26th Jun 2014 10:48
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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The London Stock Exchange Group PLC said it has agreed to acquire Russell Investments from Northwestern Mutual for USD2.70 billion in cash, adding that it intends to fund it with USD1.60 billion net proceeds from a rights issue to take place in September, with the remaining USD1.10 billion through bank debt, as the stock exchange seeks to broaden its scope in the US. In a statement, the stock exchange said the acquisition will enable it to combine Russell's index business with FTSE, bringing together USD5.2 trillion of assets benchmarked to Russell and an estimated USD4.0 trillion of equities benchmarked to FTSE. The stock exchange said it expects the acquisition to add to its earnings from its first full year in total, with Russell's index business to add to earnings from the second year on a standalone basis.
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New York state's top law enforcer Wednesday filed fraud charges against Barclays PLC over its dark pool, LX Liquidity Cross, alleging that the bank has favoured high-frequency traders at the expense of other investors. Eric Schneiderman, the state attorney-general, accused Barclays of demonstrating a "disturbing disregard" for its investors in a "systematic pattern of fraud and deceit." The complaint alleges that Barclays has actively sought to attract high-frequency traders by giving them "systematic advantages" over others trading in its own dark pool.
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Standard Chartered PLC said it expects its first-half operating profit to be down by about 20% when it reports its interim results in August, hit by a poor performance in its financial markets business. Standard Chartered, which is UK-based but makes the vast bulk of its earnings in emerging markets, said that it also expects its first-half income to be down by a mid single-digit percentage from a year before, hit by an increase in loan impairments and a tough time in India, Korea and Singapore offsetting income growth in China and Africa. Its comparisons for operating profit and income exclude the UK bank levy, own credit adjustments, and goodwill impairment in Korea.
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Electronics retailer Dixons Retail PLC and mobile phone retailer Carphone Warehouse Group PLC both reported higher profits for their recent financial years, driven by strong trading in the UK and boding well for their upcoming merger. The aim of the merger, to create Dixons Carphone, is for Dixons Retail to provide the space and product offering, with the help of its big out-of-town stores, while Carphone will provide the content and connectivity. "We both go into this merger with a significant position of strength," Dixons CEO Sebastian James said in a call with journalists. "It is a great way to get married."
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Bwin.party Digital Entertainment PLC responded to press speculation that the company is considering selling some or all of the company as part of a strategic review, stating that it has no plans to break-up or sell the company. The online gambling company released a statement following a Bloomberg article stating that the firm is considering a sell-off of all or some of the company amid a firm-wide strategic review, citing two people familiar with the matter. According to the Bloomberg article, the company is considering its options and will decide within two months, citing one person. "Since his appointment as Chairman last month, Philip Yea has been working with the executive management team on ways in which the Group can increase shareholder value, however we can confirm that there are no plans to break-up or sell the company," said bwin.party.
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DS Smith PLC said pretax profit jumped in its full-year as revenues rose on organic growth and the first 12 month contribution from the legacy SCA Packaging business acquired in 2012. The recycled packaging for consumer goods supplier said in its results for the financial year 2013/2014 that pretax profit more than doubled to GBP167 million, up from GBP82 million last year. Revenue rose 10% to GBP4.04 billion up from GBP3.67 billion the previous year. The company also increased its dividend per share by 25% to 10.0 pence per share, up from the 8.0 pence per share paid in 2013.
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A US Food and Drug Administration advisory committee Wednesday recommended against the accelerated approval for AstraZeneca PLC's ovarian cancer drug olaparib based on mid-stage study results. The FDA Oncologic Drugs Advisory Committee voted 11 to 2 that the current evidence from clinical studies does not support an accelerated approval for use of olaparib. The investigational drug is indicated as a maintenance treatment for women with platinum-sensitive relapsed ovarian cancer who have the germline BRCA (gBRCA) mutation, and who are in complete or partial response to platinum-based chemotherapy. The sales potential for this drug is reportedly pegged at USD2 billion.
