11th Dec 2015 08:21
LONDON (Alliance News) - Stocks opened lower in London Friday, as the prices of oil and gold remained under pressure.
Shares in FTSE 100 retailer Sports Direct also continued to slide, down 2.9%, following the company's earnings report on Thursday. Goldman Sachs cut its price target on the stock but kept a Buy recommendation.
Meanwhile, the UK government has put back a decision on expanding Heathrow airport until the summer of 2016.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,072.50
FTSE 250: down 0.2% at 17,039.12
AIM ALL-SHARE: down 0.2% at 730.01
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Hang Seng: closed down 1.1% at 21,464.05
Nikkei 225: closed up 1.0% at 19,230.48
DJIA: closed up 0.5% at 17,574.75
S&P 500: closed up 0.2% at 2,052.23
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GBP: down at USD1.5147 (USD1.5180)
EUR: up at USD1.0951 (USD1.0939)
GOLD: down at USD1,070.49 per ounce (USD1,073.20)
OIL (Brent): down at USD39.58 a barrel (USD39.76)
(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)
09:00 Italy Industrial Output
09:30 UK Consumer Inflation Expectations
10:15 EU Targeted LTRO
13:30 US Retail Sales
13:30 US Producer Price Index
15:00 US Reuters/Michigan Consumer Sentiment Index Preliminary
15:00 US Business Inventories
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The UK government said it will delay a decision on expanding London's airports to summer next year as it undertakes further work on the environmental impact of the changes. The decision was seen as a move to push the decision on expanding airport capacity beyond the London Mayoral elections, where Tory candidate Zac Goldsmith is running and opposes the expansion of Heathrow airport. The government said it will undertaken a series of studies to figure how to best mitigate the impact of airport expansion on local people and businesses, along with more work on the environmental impact of the changes.
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Germany's consumer prices increased at the fastest pace in six months as estimated in November, final data published by Destatis showed. Inflation rose to 0.4% in November from 0.3% in October. It was the fastest since May, when prices climbed 0.7%. Month-on-month, consumer prices edged up 0.1% after staying flat in October. The statistical office confirmed its provisional results published on November 30. A decrease of 7.5% in energy prices exerted a marked downward effect on inflation. Excluding energy, inflation would have been 1.3%, Destatis said. The harmonized index of consumer prices gained 0.3% annually, slightly faster than October's 0.2% increase.
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French current account turned to a deficit in October from a surplus in the previous month, figures from the Bank of France showed. The current account showed a deficit of EUR 1.4 billion in October against a surplus of EUR 0.3 billion in September. The goods trade deficit widened to EUR 3.0 billion in October from EUR 1.9 billion in the preceding month. At the same time, the surplus on services trade shrank to EUR 1.1 billion from EUR 1.8 billion.
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International negotiators were grappling overnight with the latest draft of a climate deal that aims to prevent global catastrophe in future decades. French Foreign Minister Laurent Fabius, who has presided over the two weeks of talks, was optimistic that agreement could be found by the Friday deadline. "We are extremely close to an agreement," he said. "We must work in the coming hours to find common ground." The latest draft left open three major issues that Fabius conceded were the most "complex" of the two weeks of talks. They involve the question of different rules for rich and poor countries; financial aid for developing nations to adapt to warmer temperatures and create carbon-free energy sources; and levels of ambition.
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Syria's disparate opposition groups say they are ready to have UN-sponsored negotiations with representatives from President Bashar al-Assad's government - but insist he step down. "The aim of the political settlement is to create a state based on the principle of citizenship without Bashar al-Assad or figures of his regime having a place in it or any future political arrangements," the groups said Thursday in a statement. A meeting with representatives of the Syrian regime is now planned for January. The Syrian opposition groups met for two days of talks in the Saudi capital Riyadh to try to build a united front.
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BROKER RATING CHANGES
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GOLDMAN CUTS ANGLO AMERICAN PRICE TARGET TO 280 (430) PENCE - 'SELL'
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GOLDMAN RAISES PRUDENTIAL TARGET TO 1900 (1800) PENCE - 'CONVICTION BUY LIST'
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GOLDMAN RAISES ST JAMES'S PLACE PRICE TARGET TO 1140 (1050) PENCE - 'BUY'
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GOLDMAN CUTS SPORTS DIRECT PRICE TARGET TO 725 (850) PENCE - 'BUY'
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COMPANIES - FTSE 100
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Capita said it has been awarded a contract to provide customer management services to Unitymedia, Germany's second largest broadband and cable provider, worth EUR88.0 million over seven years. The company said its bid pipeline currently stands at GBP5.1 billion, a fall from the GBP5.4 billion seen in July. The pipeline is comprised of 29 bids, with 98% representing new business and the remainder being renewals.
