26th Feb 2016 08:25
LONDON (Alliance News) - London shares opened firm Friday on another significant day in the UK earnings calendar. Royal Bank of Scotland and British Airways-owner IAG led FTSE 100 decliners after announcing their 2015 results, down 8.2% and 1.3%, respectively.
London Stock Exchange Group and Deutsche Boerse said Friday the outcome of the UK's Brexit vote will not be a condition for their potential merger.
The two companies said also confirmed that a combined entity would be a UK PLC domiciled in London, with headquarters in London and Frankfurt, a premium listing on the London Stock Exchange and a prime standard listing on the Frankfurt Stock Exchange.
Deutsche Boerse Chief Executive Officer Carsten Kengeter would lead the combined entity, the companies said, taking the position of chief executive officer, with LSE Chief Executive Officer Xavier Rolet to step down on completion of a deal.
LSE Chairman Donald Brydon would chair the board of the entity, with his counterpart at Deutsche Boerse Joachim Faber to be his deputy. David Warren, the LSE's chief financial officer, would be the finance boss of the broader group.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.1% at 6,079.21
FTSE 250: up 0.9% at 16,549.72
AIM ALL-SHARE: flat at 688.79
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Hang Seng: closed up 2.5 at 19,364.15
Nikkei 225: closed up 0.3% at 16,188.41
DJIA: closed up 1.3% at 16,697.29
S&P 500: closed up 1.1% at 1,951.70
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GBP: up at USD1.4007 (USD1.3940)
EUR: up at USD1.1041 (USD1.1029)
GOLD: down at USD1,233.70 per ounce (USD1,237.46)
OIL (Brent): up at USD35.41 a barrel (USD33.75)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
(all times in GMT)
10:00 EU Consumer Confidence, Economic Sentiment, Business Climate
13:00 Germany Consumer Price Index
13:30 US Gross Domestic Product and GDP Price Index Preliminary
13:30 US Goods Trade Balance
15:00 US Personal Income and Spending
15:00 US Personal Consumption Expenditures - Price Index (MoM)
15:00 US Reuters/Michigan Consumer Sentiment Index
18:00 US Baker Hughes US Oil Rig Count
18:30 EU ECB's Praet Speech
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UK export growth slowed at the end of 2015 on the face of considerable challenges, the latest quarterly International Trade Outlook report from the British Chambers of Commerce and DHL showed. Export sales and orders across manufacturing and services sectors fell significantly in the fourth quarter of 2015. The trade confidence index dropped by 2.5% in the fourth quarter from last year. Among manufacturers, the balance of firms reporting improvements in export sales dropped to 1% from 10%. Slowing growth in China and the US, along with the continued weakness in the Eurozone, have made it harder for firms to build momentum, John Longworth, BCC director general said.
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Consumer confidence in the UK deteriorated in February, the latest survey from GfK revealed on Friday as its index score fell to 0. That was shy of forecasts for +3 and down from +4, and it marks a 14-month low score for the index. "Despite the positive impact of continued low interest rates and subdued inflation on day-to-day household budgets, the feeble outlook for growth and a variety of economic uncertainties since the start of the year has depressed optimism," said GfK's Joe Stanton.
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The People's Bank of China has more monetary policy space and multiple instruments to address possible downside risks, Governor Zhou Xiaochuan said. He reiterated that there is no room for persistent renminbi depreciation. In the long-run, the exchange rate will reflect economic fundamentals, he noted. The economic growth remains relatively strong, Zhou said ahead of this week's G20 meeting in Shanghai. The central bank said foreign reserves will be maintained around appropriate and reasonable level.
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Home prices in majority of the Chinese cities increased at the beginning of the year, figures from the National Bureau of Statistics showed. On a monthly basis, new homes prices climbed 38 out of 70 cities surveyed by the government. Prices dropped in 24 cities but remained flat in eight cities.
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Overall nationwide consumer prices in Japan were flat on a yearly basis in January, the Ministry of Internal Affairs and Communications said. That was in line with forecasts and down from 0.2% in December. Core CPI also was flat, matching forecasts and down from 0.1% in the previous month. On a yearly basis, overall CPI was down 0.4% and core inflation slipped 0.7%.
