8th May 2014 10:25
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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Barclays PLC detailed plans to shrink its investment bank with a new round of job cuts, while shifting billions of pounds' worth of risk-weighted assets into what it termed a non-core unit, amidst changes to the group's overall structure to boost returns. In a statement, the UK-based lender said it will cut around 7,000 jobs in its investment bank by 2016, with the unit to be shrunk to make sure it makes up just 30% of the group's total risk-weighted assets by 2016. In its current state, the investment bank makes up just over half of the group's risk-weighted assets. The revamped unit will be "origination led and returns focused" and will offer banking, equities, credit and certain macro products in a more capital-efficient way, Barclays said.
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Standard Chartered PLC said its first-quarter operating profit fell by a high single-digit percentage due to difficult market conditions, a weak performance in Korea as the business there is scaled down, and the weakness of emerging market currencies including the Indian rupee and the Indonesian rupiah. In a statement, the emerging markets-focused bank said the drop in operating profit was in line with expectations. On a constant currency basis, first-quarter operating profit fell by a mid single-digit percentage, according to the lender. Outgoing Finance Director Richard Meddings told reporters that the bank has seen a slight increase in headcount in the first-quarter, but noted the quarter doesn't normally see much change.
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Prudential PLC reported a 29% increase in first-quarter new business profit, boosted by its operations in the US, the UK and Asia, while its fund management arm benefited from more than GBP1.4 billion in net inflows over the quarter. In a statement, Prudential said new business profit increased to GBP529.0 million in the quarter ended March 31 from GBP410.0 million. While increases were reported across all three of its main areas of operation, they were most marked in the US and the UK. Results in the UK were driven by three bulk annuity deals, but individual annuities annual premium equivalent sales fell by 35% to GBP36.0 million as a result of a market downturn, which Prudential said began to emerge through 2013 as policyholders increasingly put off retirement. Prudential also said the implications of changes made by the UK government in its 2014 Budget that allow individuals more freedom with their pensions pots are still uncertain.
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BT Group PLC raised its total dividend for the year to end-March, after it beat expectations for pretax profit and revenue, and promised further dividend growth over the next two years. The telecommunications company raised its total annual dividend to 10.9 pence from 9.5 pence BT posted pretax profit of GBP2.31 billion, broadly flat on the year before, as revenue rose to GBP18.29 billion from GBP18.10 billion. Profit was damped by restructuring charges of GBP276 million and a GBP450 million investment in the new BT Sport service. The company said expects to posted further restructuring costs of around GBP200 million in the new financial year.
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Centrica PLC saw its shares drop after the firm cut its earnings outlook for the full-year as market conditions remain challenging, overshadowed by an "unprecedented focus on the energy sector." Centrica has reduced its outlook for earnings in 2014, with full-year adjusted earnings per share expected to be in the range 22-23 pence. The firm said earnings growth is expected to return in 2015. The firm said market conditions have been challenging for during the year-to-date on both sides of the Atlantic. In the UK, the downstream business has experienced lower consumption due to mild weather, an unprecedented focus on the energy sector and a highly competitive environment for energy supply.
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Sage Group PLC announced the departure of Chief Executive Guy Berruyer, while expressing confidence in meeting its 6% revenue growth target for 2015, after it swung into a profit in the half year to end-March. Berruyer had been chief executive for four years, and the company said it had begun the process of appointing his successor. The business management software company raised its interim dividend to 4.12 pence from 3.88 pence in the previous year. Sage posted a pretax profit of GBP164,5 million in the half year, swinging from a pretax loss of GBP7.7 million in the same period a year earlier.
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Wm Morrison Supermarkets PLC said that it retains its profit guidance for the full-year and remains on schedule to cut costs and increase its number of UK convenience stores, while reporting a decline in total sales. Morrison plans to realise savings of GBP1 billion over the coming three years to strengthen its business and reinforce its core customer proposition. Since then the company said it has been making significant improvements to the layout of its stores and on May 1 cut prices permanently on over 1,200 products. As the price war between supermarket giants continues, Morrison said it is making good progress in achieving its strategic goals, with its investment in IT infrastructure and systems on track to support its improvements.
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Housebuilder Barratt Developments PLC said it continues to trade well in 2014, with an increase in net private reservations and sales during the period, amidst recovery for the UK's housing market. In an interim management statement for the period January 1 to May 4, the residential property development group said net private reservations were up 25% at 0.71 per active site compared with 0.68 per active site in 2013. FTSE 100-listed Barratt said the UK government's Help to Buy equity scheme remains a very attractive opportunity for its customers and, in particular, is supporting first-time buyers. In the period, 2,150 of its reservations used the scheme.
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Randgold Resources PLC said pretax profit for the first quarter was down on the previous quarter as the firm reports higher production figures, boosted by increased production from its Kibali mine. Pretax profit for the three months to March 31, 2014 was USD108.1 million, down from USD129.7 million the previous quarter, but up from USD85.4 million on the comparative period in 2013.
