31st May 2018 12:02
LONDON (Alliance News) - Stocks in London were trading higher at midday on Thursday as fears over the political crisis in Italy dissipated, while FirstGroup stole the headlines as its chief executive resigned following a large loss.The FTSE 100 index was up 0.1%, or 4.67 points, at 7,694.27 at midday Thursday. The mid-cap FTSE 250 index was up 0.3% at 20,888.02. The AIM All-Share index was up 0.2% at 1,082.84.The Cboe UK 100 was up 0.4% at 13,062.49, the Cboe UK 250 was up 0.5% at 19,089.91, and the Cboe UK Small Companies was up 0.1% at 12,678.58.The head of Italy's anti-immigrant League party, Matteo Salvini, cancelled several events in the north of the country on Thursday, a spokeswoman said, amid reports that he is expected to revive efforts to form a coalition government.Salvini is scheduled to meet with the head of the anti-establishment Five Star Movement (M5S) in Rome, Italian media reported.The M5S and League failed to form a coalition government at the weekend after President Sergio Mattarella refused to approve their nominee for finance minister. The candidate, Paolo Savona, was known for his criticism of the eurozone and Germany.The situation took a turn on Wednesday when M5S leader Luigi Di Maio suggested giving Savona another post in the cabinet to avoid an interim government and, ultimately, fresh elections."Markets are going to be hugely sensitive to the prospect of a new election, and if they manage to put together a coalition without a new vote, nor the staunchly anti-EU finance minister Paolo Savona, this would be the ideal outcome for markets," said IG market analyst Joshua Mahony.On the London Stock Exchange, CRH was the best blue chip performer at midday up 3.8% after the Irish building materials firm said it will establish a new division effective from January 2019. The new Building Products division will combine the Europe Lightside, Europe Distribution and Americas Products divisions under the management of the latter's President Keith Haas. CRH said it is targeting to improve its group earnings before interest, taxes, depreciation and amortisation margin by 300 basis points by 2021.Informa was up 1.9% after the events firm said it expects its takeover offer for FTSE 250-listed rival UBM to become effective on June 15 after the UK Competition & Markets Authority decided not to investigate the acquisition. Business-to-business multimedia firm UBM shares will cease trading on June 14 and its shareholders will receive new Informa shares, which will start trading on June 18. The GBP3.90 billion merger, valuing each UBM share at a 30% premium on the share price at the time, was agreed in January. UK regulator CMA said the transaction does not qualify for investigation under competition law, completing the regulatory process in the UK. In China, Germany, Turkey and the US, the process was already completed.UBM shares were up 2.7%.At the other end of the large cap index, National Grid was down 4.3% after the stock went ex-dividend meaning new buyers no longer qualify for the latest dividend payout. In the FTSE 250, FirstGroup was the worst performer down 12% with GBP162 million wiped off its total market value after the transport company's chief executive departed following sharp losses owing to woes from its US Greyhound business. FirstGroup said Chief Executive Officer Tim O'Toole will step down with immediate effect, while Non-Executive Chairman Wolfhart Hauser will become executive chairman until a new CEO is found. FirstGroup said it has already started the process to select a new CEO. FirstGroup swung to a GBP326.9 million pretax loss for the year to March-end, having reported a GBP152.6 million profit a year earlier. The company said the pretax loss reflects the "non-cash impairment of Greyhound goodwill and onerous contract provision on the TransPennine Express rail franchise". The impairment of Greyhound, a US intercity coach operator, was GBP277.3 million."The Greyhound service is suffering from staffing issues and increasing competition from airlines. FirstGroup confirmed there will be a review carried out on the Greyhound division. The group foresees 'broadly stable' earnings this year, but that hasn't put traders' fears at bay," said David Madden, market analyst at CMC Markets.Sterling was higher quoted at USD1.3325 Thursday, against USD1.3291 at the London equities close on Wednesday.In domestic economic news, UK mortgage approvals dropped slightly in April, the Bank of England reported.Mortgage approvals for house purchases totaled 62,455 versus 62,802 in March. The expected level was 63,500. Net lending for consumer credit was GBP1.80 billion in April versus GBP0.40 billion in the previous month and forecast of GBP1.30 billion.At the same time, secured lending increased GBP3.90 billion, in line with expectations. Meanwhile, lending to non-financial businesses decreased by GBP2.80 billion in April following a large increase in March."British consumer lending and consumer credit both topped economists' forecasts. This suggests that demand is strong with consumers, but overreliance on borrowed money can be a hinder an economy," said Madden.In mainland Europe, the CAC 40 in Paris was up 0.2% while the DAX 30 in Frankfurt was down 0.4% Thursday.The euro was higher quoted at USD1.1703 compared to USD1.1665 at the European equities close Wednesday as data showed eurozone inflation rose to its highest level since April 2017. Annual inflation in the eurozone rose to 1.9% in May, coming close to the target figure, according to an initial estimate by the EU's statistics agency Eurostat.The European Central Bank's annual inflation target is just below 2%.Stocks in New York were set for a lower open following a strong close on Wednesday. The Dow Jones Industrial Average, the S&P 500 and Nasdaq Composite indices were all called down 0.1%.