15th Mar 2016 08:18
LONDON (Alliance News) - Miners were leading shares lower in London early Tuesday, amid a string of downgrades and as Antofagasta confirmed fears it would pay no final dividend amid plunging earnings.
The Chilean copper miner led FTSE 100 losers, down 7.8%, followed by Anglo American, BHP Billiton, Glencore and Rio Tinto.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.6% at 6,139.33
FTSE 250: down 0.3% at 16,651.06
AIM ALL-SHARE: down 0.1% at 712.65
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Hang Seng: closed down 0.7% at 20,288.77
Nikkei 225: closed down 0.7% at 17,117.07
DJIA: closed up 0.1% at 17,229.13
S&P 500: closed down 0.1% at 2,019.64
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GBP: down at USD1.4256 (USD1.4322)
EUR: flat at USD1.1113 (USD1.1111)
GOLD: down at USD1,232.35 per ounce (USD1,243.00)
OIL (Brent): down at USD38.71 a barrel (USD39.11)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in GMT)
09:00 Italy consumer price index
10:00 Ireland gross domestic product
10:00 EU employment change
12:30 US NY Empire State Manufacturing Index
12:30 US retail sales
12:30 US producer price index
12:55 US Redbook index
14:00 US business inventories
14:00 US NAHB Housing Market Index
21:30 US API weekly crude oil stocks
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UK Chancellor George Osborne is set to give the green light to major rail developments in the north of England and London in his Budget on Wednesday. The Chancellor is expected to confirm government backing for the HS3 high-speed rail link between Manchester and Leeds, and the Crossrail 2 project to connect Surrey and Hertfordshire via stations in central London like King's Cross, Victoria, Chelsea and Clapham Junction.
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UK Prime Minister David Cameron has warned Britain has "100 days to secure our future" as the mastermind behind his general election victory said the EU referendum is hanging in the balance. In a new campaign video, the Prime Minister repeated assertions that leaving the EU would push up prices in the shops, put jobs at risks and make the country's streets more dangerous. An ORB poll for the Daily Telegraph has suggested that battle is currently deadlocked, with Remain on 47% and Leave on 48%. However, when likelihood to vote is taken into account, the Brexit camp would win by 52% to 44%.
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The Bank of Japan refrained from expanding its monetary stimulus as policymakers await to see the impact of the negative interest rate introduced in January. Governor Haruhiko Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the monetary base at an annual pace of about JPY80 trillion. Policymakers voted 7-2 to maintain the -0.1% interest rate on current accounts that financial institutions maintain at the bank. The bank said it would take additional easing measures if needed for achieving the price stability target.
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Members of the Reserve Bank of Australia's monetary policy board said that the country's economic growth remained slightly below trend, minutes from the bank's March 1 meeting revealed. With that in mind, the bank said additional easing measures remain a possibility - especially in light of persistent low inflation. At the meeting, the RBA held its benchmark lending rate at the record low 2.00% for the ninth straight meeting.
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Russian President Vladimir Putin ordered the withdrawal of the majority of Russian troops in Syria starting Tuesday, saying their task has been "completely fulfilled". Putin said he hoped the pullout will be a stimulus for a political resolution of the conflict. "The task presented to the Defence Ministry and the armed forces has been completely fulfilled," Putin told Defence Minister Sergei Shoigu on Monday, the same day that representatives of the Syrian government and opposition struggled to agree on President Bashar al-Assad's future at the start of renewed peace talks in Geneva.
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The US and Russia disagreed over whether recent ballistic missile tests conducted by Iran violated a UN Security Council resolution. The Security Council discussed the rocket launches after the US called for a meeting charging that the tests violated a resolution passed last year that endorsed the international nuclear deal brokered with Iran.
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The Organization of the Petroleum Exporting Countries said on Monday it expects lower demand for its crude oil in 2016 than previously anticipated. In its monthly report, OPEC said demand for its crude oil is projected at 31.5 million barrels per day in 2016, down by about 100,000 barrels per day than it had forecast in its last report. The oil cartel said its crude supply decreased by 175,000 barrels a day in February, to average around 32.3 million barrels per day, according to secondary sources. This was due to decreases in output by Iraq, Nigeria and UAE, which offset increases from Iran, Saudi Arabia and Kuwait.
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BROKER RATING CHANGES
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GOLDMAN RAISES RBS TO 'CONVICTION BUY' ('NEUTRAL') - TARGET 375 (380) PENCE
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JEFFERIES CUTS ASTRAZENECA TO 'HOLD' ('BUY') - PRICE TARGET 4350 (4900) PENCE
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TRADERS: MORGAN STANLEY CUTS RIO TINTO TO 'EQUALWEIGHT'
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TRADERS: MORGAN STANLEY CUTS ANGLO AMERICAN TO 'UNDERWEIGHT'
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MACQUARIE CUTS ANTOFAGASTA TO 'UNDERPERFORM' ('NEUTRAL') - TARGET 365 (350) PENCE
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MACQUARIE CUTS BHP BILLITON TO 'UNDERPERFORM' ('NEUTRAL') - PRICE TARGET 700 PENCE
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COMPANIES - FTSE 100
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J Sainsbury reported growth in sales in the fourth quarter of its financial year and said that, while the market remains competitive, it is confident it will outperform its major peers. The supermarket chain said total retail sales in the nine weeks ended March 12 increased by 1.2% excluding fuel and by 0.5% including fuel, both year-on-year. On a like-for-like basis, retail sales were up by 0.1% excluding fuel, but declined by 0.4% including fuel. Sainsbury's made no mention of its takeover bid for Argos retail chain owner Home Retail Group.