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Supergroup PLC saw its shares plummet, after it missed sales targets in the last quarter, and now expects its pretax profit for the full year to be at the lower end of expectations, hit by the promotional environment in the UK retailer sector. The clothing designer and retailer reported a 12% increases in total group revenues for the fourth quarter ended April 26 to GBP97.8 million, up from GBP87.1 million the prior year, driven by a 13% increase in retail sales to GBP54.6 million, and a 11% rise in wholesale sales to GBP43.2 million. However, on an underlying and reported basis, like-for-like retail sales declined instead of expectations for growth. The group said that like-for-like sales were hit by a late Easter, product mix, and lower eBay sales.
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Glencore Xstrata PLC confirmed it has appointed Tony Hayward as permanent chairman of the company with immediate effect. Hayward was appointed to the board in April 2011, prior to Glencore's IPO. He served from the IPO as the senior independent director until May 2013, when he was appointed interim chairman. Hawyard has served as chief executive of Genel Energy PLC since June 2011. Before this, he was chief executive of BP PLC, leaving in the wake of the Gulf of Mexico oil spill in April 2010.
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MARKETS
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The FTSE 100 has made a strong start, erasing all the losses it has made this week so far with stand-out gainer Barclays leading the index.
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FTSE 100: up 0.4% at 6821.06
FTSE 250: up 0.3% at 15932.96
AIM ALL-SHARE: down 0.2% at 809.42
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The pound and euro are both currently up against the dollar ahead of the latest policy announcements from both the Bank of England and the European Central Bank.
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GBP-USD: up at USD1.6963
EUR-USD: up at USD1.3948
GOLD: up at USD1291.86 per ounce
OIL (Brent): down at USD107.67 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The European Central Bank is expected to kept interest rates on hold at an historic low despite the pressure to act to head off the threat of a rising euro driving down consumer prices. Still, many analysts believe the ECB is likely to wait until it releases in June its new inflation and economic growth forecasts for the 18-member eurozone before considering any further action. The Frankfurt-based ECB, which this week holds an out-of-town meeting in Brussels, last cut the cost of money in November, when it trimmed its benchmark refinancing rate by 25 basis points to an historic low of 0.25%.
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The average asking price for a house in the UK was down in April, the latest survey from the Royal Institution of Chartered Surveyors revealed. The RICS house price balance came in with a score of 54 in April - missing forecasts for 56 and down from 57 in March. By region, house prices moved higher in the South East and in East Anglia, while they were down in the London area.
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German industrial production decreased unexpectedly in March, official data showed. Industrial production fell 0.5% in March from February, Destatis reported. This was the first decrease in five months. Production advanced 0.6% in February and 0.4% in January.
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Defying expectations for a decline, China's exports as well as imports increased in April, vindicating the government's resistance to introduce more stimulus to cushion the recovery. Exports gained 0.9% in April from last year, data published by the General Administration of Customs showed. Shipments were forecast to fall 2% after declining 6.6% in March. Likewise, imports rose 0.8%, confounding expectations for a 2.1% drop. The increase reversed some of the 11.3% fall in March.
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Russia is prepared to accept the outcome of Ukraine's presidential election if Kiev ends military operations against separatist groups in the country's east beforehand, a Kremlin spokesman says. Dmitry Peskov, spokesman for President Vladimir Putin, tells the Interfax news agency that the May 25 election is a "move in the right direction." Another condition for Russian recognition is for the pro-Western government in Kiev to engage in a dialogue with the separatists, he says.
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Pro-Russian separatists in Ukraine are to decide if they want to hold off on a secession referendum planned for the weekend after Russian President Vladimir Putin called for it to be delayed. The considerations come as the separatists and the Ukrainian government seemed to be inching towards possible talks to end fighting in the east, a possibility that had been ruled out by both sides as recently as Wednesday. The secession referendum, set for Sunday, would let residents in the provinces of Luhansk and Donetsk vote on whether they want to stay part of Ukraine. Ukrainians opposed to a split see it as a precursor to an eventual merger with Russia as happened with Crimea in March.
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EU ministers were set to assess Japan's progress in opening up its markets to European products, amid hopes that the two sides can move forward on a free trade deal. An ambitious agreement could boost both sides' economy and exports. Growth and job creation are key priorities in the EU, which is emerging from a deep economic crisis. "Continued trade liberalization is crucial for keeping our economic recovery on track," EU President Herman Van Rompuy said Wednesday, during a visit to Brussels by Japanese Prime Minister Shinzo Abe. The two sides agreed to accelerate negotiations on the free trade agreement, with the aim of reaching a basic deal in 2015.
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US President Barack Obama plans to remove certain trade benefits for goods imported by the US from Russian under the Generalized System of Preferences (GSP) programme. Obama notified Congress that he is taking the action because Russia is "sufficiently advanced economically" and no longer warrants preferential treatment under the GSP programme, a White House statement said Wednesday. Once Russia's eligibility is withdrawn, US imports of GSP-eligible goods from Russia will be subject to normal duty. White House spokeswoman Caitlin Hayden told dpa that Russia's actions regarding Ukraine are not directly related to Obama's decision. But she added they "make it particularly appropriate to take this step now.
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