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Legal & General Group gave its backing to long-termism by setting out plans to stop reporting on a quarterly basis. The life insurer and investment manager said its preference is to make "timely and frequent" updates, with the intent of improving the way it communicates with investors and other stakeholders. The move comes after the group's investment management arm wrote to every company in the FTSE 350 in support of regulatory changes that have removed the obligation to report finances on a quarterly basis. Legal & General said it will continue to provide preliminary annual and interim results, as well as "qualitative" updates covering market and company developments.
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Standard Chartered said 96.79% of the new shares on offer under its USD5.1 billion rights issue were taken up by shareholders. The Asia-focused lender said JP Morgan Cazenove and Bank of America Merrill Lynch - the investment banks working on the rights issue - will use their "reasonable endeavours" to find buyers of the remaining shares. Standard Chartered revealed the capital raising on November 3, alongside further measures to bolster its financial strength and adjust its strategy in a move to improve returns.
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AstraZeneca has teamed up with the Swedish government and the Wallenberg family to invest USD100.0 million in a new research centre, the Financial Times reported. The pair will work together on developing new technologies for discovering and manufacturing new drugs, the FT said, following on from AstraZeneca's announcement in May that it would build a new USD285.0 million production facility in Sweden.
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AstraZeneca also has won a partial victory in its battle with the National Institute for Health and Clinical Excellence, the NHS drug cost watchdog, over access to a new medicine for ovarian cancer, the FT said. NICE said on Friday it would be willing to recommend olaparib, also known as Lynparza, for use by the NHS England, reversing its June decision to reject the drug. This was only secured, however, after AstraZeneca agreed to cut the price of the drug and fund some treatment costs in concession.
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COMPANIES - FTSE 250
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Construction and support services group Carillion said it has secured a contract from German transport company Arriva's UK trains arm to be preferred facilities management and services partner. The contract, worth around GBP120.0 million to Carillion, will see the company work with Arriva on the Northern Rail franchise, which was awarded to Arriva's UK unit earlier this week by the UK government. Carillion will work on the project for an initial nine-year period, with the potential to extend this by a further year. It is due to start work on the contract in April 2016.
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John Laing Group said it is on track to achieve its full-year targets for 2015. The infrastructure investor and manager said it is "well positioned" in the market for new infrastructure, which is driven by population growth, urbanisation and climate change. The group reported investment commitments to date of GBP170.0 million, at the upper end of the guided GBP150.0 million and GBP170.5 million range. Realisations to date have amounted to GBP86.0 million, against a full-year target of about GBP100.0 million.
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Bellway continued the positive newsflow from the UK housebuilding sector as it said its reservation rate improved in the first months of its new financial year and that its total completions and average selling price are both set to rise in the full year. The group said its reservation rate in the 18 weeks from August 1 to December 6 has increased 12% year-on-year to 165 homes per week. The strong start to the year led the group to forecast its total completions for the full year to the end of July 2016 will rise around 10% year-on-year, from the 7,752 it completed in its 2015 financial year. Bellway added the average price of those completions will also rise by around 10%, meaning it expects its operating margin for the current financial year to increase about 21%, contributing to another anticipated improvement in its return on capital employed.
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International Personal Finance late Thursday warned it could be hit by new legislation in Slovakia. The lender's update came one day after the Slovak parliament voted to adopt "previously undiscussed" proposals to amend various pieces of consumer legislation. "IPF is reviewing the draft amendments to assess the extent to which its product structure would be affected by the proposed changes. Based on our current understanding, these changes would mean that all fees that IPF raises in connection with the issuance of a loan, including the fee for home service, would need to be levied at rates consistent with the remuneration cap," the company said in a statement. International Personal Finance added that it is "very actively" reviewing the implications of the "unexpected" amendments.
