4th Aug 2015 09:33
LONDON (Alliance News) - UK stocks have reversed a lower open to trade slightly higher mid-morning Tuesday, with the resource sector rebounding after its recent losses, while the pound fell sharply after the release of a weaker-than-expected UK construction purchasing managers' index score.
UK construction sector growth slowed unexpectedly in July, with business activity and incoming new work expanding at slower rates, survey results from Markit Economics showed. The Markit/Chartered Institute of Procurement & Supply construction PMI slipped to 57.1 in July from June's four-month high of 58.1. It was forecast to rise to 58.5.
"July's growth slowdown is the first for three months and perhaps a sign that the post-election impact on construction confidence has started to diminish. Reflecting this, UK construction firms? business activity expectations moderated from June's 11-year peak but remain strong overall," says Tim Moore, senior economist at Markit.
The pound fell sharply against other major currencies following the data. Against the dollar, the pound fell to a low of USD1.5570 following the data.
The FTSE 100 trades up 0.3% at 6,708.66, the FTSE 250 is up 0.2% at 17,708.87, and the AIM All-Share is up 0.2% at 752.95.
In Europe, the CAC 40 in Paris is down 0.3%, while the DAX 30 in Frankfurt is up 0.1%.
The biggest gainers in the FTSE 100 are mostly miners, recovering somewhat from their heavy falls on Monday. Glencore, which hit a new all-time low on Monday, is up 1.0%, while Anglo American is up 2.3%, Rio Tinto is up 2.1% and BHP Billiton is up 2.0%.
Elsewhere on the London Stock Exchange, Smiths Group is the best blue-chip performer, trading up 6.2%. US activist hedge fund ValueAct has emerged as a shareholder in FTSE 100-listed engineering company, just days after it was revealed the fund had become the largest shareholder in Rolls-Royce Holdings, the Financial Times reported.
ValueAct's holding in Smiths, which makes products including airport scanners and medical devices, is below the 5% threshold required for disclosure to the London Stock Exchange, the FT said.
Meggitt trades up 5.2% after it said its pretax profit jumped in the first half of 2015 as revenue increased, though the company's order intake was weaker in the period. The aerospace engineering company said its pretax profit for the half to the end of June was up to GBP115.8 million from GBP98.2 million, driven by a 10% rise in revenue in the half to GBP793.7 million from GBP718.9 million. Order intake, however, fell by 1% in the half to GBP775.3 million from GBP782.7 million.
Direct Line Insurance Group improved its guidance for a key measure of underwriting profitability in 2015, as it recorded higher-than-expected reserve releases from prior years in the first half and reported improved profit figures.
The motor and home insurer, which trades up 1.9%, said it expects its combined operating ratio for 2015 to be in the range of 92% to 94%, an improvement on the previous guidance of 94% to 96%, assuming a "normal annual level" of home claims from major weather events of about GBP80 million.The company also said pretax profit from continuing operations increased to GBP315.0 million in the half, compared with GBP211.7 million in the prior year period.
On the other side of the index, Standard Life shares are taking a hit, trading down 3.2%, making it the worst performer in the FTSE 100. The Edinburgh-based investments and savings company said it expects a lower contribution to its results for 2015 from annuity new business in the wake of changes to UK pensions rules that mean retirees are no longer required to purchase them.
It said it expects annuity new business to fall by about GBP10 million to GBP15 million in 2015. The contribution from asset liability management is to fall by about GBP30 million to GBP40 million, Standard Life said.
Builders' merchant and home improvement retailer Travis Perkins trades down 3.1% even though it hiked its interim dividend by 20% on the back of a rise in profit driven by stronger revenue and robust like-for-like sales growth.
The company, which runs the Wickes DIY chain along with plumbing and heating and contract merchanting businesses, said its pretax profit for the six months to the end of June was GBP158.6 million, up from GBP153.7 million a year earlier.
However, Davy Securities said the company's first-half came in weaker than it expected and leaves the group with considerable ground to make up in the second half of the year if it is to reach its full-year target.
FTSE 250-listed Rotork, up 4.2%, said its pretax profit and revenue both declined in the first half as the group continues to suffer the effects of the downturn in the oil and gas industry, and said it has struck a deal to acquire a unit of fellow UK-listed engineer Spirax-Sarco Engineering.
The company, which makes actuators for gearboxes and pneumatic instruments, said its pretax profit was down to GBP56.3 million from GBP61.5 million in the first half. Revenue declined to GBP274.2 million from GBP278.5 million, and order intake sunk 9.5% to GBP274 million from GBP302.7 million. In order to sweeten the pill for investors, Rotork said it has increased its interim dividend payout by 1.6% to 1.95 pence per share.
Just Eat trades up 1.7%. The online takeaway platform reported growth in profit in the first half of 2015 and said it expects revenue for the full year to be higher than originally anticipated due to additional orders delivered by extra investment.
The company reported growth in pretax profit in the six months ended June 30 to GBP14.0 million from GBP8.6 million in the first half of 2014, as revenue rose to GBP107.8 million from GBP69.8 million.
Still ahead in the economic calendar are the US ISM New York Index at 1445 BST and US factory orders at 1500 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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