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MARKETS
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UK stocks are marginally higher, led by London Stock Exchange Group, while Barclays leads FTSE 100 losers.
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FTSE 100: up 0.1% at 6740.04
FTSE 250: up 0.8% at 15575.86
AIM ALL-SHARE: up 0.3% at 780.18
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The pound is currently trading at a 3-day high against the dollar amid Bank of England Goveenor Mark Carney's speech.
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GBP-USD: up at USD1.7032
EUR-USD: down at USD1.3616
GOLD: down at USD1310.00 per ounce
OIL (Brent): down at USD113.89 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The Bank of England has tightened mortgage lending rules in order to contain property market overheating. The central bank does not believe that household indebtedness poses an imminent threat to stability, BoE said in its Financial Stability Report. But it is prudent to insure against the risk of a marked loosening in underwriting standards and a further significant rise in highly indebted households, it said. The Financial Policy Committee of BoE recommended that mortgage lenders should limit the proportion of mortgages at loan-to-income multiples of 4.5 and above to no more than 15% of their new mortgages.
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The UK energy market regulator Ofgem said that, following on from proposals in March, it is referring the UK energy market to the Competition and Markets Authority for a full investigation, asking it to investigate the barriers to competition inherent with the "big six" suppliers. The regulator proposed the investigation in March, saying that the market needs a market investigation "to clear the air", with the investigation expected to reassure consumers and complement Ofgem's reforms for a simpler, clearer and fairer energy market. Following a consultation period, the regulator has now formally referred the energy market to the CMA.
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British Foreign Secretary William Hague has arrived in Baghdad on a previously unannounced visit for talks on Iraq's turmoil. "He will meet with (Iraqi Prime Minister Nuri) al-Maliki and senior officials to examine the latest developments in Iraq," a government source told dpa on condition of anonymity.
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Iraq's new parliament will convene next week to start procedures for setting up a new government - despite deepening political rifts and an ongoing Islamist-led insurgency - announced President Jalal Talibini. "The presidency has issued a republican decree inviting the new House of Representatives to meet on Tuesday, July 1, to form a new government," independent news site Alsumaria News reported, citing a presidential statement. Political divisions and horse-trading are unlikely to put a new government in place any time soon. On Wednesday, Shiite Iraqi Prime Minister Nuri al-Maliki rejected calls for a "national salvation" government, saying such calls amounted to "a coup against the constitution."
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German Chancellor Angela Merkel continued to push for a diplomatic solution in Ukraine on Thursday in discussions with Russian President Vladimir Putin. The two leaders talked about a possible monitoring of the ceasefire monitoring, the start of a regular contact group and the release of hostages, the Kremlin said. Putin reiterated his position that the ceasefire, which President Petro Poroshenko announced last Friday, should be prolonged.
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China's central bank will permit banks in Shanghai, beyond the city's free-trade zone, to set foreign-currency deposit rates on small accounts as the government endeavors to bring healthy competition in the banking system. The People's Bank of China will start with institutional deposit accounts tomorrow, and individual accounts will be added on at a later stage. The central bank had abolished ceiling on foreign currency interest rates on March 1 for smaller deposits in the free trade zone in Shanghai. The free trade zone was established last September. The State Administration of Foreign Exchange on Wednesday said it will increase foreign exchange derivative products to facilitate foreign trade. Further, it vowed to promote and regulate the development of the forex derivative market.
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Missing Malaysia Airlines flight MH370 may have crashed further south in the Indian Ocean than the latest search area, and was "highly likely" to have been on autopilot when it went down, Australian authorities said. Following further analysis of flight data, the search would focus on a different point of an arc where the aircraft last communicated with satellites, said Australia's Deputy Prime Minister Warren Truss. "We are now shifting our attention to an area further south along the arc based on these calculations," he told reporters. It was "highly, highly likely" that the aircraft was on autopilot when it crashed, Truss was quoted as saying by Australian media, explaining that otherwise "it could not have followed the orderly path that has been identified through the satellite sightings."
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