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Petra Diamonds said it made USD86.2 million from the sale of its latest diamond tender, including the exceptional pink stone extracted from the Williamson mine in Tanzania. It was the company's second diamond tender in the first half of its financial year, with prices remaining broadly flat over both. Petra sold 606,080 carats for a total of USD86.2 million, including that pink stone which contributed over USD10.0 million. Although prices in the second tender were similar to the first carried out earlier in 2015, Petra said the "expected improvement in product mix" has "favourably impacted" the average price per carat it has achieved. Petra said rough diamond prices have fallen by around 9% since the fourth quarter of its last financial year ended June 2015, but the weakening of the South African rand has mitigated that fall, it said.
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Kaz Minerals said the Bozshakol project in Kazkahstan has progressed well in the fourth quarter of 2015 and said production of copper concentrate is expected to start in January. The guidance to start production in January compares to its original target to start in the first quarter of 2016 - as Kaz pushes on with commissioning work.
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COMPANIES - LONDON MAIN MARKET AND AIM
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US-based investment group Cathexis UK Holdings said it has made a takeover offer for construction services company ISG which values the company's issued share capital at GBP70.8 million. Cathexis will pay 143.00 pence per share for ISG, a 17% premium to its closing price on Thursday. Cathexis already holds a 29.5% stake in ISG, having been a shareholder in the business since March 2012.
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Irish drinks company C&C Group said it has struck a long-term distribution deal with American brewer Pabst Brewing to cover the US market. Under the terms of the deal, Pabst will acquire the licence to distribute, market and sell all of C&C's cider brands in the US, including Magners and Blackthorn, along with its premium craft cider brands like Woodchuck, Gumption and Wyder's. No financial details on the agreement were disclosed.
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Plus500 said it intends to resume onboarding of new UK customers in January 2016. "Plus500 notes recent inaccurate external comments and confirms that Plus500UK is not subject to regulatory restrictions including preventing it from onboarding new customers," the company said in a statement. The online financial trading company, which provides contracts for difference, was barred from onboarding new UK customers in May, as it drew regulatory scrutiny from the country's Financial Conduct Authority over its anti-money laundering procedures.
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Clean water technology company HaloSource said delays in getting its drinking water plant in China up and running will result in the group's 2015 results materially missing expectations. HaloSource said the drinking water plant in China is now actively fulfilling customer orders, but this followed an extended shutdown of the facility due to unexpected operational challenges related to the production of cartridges as the company ramped up production capacity. These delays have pushed orders expected in 2015 back to the first quarter of 2016 and, as a result, drinking water revenue for the second half will be lower than anticipated.
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COMPANIES - INTERNATIONAL
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Prominent Chinese investor and businessman Guo Guangchang was unreachable Friday, sending shares in his company Fosun International tumbling, reports said. China's watchdog has been conducting investigations into alleged malpractice on the country's stock exchange, with several finance executives disappearing to help authorities with their enquiries. The billionnaire chief executive of Fosun, dubbed China's Warren Buffet, has been out of contact since Thursday morning, business magazine Caixin reported. Some social media reports said he was apprehended by police at Shanghai airport. The South China Morning Post said it has been unable to reach the company's public relations office, but two other Fosun executives denied the Caixin report, and said that the company had been in touch with Guo.
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Dow Chemical and EI DuPont De Nemours plan to announce a merger Friday, the Bloomberg reported, citing people familiar with the matter, a deal that would be the largest ever in the chemicals industry. There's still no guarantee that the terms of the transaction will be agreed by then, the report said. The companies have been in advanced talks about a merger that would be followed by a breakup of the combined company into three separate businesses: agriculture, specialty chemicals and commodity chemicals.
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Ford Motor said it planned to invest additional USD4.5 billion in electrified vehicle solutions by 2020. The company said it will add 13 new electrified vehicles to its product portfolio by 2020, rising to more than 40% of Ford's nameplates globally by the decade's end, up from 13% now. The plans includes roll out of a new Focus Electric car next year with fast-charge capability and an estimated 100-mile range, up from 76 miles in the current electric Focus.
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Friday's Scheduled AGMs/EGMs
Bellway
MJ Gleeson
Standard Life Investments Property Income Trust (re acquisition)
Waterman Group
BACIT
CQS New City High Yield Fund
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By Tom Waite; [email protected]; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
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