Early markets roundup: Shell leads FTSE 100 higher, Lloyds struggles

European equities moved higher on Thursday morning, with Shell leading the way on the FTSE 100, before the European Central Bank takes centre-stage after a Federal Reserve hold on Wednesday.

Investors also assessed a possible diplomatic breakthrough in the Middle East.

The FTSE 100 index opened up 53.57 points, 0.5%, at 10,748.07. The FTSE 250 was up 6.61 points, marginally higher, at 24,645.87, and the AIM all-share was up 1.30 points, 0.2%, at 762.31.

The Cboe UK 100 was up 0.5% at 1,065.64, the Cboe UK 250 was up 0.3% at 21,686.14, and the Cboe small companies was up 0.1% at 18,963.24.

The CAC 40 in Paris was up 0.7%, while Frankfurt's DAX 40 added 0.6%.

Sterling was quoted at USD1.3313 early Thursday, marginally higher than USD1.3310 at the London equities close on Wednesday. Against the euro, sterling rose to EUR1.1952 from EUR1.1941 a day earlier.

The euro traded at USD1.1140 early Thursday, lower than USD1.1148 late Wednesday. Against the yen, the dollar was quoted at JPY157.81 versus JPY158.23.

At the top of the FTSE 100, Shell rose 2.8% after reporting a sharp increase in third-quarter profit, supported by elevated commodity prices, record refining margins and strong operational performance.

Net profit more than doubled to USD12.15 billion from USD5.42 billion a year earlier, while revenue jumped 36% to USD92.85 billion from USD68.15 billion, although it declined from USD94.66 billion in the second quarter.

Adjusted earnings rose to USD10.81 billion from USD9.84 billion quarter-on-quarter, while adjusted Ebitda increased to USD22.74 billion from USD20.71 billion.

Shell also announced a further USD5 billion share buyback programme over the next three months and maintained its full-year cash capital expenditure forecast of USD23 billion to USD25 billion, including its acquisition of ARC Resources.

Brent oil was trading at USD114.21 a barrel early Thursday, down from USD116.37 late Wednesday, amid renewed hopes of diplomatic progress between Washington and Tehran.

US Vice President JD Vance has contacted Iran's security chief in an effort to revive peace negotiations and avert a renewed American military offensive, the Wall Street Journal reported.

Vance sent a letter to Mohsen Rezaei, head of Iran's Supreme National Security Council, at the direction of President Donald Trump, according to one of the newspaper's sources.

Back in London, Haleon plunged 11% after the consumer healthcare company lowered its full-year organic revenue growth outlook and announced plans to accelerate changes to its Brazilian operations.

Haleon now expects organic revenue growth of around 2.5% in 2026, while forecasting high-single-digit percentage growth in adjusted operating profit at constant currency.

The company said it would bring forward changes to its Brazil strategy to the fourth quarter of 2026, rather than implementing them throughout 2027, reducing fourth-quarter net revenue by an estimated £15 million to £20 million.

Third-quarter revenue rose 2.5% to £2.87 billion, with organic growth of 2.6%, comprising a 2.1% contribution from pricing and 0.5% from volume and product mix.

Organic revenue in Oral Health rose 8.8%, while Digestive Health grew 2.5%. Respiratory Health declined 2.0%, while Vitamins, Minerals and Supplements fell 0.5%.

Haleon also launched a £500 million share buyback programme, managed by Citigroup and expected to be completed by February 2027.

Elsewhere, St James's Place fell 4.0%, despite reporting record funds under management in the third quarter, as positive market performance offset an increase in customer withdrawals.

Lloyds Banking Group declined 3.5%, despite reporting that third-quarter pretax profit nearly doubled to £2.33 billion from £1.17 billion a year earlier, supported by higher income and lower remediation charges.

Underlying net interest income rose 10% to £3.81 billion from £3.45 billion, while its banking net interest margin improved to 3.25% from 3.06%.

The lender maintained its full-year guidance, including underlying net interest income of more than £14.9 billion, a cost-to-income ratio below 50% and return on tangible equity above 16%.

Advertising group WPP rose 1.6% after reporting a 0.5% increase in third-quarter revenue to £3.27 billion, although revenue less pass-through costs declined 2.0% to £2.41 billion, down 2.1% on a like-for-like basis.

For the first nine months, revenue fell 2.8% to £9.65 billion, while revenue less pass-through costs declined 4.4% to £7.16 billion.

Whitbread added 1.2%, despite trading ex-dividend, after welcoming measures in Wednesday's UK budget to limit increases in business rates for hospitality companies in England.

The Premier Inn owner now expects business rates payments to rise by between £7.5 million and £12.5 million in financial 2028, compared with a previously anticipated increase of around £35 million.

By financial 2029, Whitbread expects its business rates payments to be between £45 million and £60 million lower than previously forecast.

Chief Executive Dominic Paul welcomed the measures, alongside more moderate increases in the national living wage and minimum wage. Whitbread said it would provide updated UK cost inflation guidance in January.

GSK fell 0.9% after Jefferies downgraded the pharmaceutical company to 'hold' from 'buy', cutting its price target to 2,100 pence from 2,500p.

At the bottom of the FTSE 250, Henderson Far East Income fell 3.7% and Renishaw declined 3.2%, with both stocks trading ex-dividend.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.2%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.3%.

The US Federal Reserve left interest rates unchanged on Wednesday, as analysts continued to anticipate a further increase in December, although expectations for the policy outlook in 2027 remained more divided.

Gold was quoted at USD4,029.30 an ounce early Thursday, lower than USD4,039.18 on Wednesday.

On the economic calendar, UK mortgage approvals and Irish gross domestic product figures are due early in the session.

Later, the European Central Bank announces its latest interest rate decision, with markets expecting rates to remain unchanged, while the US releases personal consumption expenditures inflation data and weekly jobless claims figures.

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