
easyJet (EZJ) 1,662.50p -1.31%
InterContinental Hotels Group (IHG) 4,608.00p -1.26%
NMC Health (NMC) 3,466.00p -1.25%
AstraZeneca (AZN) 4,723.00p -1.03%
Just Eat (JE.) 869.02p -0.98%

FTSE 250 - Risers

Phoenix Group Holdings (DI) (PHNX) 799.00p 5.20%
TalkTalk Telecom Group (TALK) 101.00p 3.38%
Acacia Mining (ACA) 145.60p 3.15%
Dignity (DTY) 803.90p 3.13%
Rightmove (RMV) 4,439.00p 2.99%
Playtech (PTEC) 773.20p 2.85%
Hiscox Limited (DI) (HSX) 1,424.00p 2.45%
Drax Group (DRX) 235.40p 2.35%
Intu Properties (INTU) 219.80p 2.23%
Capita (CPI) 183.65p 2.14%

FTSE 250 - Fallers

SIG (SHI) 140.50p -6.33%
Indivior (INDV) 381.40p -3.20%
Man Group (EMG) 180.62p -3.18%
Mitie Group (MTO) 158.30p -2.70%
Grafton Group Units (GFTU) 785.00p -2.30%
Renishaw (RSW) 4,854.00p -1.78%
Moneysupermarket.com Group (MONY) 279.20p -1.55%
Aveva Group (AVV) 2,900.00p -1.49%
Cobham (COB) 121.60p -1.46%
BTG (BTG) 662.00p -1.34%

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