30th Nov 2015 08:41
LONDON (Alliance News) - London shares opened lower Monday, with Intercontinental Hotels Group leading blue-chip gainers following a newspaper report that the company is set to attract takeover interest from Chinese companies.
Meanwhile, miner BHP Billiton was the biggest large-cap faller after the Brazilian government said late last week that it plans to sue the miner for causing what it called an environmental catastrophe caused by a tailings dam burst.
The FTSE 100 index was down 0.7% at 6.331.40 points, the FTSE 250 was down 0.2% at 17,228.52 and the AIM All-Share was down 0.1% at 731.49.
BHP Billiton, down 3.6%, and Brazil-based Vale said a total of 13 fatalities have been recorded so far after the pair's tailings dam in Brazil burst earlier November, as the clean up operation commences. The pair each own a 50% stake in the Samarco joint venture, which was responsible for the Fundão dam which burst. A further six people are still missing.
On Friday, the Brazilian federal government tabled plans to sue BHP and Vale after the incident. The Attorney General of the Union, the Brazilian prosecutor, and the Minas Gerais and Espirito Santo states, filed a civil suit against the two companies along with the Samarco joint venture itself, for up to BRL20.0 billion, or USD5.2 billion, for the environmental damage caused by the Fundão dam bursting.
On Monday, the two companies said they are still committed to establishing a separate, voluntary, non-profit fund to support the recovery of the Rio Doce river system, which was affected by the dam burst.
Other mining stocks also were down Monday morning, with Antofagasta off 1.4%. Gold miners Fresnillo, down 1.0%, and Rangold Resources, down 0.7%, were reflecting the weakness in the gold price, which has been under pressure since Friday.
The metal hit its lowest level since early 2010 at USD1,053.08, while at the London close on Friday, gold was at USD1,057.60. Shortly after the London open Monday, the metal had rebounded and was quoted at USD1,057.46.
"The outlook does not look bright [for gold prices] either as the European Central Bank and Federal Reserve's diverging policies mean that the attractiveness of both the US dollar and stocks could increase further," said Forex.com analyst Fawad Razaqzada.
"This won't be good news for the so-called safe haven precious metal, which, unlike equities and bonds, pays no dividends, offers no yield and costs money to store, too. So traders may continue to speculate that the buck-denominated metal will, at least in the short term, head further lower," the analyst adds.
Aberdeen Asset Management was another faller, down 2.6%. The company reported stable profit in its last financial year, as weak investor sentiment towards Asia and emerging markets in general weighed on the asset manager's results, with heavy net outflows hitting assets under management.
Pretax profit fell to GBP353.7 million in the year ended September 30, compared with GBP354.6 million the prior year. On an underlying basis, which is stated before amortisation of intangible assets and acquisition-related items, pretax profit edged up to GBP491.6 million from GBP490.3 million. Aberdeen increased its dividend for the full year to 19.5 pence from 18.0p.
At the other end of the blue-chip index, Intercontinental Hotels was up 1.4%. Chinese bidders are understood to be eyeing a bid for the hotel operator after rival Starwood Hotels & Resorts Worldwide agreed to be acquired by rival Marriott, The Daily Telegraph reported.
City sources told the newspaper that IHG has been left vulnerable by the merger of Starwood and Marriott, and three Chinese suitors - including Shanghai Jin Jiang International Hotels Group, airline owner HNA Group and sovereign wealth fund China Investment Corp - all were understood to have run the rule over Starwood prior to the deal.
The sources said these three will now likely turn their attention to IHG, the owner of the Holiday Inn chain, though no approach has yet been made.
In Europe, the CAC 40 index in Paris opened down 0.5%, while the DAX 30 in Frankfurt was down 0.2%.
Germany's retail sales declined more than expected in October, figures from Destatis showed Monday. Retail sales fell 0.4% in October from a flat reading in September. Sales were expected to decrease 0.2%. On a yearly basis, growth in retail sales slowed to 2.1% from 3.5% a month ago.
Still in the economic calendar Monday, UK's consumer credit and mortgage approval data are due at 0930 GMT, while Germany's consumer price index is at 1300 GMT. In the US, the Chicago Purchasing Manager's Index is due at 1445 GMT and pending homes data are expected at 1500 GMT.
The Chinese stock market has experienced some volatility on Monday ahead of the decision from the International Monetary Fund whether to include the Asian giant's currency in lender's currency basket.
The Shanghai Composite index ended up 0.3% at 3,445.40 points, having hit an intraday low at 3,327.81. Meanwhile, the Hang Seng in Hong Kong ended down 0.3% at 21,996.42 points after reaching an intraday high of 22,195.25.
The Japanese Nikkei 225 index ended down 0.7%.
By Daniel Ruiz; [email protected]
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