20th Jul 2015 11:10
LONDON (Alliance News) - Stocks in the UK and Europe trade higher midday Monday, and Wall Street futures point to a firm open, with US earnings season in-focus and with the price of gold falling to a five-year low.
The FTSE 100 is up 0.3% at 6,793.11 points. The FTSE 250 is up 0.4% at 17,828.10, and the AIM All-Share index is up 0.4% at 759.73.
In Europe, the CAC 40 in Paris is up 0.8%, as is the DAX 30 in Frankfurt.
Ahead of the open in New York, futures point the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 up 0.1%. Earnings season in the US continues, with earnings expected from IBM, Morgan Stanley and Halliburton, amongst others.
On the London Stock Sxchange, AVEVA Group shares are up 28% to 2,270.00 pence, leading FTSE 250 gainers by a mile. The engineering software company said it has struck a deal with French energy group Schneider Electric to acquire industrial software assets from Schneider in a GBP1.3 billion reverse takeover.
Under the terms of the deal, AVEVA will acquire Schneider Software on a debt-free, cash-free basis and will receive GBP550 million in cash from Schneider Electric for AVEVA shares. The overall deal will give Schneider a 53.5% stake in AVEVA. AVEVA said that based on its share price before the market open - shares in the company closed at 1,770 pence last Friday - around 74.0 million shares will be issued to Schneider Electric having a market value of around GBP1.3 billion.
Following the news, Investec upgraded AVEVA to Buy from Hold, saying that concerns over the company's reliance on the oil and gas markets should be addressed through this deal.
"After some expectation in the past years of large deals coming close, the company has now entered into its first transformational acquisition which in our view comes at an opportune time and has many merits," Investec says.
Leading the fallers list in both the FTSE 100 and FTSE 250 indices are precious metals miners following a slump in the price of gold.
In the FTSE 100, Fresnillo is down 4.1% and Randgold Resources is down 3.6%. Leading the mid-cap fallers is Lonmin, down 7.5%, Centamin, down 5.2%, and Acacia Mining, down 4.1%.
Gold prices hit a five-year low amid expectations that a US interest rate hike will occur later this year and following the disclosure of lower-than-expected gold reserves held by China. The metal fell to its lowest price since February 2010 overnight to USD1,073.40 an ounce, but has since recovered to trade at USD1,113.66.
Tullow Oil is also amongst the worst performers in the FTSE 250, trading down 4.3%. The company said gas exports from the Jubilee field to the Ghana gas plant at Atuabo have been suspended due to technical issues which will continue to impact exports until mid-August.
The gas exports were suspended on July 3 due to technical issues with gas compression systems on the floating production, storage and offloading Kwame Nkrumah vessel. Oil production is currently constrained to 65,000 barrels of oil per day, but the company said there has been no affect on the field's reserves or resources.
Standard Chartered shares trade up 1.3% after the recently-appointed chief executive of the emerging markets-focused bank, Bill Winters, appointed a new management team reporting directly to him and changed the bank's structure as he tries to improve performance and cut USD1.8 billion in costs by the end of 2017.
The new management team, which consists of 13 members, will be responsible for devising a plan by the end of the year to address the emerging markets banking group's performance, Standard Chartered said in a statement on Sunday.
In the AIM All-Share index, Cluff Natural Resources trades up 15% after it said it has made "significant progress" under its partnership deal with oil field service giant Halliburton AS in developing the company's North Sea assets.
Cluff Natural Resources is pioneering underground coal gasification, a technique which converts coal into gas, targeting coal that cannot be mined because the seams are too deep, thin or fractured and involves using the same sort of drilling technology usually used for fracking.
88 Energy said its shares in Australia have been suspended pending an announcement about a capital raising. The oil and gas company said the suspension in Australia would not affect its London-listed shares, which trade down 12%.
The Greek crisis has slipped down the agenda as the country makes progress on its debt situation. A Greek government official said that the process of making payments to the European Central Bank and International Monetary Fund has begun.
Greece owes EUR3.5 billion to the ECB and eurozone national central banks on government bonds that have matured, including EUR0.7 billion in interest that bring the payment to EUR4.2 billion. The payment due to the IMF comes to approximately EUR2.04 billion. The Greek official told dpa on condition of anonymity that all the payments will be completed by the close of business Monday.
The payment comes after the Eurogroup approved a EUR7.16 billion bridge-loan to Greece.
"This was all to be expected, but a) it is always nice to return to a world of regularly made payments after the frantic scenes of the last few weeks, and b) it is a frank reminder that a third bailout really needs to be agreed by August 20th, the date of Greece's next ECB repayment, if the country is to stand a chance of coughing up the money to the central bank," says Connor Campbell, financial analyst at Spreadex.
By Neil Thakrar; [email protected]; @NeilThakrar1
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