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Legal & General Group said profit and cash generation improved in 2015, prompting an increased dividend. Pretax profit rose to GBP1.36 billion in 2015 from GBP1.24 billion in 2014, slightly ahead of company-supplied analyst consensus of GBP1.34 billion. Net cash generation grew by 14% to GBP1.26 billion, ahead of the GBP1.22 billion expected by analysts. Legal & General lifted its total dividend per share for the year to 13.40 pence from 11.25p in 2014, beating the 13.34p expected by analysts, and it committed to a "progressive" dividend policy. The group posted a capital surplus of GBP5.5 billion over regulatory requirements under new Solvency II insurance rules in the EU, with a coverage ratio of 169%.
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Antofagasta confirmed suspicions it will skip its final dividend for 2015 after earnings were slashed by lower commodity prices and a fall in production. The Chilean copper miner reported net earnings from continuing operations of only USD5.5 million in 2015, a dramatic fall from the USD422.4 million reported in 2014, as revenue dropped 34% to USD3.39 billion as a result of weaker copper prices and lower production. Antofagasta said it will not pay a final dividend for the year, leaving shareholders with the 3.1 pence interim dividend paid for the first half. That is a huge drop from the 21.5 cents full-year dividend paid in 2014.
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COMPANIES - FTSE 250
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Car distributor Inchcape said its pretax profit and revenue both edged up in 2015, driven by a robust performance in its emerging markets business. The company said pretax profit rose 2.7% to GBP262.6 million from GBP255.8 million a year earlier, as revenue inched up to GBP6.8 billion from GBP6.7 billion. Inchcape will pay a final dividend of 14.1 pence per share, up from 13.8p a year earlier, taking its total dividend to 20.9p, a 4.0% rise on its 20.1p payout in 2014.
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Construction and infrastructure group Balfour Beatty said it plans to reinstate its dividend this year following its significant restructuring, as its pretax loss narrowed in 2015. The FTSE 250-listed company, which undertook a significant restructuring in 2014 to deal with troublesome legacy contracts in its construction division, said its pretax loss for the year to the end of December narrowed to GBP199.0 million from GBP304.0 million, mainly due to fewer losses booked on its legacy book. The group scrapped its dividend as part of its restructuring but said it intends to reinstate payouts at its interim results, due to be published in August.
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Ocado Group reported growth in sales in the first quarter of its financial year, boosted by a rise in average orders per week and said it expects to continue growing ahead of the online grocery market. The grocery delivery company said group sales in the 12 weeks to February 21 grew to GBP312.4 million from GBP271.1 million in the same period the year before, as retail sales rose to GBP286.7 million from GBP252.0 million. Average orders per week increased to 214,000 from 183,000, but the average order size slipped to GBP111.41 from GBP114.72.
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Veterinary pharmaceuticals company Dechra Pharmaceuticals said it has acquired Portland, Maine-based generic animal drugs developer Putney Inc for USD200.0 million in total. Dechra will pay USD200.0 million in cash to acquire Putney, which will be backed by an extension to its existing credit facility and by the group raising GBP47.1 million via a share placing. Dechra has issued 4.4 million shares at 1,100 pence per share to raise the funds.
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COMPANIES - INTERNATIONAL
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US-based hotel chain Marriott International faces competition from China for its proposed takeover of the Starwood hotel chain. A group of investors led by Anbang Insurance Group has upped the ante by making a bid for Starwood that surpasses Marriott's, Starwood said in a news release Monday. The consortium would pay USD76 per share, according to a Starwood news release. The offer would make the deal worth about USD12.8 billion, which compares with the stock-and-cash deal offered by Marriott of USD10.8 billion. Starwood said despite the offer its board of directors had not changed its recommendation in support of Starwood's merger with Marriott.
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Avon Products said that it will reduce its headcount by approximately 2,500 positions across multiple geographies. It includes both filled and open positions. The company will reduce corporate infrastructure and will transition, over time, the location of Avon's corporate headquarters to the UK, where the company has significant commercial operations. Avon will maintain its current facilities in Suffern and Rye, New York. The Company will also continue to be incorporated in New York and trade on the New York Stock Exchange.
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Sony Corp said that it signed a binding memorandum of understanding with Estate of Michael Jackson to acquire remaining the 50% stake in Sony/ATV music publishing held by the Estate for USD750 million. The deal includes a lump sum payment by Sony of about USD733 million as well as distributions previously committed to by Sony/ATV to be paid to the Estate. Talks on a deal began in September, when Sony exercised its right under their joint venture to buy out Jackson's estate.
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Volkswagen is being sued for EUR3.3 billion over the cover-up of its polluting diesel engines, according to reports. The case was filed Monday at the Braunschweig Regional Court on behalf of 278 institutional investors from around the world. The suit claims VW failed to publish information about the emissions scandal in a timely manner, the reports said.
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Japanese conglomerate Toshiba Corp is in late-stage negotiations to sell its white goods business to Chinese household appliance giant Midea Group, The Nikkei reported. The deal is expected to fetch tens of billions of yen. The Japanese electronics titan is looking to offload to Midea the majority of shares held in fully-owned subsidiary Toshiba Lifestyle Products & Services by this summer. Last week, Toshiba granted exclusive negotiation rights to Canon to buy its medical equipment unit as Toshiba restructures its operations after an accounting scandal.
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Tuesday's Scheduled AGMs/EGMs
Brunner Investment Trust
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By Tom Waite; [email protected]; @thomaslwaite
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