25th Aug 2015 07:32
LONDON (Alliance News) - London share prices traded higher at the open Tuesday, as Asian markets lost ground again but climbed off their worst levels following Monday's sell-off.
The FTSE 100 traded up 1.4% at 5,979.36, recovering at the open some of the ground lost on Monday. The FTSE 250 is up 0.9% at 16,362.38 and the AIM All-Share is up 0.2% at 703.63.
In Europe, major indices also were higher, with the CAC 40 in Paris and the DAX 30 in Frankfurt both up 1.6%.
In Asia, the Nikkei in Tokyo ended down 4.0%, the Hang Seng in Hong Kong was down 0.9%, and the Shanghai Composite was off 7.7%. Concerns over slowing growth in China had spurred panic selling across the Asian region on Monday, prompting many to dub it "Black Monday".
After the declines seen in stocks on Monday, China's central bank said it will inject more money into the country's markets, as it also set its currency fix slightly weaker following the three-day devaluation which drove the value of yuan down last week.
The People Bank of China set Tuesday's central parity rate for yuan at 6.3987 per dollar, compared to Monday's reference rate of 6.3862. The central bank sets the reference rate every morning and allows the currency to move by up to 2% from that level.
In addition, the bank said it will inject CNY150 billion via 7-day reverse repos, a decision which should also help to underpin some improved sentiment in Asian markets, according to Bloomberg.
On the London Stock Exchange, RSA Insurance was the best performer in the FTSE 100, up 5.2% at 520 pence. RSA said it has received a revised takeover offer from Swiss rival Zurich Insurance Group and said it has indicated a willingness to recommend it, though Zurich said it reserves the right to make a bid below the price at which the new offer has been made.
The bid is for 550.00 pence per share, or GBP5.59 billion in total, and would allow RSA shareholders to get the 3.5 pence per share dividend RSA announced in its interim results earlier this month. RSA shares closed Monday at 495.00p.
RSA said the takeover offer is conditional on due diligence and the board recommending the bid, but the insurer said it has indicated that it would be willing to recommend Zurich's offer subject to satisfaction of all relevant parts of the bid.
BHP Billiton was the second best blue-chip performer, up 4.0%, after it said its profit and earnings both plummeted in its recent financial year due to falling commodity prices, but the miner surprised the market by improving its dividend. The FTSE 100-listed multi-commodity giant also reported large reductions in costs as it tries to battle the downturn in the mining industry, including reducing its capital expenditure budget by a further USD500 million in the 2016 financial year.
The mining major surprisingly increased its dividend for the full year to 124.0 cents per share from 122.0 cents last year. Analysts were expecting the dividend to remain flat year-on-year.
In the FTSE 250, Regus led the mid-cap gainers, up 6.5%. The office space provider posted robust results for the first half of the year, with the group's pretax profit more than doubling, its revenue pushing higher and its return on investment in the period improving, all in line with its expectations.
Meanwhile, Poundland Group is up 5.6% after the UK Competition and Markets Authority said it has provisionally cleared the acquisition of 99p Stores by the company. Earlier this year, Poundland agreed a GBP55 million cash and shares deal to buy its smaller - and slightly keener priced - rival, paying GBP47.5 million in cash and a further GBP7.5 million in shares.
Still in the economic calendar, in the US, the Redbook index is due at 1355 BST, and US Markit services and composite purchasing manager's indices are due at 1445 BST. New home sales and consumer confidence are both expected at 1500 BST.
By Daniel Ruiz; [email protected]
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