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The US economy still needs support from the Federal Reserve, a top central banker said Thursday. The ongoing recovery requires a "gentle shove forward," according to San Francisco Fed President John Williams. Williams expects inflation to rebound toward the Fed's 2% target as the economy continues to improve. He anticipates 2.25% GDP growth this year. In terms of rate hikes, Williams expects "a gradual process".
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Republican presidential contenders Marco Rubio and Ted Cruz took aim at Donald Trump Thursday in the final debate before crucial primaries in a dozen states next week. They criticized the billionaire businessman for allegedly hiring illegal immigrants, failing to release his tax returns and shifting his positions on a variety of issues. Trump leads in national polls and is on top in most of the states that will vote next week on so-called Super Tuesday, which could give him the necessary momentum to become the Republican Party's candidate.
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A French court has given authorities the go ahead to clear part of migrant camps near Calais, evicting hundreds of people, ruling that only sites of public use could stay in place. The court in the northern city of Lille upheld an expulsion order issued by local authorities. The judge said that arguments presented by humanitarian groups decrying limited housing alternatives were outweighed by efforts made by local authorities and the state to provide sufficient accommodation.
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BROKER RATING CHANGES
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NOMURA RAISES BURBERRY TO 'BUY' ('NEUTRAL') - TARGET 1500 (1450) PENCE
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BARCLAYS INITIATES SEVERN TRENT WITH 'EQUAL WEIGHT' - TARGET 2200 PENCE
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BARCLAYS INITIATES UNITED UTILITIES WITH 'EQUAL WEIGHT' - TARGET 970 PENCE
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TRADERS: UBS CUTS ANTOFAGASTA TO 'SELL' ('NEUTRAL')
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BERENBERG INITIATES NICHOLS WITH 'BUY' - TARGET 1450 PENCE
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BERENBERG INITIATES BRITVIC WITH 'BUY' - TARGET 850 PENCE
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COMPANIES - FTSE 100
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Royal Bank of Scotland Group reported its eighth consecutive annual net loss, as the state-backed bank's restructuring continued. Net losses did narrow, however, to GBP1.98 billion in 2015 from GBP3.47 billion in 2014, even as the bank swung to a GBP2.74 billion net loss in the fourth quarter from a GBP940 million net profit the corresponding three months the prior year.
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International Consolidated Airlines Group reported a more than doubling in profit in 2015, as revenue grew despite taking a small hit to sales in the fourth quarter following the terrorist attacks in Paris. The British Airways owner said its pretax profit in 2015 grew to EUR1.82 billion from EUR828 million in 2014, as revenue rose by 13% to EUR22.86 billion from EUR20.17 billion. IAG said it will pay a total dividend of 20 cents for the full year, including a 10 cent final dividend.
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Pearson said it swung to a loss in 2015 due to the huge restructuring it is undertaking to return itself to health, as sales also dipped in competitive markets and it said stability will start to return only by 2018. The education and publishing group said it swung to a pretax loss of GBP433.0 million for the year to the end of December, compared to a GBP255.0 million profit in 2014, primarily due to the one-off costs the group will book for the restructuring programme. Pearson said it will pay a final dividend of 34.00 pence per share, meaning its total dividend will edge up to 52.00p from 51.00p, in line with the level at which it set the payout when it outlined its restructuring plans last month.
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BHP Billiton said progress has been made in its negotiations with Brazilian authorities on a settlement for the Samarco tailings mine dam burst. Responding to recent news reports that Brazilian authorities are seeking to substantially increase the value of a compensation settlement regarding the mine disaster, BHP said significant progress has been made in the negotiations and it was "hopeful" an agreement will be reached.
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Shopping centre owner Intu Properties posted a rise in rental income but a much lower revaluation surplus for 2015, as pretax profit for the group dipped. The mall operator said it made a pretax profit of GBP513.0 million for the year to the end of December, down from a GBP593.7 million profit a year earlier, as a significant decline in the valuation gain it made on its portfolio offset much lower financing costs for the business. Intu said it will pay a final dividend of 9.1 pence per share, meaning its total dividend remains flat at 13.7p.
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Sports Direct International said it will stop drawing down from its loan facility with Mike Ashley/Mash Holdings Ltd due to criticism it has received about related-party transactions and instead will solely use its revolving credit facility, which was recently increased to GBP788 million.
