22nd May 2015 09:41
LONDON (Alliance News) - UK stock indices are trading higher mid-morning Friday as investors await speeches from key central bankers and the latest reading of US consumer prices, while Vodafone Group shares hit their highest level in 14 and a half years on continued merger and acquisition speculation.
The FTSE 100 is up 0.3% at 7,037.00, the FTSE 250 is up 0.2% at 18,190.66 and the AIM All-Share index is up 0.1% at 764.14.
In Europe, the French CAC 40 trades down 0.2% and the German DAX 30 is down 0.1%.
German business confidence weakened less than expected in May, according to a report by the IFO Institute for Economic Research. The business confidence index fell marginally to 108.5 in May from 108.6 in April. It was expected to decline to 108.3. Meanwhile, the current conditions index increased unexpectedly to 114.3 from around 113.9 a month ago. Economists had expected it to fall to 113.5. At the same time, the expectations index slid to 103 in May, in line with expectations, from about 103.5 a month ago.
Vodafone is the best performer in the FTSE 100, up 4.3%, on continued speculation surrounding a potential takeover by Liberty Global and a break-up of its operations. In a note on Thursday, Nomura upgraded Vodafone to Neutral from Reduce, saying the company's mediocre performance may influence the board to consider alternative routes for value creation, especially after comments from Liberty Global Chairman John Malone about a potential combination.
Nomura believes that Liberty Global will be unwilling to acquire the whole of Vodafone, but Malone was specific that Vodafone would be a 'great fit in Western Europe', which leads Nomura to believe Liberty Global would only be interested in acquiring Vodafone's Europe operations, and not those more distant, such as in India and South Africa.
Vodafone shares hit a high of 256.00p, its highest level since December 2000.
Severn Trent is the worst blue-chip performer, down 1.7%, as it said its pretax profit more than halved in the last financial year due to losses on financial instruments, but underlying earnings and revenue rose and the company increased its dividend as expected.
The UK water company said its pretax profit for the year ended March 31 more than halved to GBP148.2 million from GBP318.9 million a year earlier. However, excluding exceptional items and losses on financial instruments, profit rose to GBP300.4 million from GBP276.1 million as revenue climbed to GBP1.80 billion from GBP1.75 billion.
Whitbread said Lloyds Banking Group executive Alison Brittain will be its next chief executive, becoming the sixth female CEO of a FTSE 100 company. The owner of the Premier Inn and Costa Coffee chains said Brittain will join the company on January 4, 2016, and will succeed Andy Harrison who is retiring from full-time executive life at the end of February, 2016. Whitbread shares trade down 1.1%.
Mining stocks are helping to support London's main indices, with Anglo American up 1.8%, Fresnillo up 1.6% and BHP Billiton up 1.5%. In the FTSE 250, Kaz Minerals is up 2.8%, and Vedanta Resources is up 2.4%.
Investec raised BHP Billiton to Hold from Sell on the back of strong cashflow and debt reductions, but said the timing of the company's spin off of the South32 portfolio has occurred at an unfortunate time.
Investors will be looking ahead to a raft of speeches from central bankers, with Bank of England Governor Mark Carney, Bank of Japan Governor Haruhiko Kuroda and European Central Bank President Mario Draghi all expected to speak at 1430 BST. US Federal Reserve Chair Janet Yellen, meanwhile, is due to speak at 1800 BST.
"Economic opinion being disseminated not in data but speeches always leaves room for interpretation, and as such today's speeches will offer traders ample opportunity to jump to conclusions. All the while that this is going on, the time remaining for Greece to meet the austerity requirements that will trigger the release of the next tranche of funding is ticking away towards next week’s deadline," says Alastair McCaig, market analyst at IG.
In an earlier speech in Sintra, Portugal, Draghi said the outlook for the eurozone is much brighter, with growth picking up and inflation expectations recovering from from their trough. Draghi says it is a sign that the ECB's monetary policy is working.
"Monetary policy can steer the economy back to its potential. Structural reform can raise that potential. And it is the combination of these demand and supply policies that will deliver lasting stability and prosperity," he added.
Greek Prime Minister Alexis Tsipras, meanwhile, said he is optimistic that a solution for his country's economic problems can be found, after holding talks with his German and French counterparts.
"The discussion was very constructive, in a very good and friendly atmosphere," he told journalists after the late-night meeting with German Chancellor Angela Merkel and French President Francois Hollande on the margins of an EU summit in Riga.
A statement by Tsipras' office said Merkel and Hollande expressed their willingness "to help personally, if needed, to complete the agreement soon." Government spokesman Gabriel Sakellaridis said in a television interview that he expects an agreement between Greece and its creditors to be reached within 10 days.
Still ahead in the economic calendar is US consumer price inflation information for April, which is set to come out at 1330 BST. According to FXStreet.com, economists expectations are for US CPI to fall to 0.1% month-on-month in April, down from the 0.2% posted in March, but to remain unchanged on a yearly basis at negative 0.1%.
Futures indicate Wall Street for a higher open, with the DJIA and Nasdaq 100, pointed up 0.1% and the S&P 500 pointed flat.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
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