27th May 2015 09:43
LONDON (Alliance News) - London stock prices are experiencing a small rebound mid-morning Wednesday following heavy losses on Tuesday, as a light day of economic data sees company news steal attention, particularly International Consolidated Airlines Group's takeover bid for Aer Lingus.
At mid-morning, the FTSE 100 trades up 0.7% at 6,999.29, the FTSE 250 is up 0.6% at 18,197.90, and the AIM-All Share is up 0.1% at 765.74.
In Europe, the CAC 40 in Paris is up 0.5%, while the DAX 30 in Frankfurt trades up 0.2%.
Irish flag carrier Aer Lingus Group late Tuesday said it has moved a step closer to being taken over by British Airways owner International Consolidated Airlines Group in a EUR1.4 billion deal, after the Irish government gave its backing to the deal.
The offer remains conditional on securing the approval of both the Irish government and budget carrier Ryanair Holdings, both of which hold substantial stakes in Aer Lingus, along with it securing regulatory approval in Europe and the UK. The Irish government, however, said it supports the takeover bid from IAG after it was confirmed that Aer Lingus would keep its existing slots at Heathrow airport. The Irish Parliament, the Dáil, still has to vote on the approval.
Cantor Fitzgerald believes that Ryanair Holdings will agree to sell its stake in Aer Lingus to IAG, as the additional cash from the deal could help finance its large new B737 aircraft orders and may also accelerate planned buy-backs or further special dividends.
IAG trades up 1.4%, Aer Lingus is up 1.9%, and Ryanair shares are up 0.8%.
Meanwhile, Imperial Tobacco Group is the best performer in the bluechip index, up 2.1%. The US Federal Trade Commission approved the acquisition of Lorillard by Reynolds American. As part of that US merger, Imperial Tobacco previously had agreed to acquire from the pair a portfolio of US cigarette brands, e-cigarette brand blu, and Lorillard's cigarette factory and national sales force.
"The announcement puts an end over 10 months of uncertainty about whether the deal would be signed off and sees Imperial Tobacco trade back up near all-time highs on the basis that it is set to become the new number-three US player in the USD100 billion US market, with a 10% market share behind that of leader Altria Group (47%) and the new Reynolds-Lorillard combo (34%)," says Mike van Dulken, head of research at Accendo Markets.
Weir Group trades down 1.2% after being downgraded to Hold from Buy by Deutsche Bank, which says a recovery in US rig count will not see an immediate surge in pressure pumping demand due to incomplete wells.
Meanwhile, Lloyds of London isurers Beazley, up 5.6% and Hiscox, up 3.0%, are amongst the best FTSE 250 performers after both being upgraded to Overweight from Neutral by JP Morgan.
De La Rue shares trade down 9.0% after it reported a drop in pretax profit in its recently completed financial year, as margins were squeezed by pricing pressure and the company achieved lower levels of new business than expected in its identity systems and security products. Weakness in the euro has put further pressure on its profitability in the new financial year, the company said.
Brewin Dolphin is down 4.6%. The wealth manager's chief executive said the company is entering the final stages of the transformation programme launched in 2012, as the company reported higher first-half pretax profit and discretionary funds under management.
In a statement, Brewin Dolphin said its discretionary funds under management amounted to GBP26.2 billion at the end of March, up from GBP24.0 billion at the end of its last financial year and from GBP22.7 billion at the end of the first half of that year. However, some analysts continue to remain cautious on the group until after the transformation is complete.
In the AIM All-Share index, RapidCloud International shares are up 15% as it said its Emerge Systems subsidiary has won two contracts for the PortalWEB product worth a total of GBP180,000 in the first year. The first of the contracts is with a leading printing company, while the second is with a major Southeast Asian airline. Neither company was named by RapidCloud.
Still ahead in the economic calendar are weekly US MBA mortgage applications at 1200 BST and the Redbook index at 1355 BST.
US futures point to a flat-to-higher open with all the DJIA, and Nasdaq 100 both a touch higher, and the S&P 500 flat.
By Neil Thakrar; [email protected]; @NeilThakrar1
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RYA.LInternational AirlinesDe La RueBRW.LBeazleyWeir GroupHiscoxIMT.LRCI.L