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Diageo said on Thursday that Vijay Mallya has resigned as chairman and non-executive director of Indian subsidiary United Spirits, and, under the agreement of the resignation, it will pay Mallya USD75.0 million. The beer and spirits maker said it will make the payment over a five-year period, subject to Mallya terminating his appointment and agreeing to a five-year global non-compete, non-interference, non-solicitation and standstill undertaking. Mallya also agreed that he and his affiliates will not pursue any claims against Diageo, United Spirits or their affiliates.
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COMPANIES - FTSE 250
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Online property portal Rightmove said pretax profit was lifted in 2015 by higher revenue, driven by a strong audience growth and an increase in its average revenue per advertiser. The company said its pretax profit was up 16% to GBP144.3 million in the year to the end of December, from GBP124.6 million in 2014, boosted by the increase in revenue to GBP192.1 million from GBP167.0 million, 15% higher. The company hiked its final dividend to 27.00 pence per share from 22.00p, 23% higher, bringing its total dividend to 43p per share from 35p in 2014.
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William Hill reported a drop in profit in 2015, as revenue fell slightly following a tough comparative period which included the football World Cup and as it faced additional gambling duties in the UK, but increased its dividend payout ratio and announced a share buyback. The betting company said pretax profit in 2015 fell to GBP184.7 million from GBP233.9 million in 2014, as revenue decreased by 1% to GBP1.59 billion from GBP1.61 billion. William Hill will pay a total dividend of 12.5 pence for the year, a 2.5% increase on the 12.2p it paid in 2014, and said it has increased the dividend payout ratio to around 50% of adjusted earnings. It will also complete a GBP200 million share buyback over the next year.
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Engineer IMI said its pretax profit and revenue fell in 2015, in line with the profit warning the group issued earlier in the year as it contended with tough markets. IMI said its pretax profit fell 34% to GBP163.0 million from GBP246.0 million a year earlier, as revenue declined 7.0% to GBP1.58 billion from GBP1.69 billion. IMI will hike its final dividend slightly to 24.5 pence from 24.0p, taking its total dividend up to 38.4p from 37.6p.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Oil and gas explorer SOCO International said it has plugged and abandoned the Baobab Marine-1 well at the Mer Profonde Sud Block in the Lower Congo Basin, offshore the Republic of Congo. The well intersected the channel complexes which had been targeted, but no hydrocarbons were encountered, SOCO said.
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Oil and gas investment company MX Oil said it has agreed terms on the sale of its investment in the Aje field offshore Nigeria to GEC Petroleum Development. Under the terms of the agreement GEC will have the right to acquire MX Oil's indirect investment in the Aje Field for a total of USD18.0 million.Initially, up to USD3.5 million will be advanced to MX Oil in three stages, with the first payment expected in March. GEC will then have the right to buy the investment, which MX Oil said is most likely to happen when initial oil production at the project starts.
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COMPANIES - INTERNATIONAL
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BASF reported its net income decreased to EUR3.99 billion in 2015 from EUR5.15 billion in 2014. EBIT before special items decreased to EUR6.74 billion from EUR7.36 billion. Sales revenue declined year-over-year to EUR70.45 billion from EUR74.33 billion euros. In 2016, the company expects its sales will decline significantly. BASF Group expects to achieve a slightly lower level of EBIT before special items than in 2015.
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Taiwanese Foxconn Technology Group reportedly postponed the Sharp Corp USD6.25 billion takeover offer. Foxconn, in a written statement, reportedly said it will delay completing the deal because it needed to study "new material information" released by Sharp. The information includes an additional USD3.1 billion in contingent liabilities not previously disclosed that Foxconn would assume from Sharp, according to The Wall Street Journal.
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Apple responded in court to an order it hack an iPhone linked to the San Bernardino, California, terrorist attack, calling the FBI's demand unconstitutional, illegal and dangerous. "No court has ever authorized what the government now seeks, no law supports such unlimited and sweeping use of the judicial process, and the constitution forbids it," lawyers for Apple wrote in a 36-page motion filed in federal district court in California.
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Oilfield services provider Halliburton reportedly announced it is slashing about 5,000 positions, or 8% of its workforce, as energy companies continue to struggle due to cheap oil prices. The Houston-based energy company told CNNMoney that the new job cuts will take place worldwide over the next several weeks.
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Friday's Scheduled AGMs/EGMs
Intelligent Energy
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
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