1st Mar 2016 11:12
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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Barclays confirmed it will sell down its 62.3% stake in its African subsidiary, amid a broader strategic update that will see the bank pay a reduced dividend in 2016 and 2017 to help boost its financial strength. Jes Staley, the bank's new chief executive, said there is more work to do to restructure the bank in 2016. He set out plans to focus the group on two "sibling" divisions, which he identified as Barclays UK and Barclays Corporate & International. The update came as Barclays said its pretax profit fell to GBP2.07 billion in 2015, from GBP2.26 billion the prior year. Its net loss widened to GBP394.0 million from GBP174.0 million. Barclays maintained its dividend for 2015 at 6.5 pence per share, but said it will cut the payment to 3.0p in 2016 and 2017.
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Intercontinental Exchange, the owner of the New York Stock Exchange, said it may enter the bidding for London Stock Exchange Group, offering an alternative to an all-share merger with Deutsche Boerse already being discussed. No approach has been made to the board of the LSE, according to US-based ICE, which confirmed a report by Bloomberg News that it was exploring a bid. According to that report, CME Group also is assessing whether it could provide competition to Deutsche Boerse. Later Tuesday, LSE confirmed it has received no takeover proposal from ICE, adding that discussions over a "merger of equals" with Deutsche Boerse "continue to progress".
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Glencore accelerated its debt reduction plans once again, aiming to sell more assets than previously thought, as the miner and commodities trader reported results that either met or beat expectations in 2015 despite substantial declines in earnings. Glencore reported net income before exceptional items of USD1.34 billion in 2015, a 69% drop from USD4.28 billion in 2014, but slightly higher than analysts expectations of only USD1.16 billion. Glencore accelerated its net debt target, saying it hopes to have net debt down to USD17.00 to USD18.00 billion by the end of 2016, compared to its previous target of USD18.00 to USD19.00 billion.
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Direct Line Insurance Group lifted its total annual dividend and reported an increase in pretax profit in 2015, helped by higher-than-expected reserve releases. Pretax profit rose to GBP507.5 million in 2015, up from GBP456.8 million the prior year, ahead of analyst expectations of GBP451.0 million, thanks to lower restructuring and other one-off costs, and better operating profits from its run-off segment and ongoing operations. Operating profit from continuing operations improved to GBP520.7 million from GBP506.0 million, primarily due to an improved underwriting performance, which more than offset weaker investment returns.
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Ashtead Group reported a marginal slowdown in revenue growth in the third quarter, though pretax profit remained much higher year-on-year. The group said its pretax profit for the three months to the end of January was GBP139.1 million, up 17% year-on-year from the GBP113.9 million it posted in 2014. For the first nine months of the financial year, pretax profit grew 20% to GBP481.8 million from GBP379.4 million, indicating a slowdown in growth in the third quarter, driven by weakening orders from the oil and gas industry. In line with other suppliers to oil and gas companies, Ashtead is seeing orders soften as energy operators trim spending and suspend projects to cope with the current low oil price environment.
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Severn Trent and United Utilities Group outlined plans to combine their non-household water and wastewater retail businesses through a joint venture. The pair of utility firms said the joint venture will primarily comprise of billing and customer service activities and will be centrally located in Stoke-on-Trent. Severn Trent will pay GBP3.5 million in order to create the 50/50 joint venture and will share the cost of systems development necessary for the provision of non-household retail services. United Utilities did not state whether it would contribute to the costs of setting up the venture. The pair need to get approval from the UK Competition & Markets Authority, which they hope will be secured in Spring.
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Taylor Wimpey said its net cash almost doubled in 2015 and pretax profit surged, as its total home sales rose and average selling price increased. The FTSE 100 housebuilder said it sold 13,219 homes over the course of 2015, up 7.5% from the 12,294 it sold a year earlier. It sold those homes at an average price of GBP230,000 apiece, up from GBP213,000, which drove revenue up 17% to GBP3.14 billion from GBP2.69 billion. The company posted a pretax profit of GBP603.8 million, up 34% from GBP450.1 million. Taylor Wimpey lifted its dividend by 7.1% to 1.67 pence per share from 1.56p the previous year, and it confirmed it will return 9.20p per share of surplus cash to shareholders in July this year, as previously announced.
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Price comparison service Moneysupermarket Group posted higher pretax profit and revenue as good money and home services performances offset a weaker performance in insurance, a trend which has continued into 2016. The company said its pretax profit for the year to the end of December was GBP63.4 million, up 20% from the GBP52.8 million in 2014, as revenue rose 14% to GBP281.7 million from GBP248.1 million. Moneysupermarket will pay a final dividend of 6.6 pence per share, taking its total dividend up to 9.15p from 8.0p in 2014.
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Just Eat reported a fall in profit in 2015 as an exceptional gain in the prior year was not repeated, but revenue grew on a rise in active users and order volumes. The online takeaway delivery service said its pretax profit in 2015 fell to GBP34.6 million from GBP57.4 million in 2014, even though revenue grew by more than half to GBP247.6 million from GBP157.0 million.
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Rotork expressed confidence in its medium-term outlook and its cost-cutting measures, as it delivered an expected fall in pretax profit and revenue for 2015, hit by its exposure to the struggling oil and gas industry. The actuators manufacturer said its pretax profit for the year to the end of December fell 28% to GBP101.9 million from GBP141.2 million in 2014, while revenue dropped to GBP546.5 million from GBP157.2 million, a 21% fall. Rotork will pay a final dividend of 3.1 pence per share, taking its total dividend to 5.05p, a 0.8% rise on the 5.01p paid a year earlier.
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Energy services company John Wood Group said it has won a USD120.0 million industrial services contract with defence support services firm Babcock International Group. Under the contract, Wood Group PSN's industrial services unit will provide industrial services to a number of UK sites, employing 400 people and building on an existing relationship in place with Babcock.
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Tullett Prebon reported an increase in annual pretax profit, helped by an expansion into energy and commodity products at a time of volatility in oil prices. Pretax profit rose to GBP105.7 million in 2015, from GBP33.5 million the prior year. On an underlying basis, pretax profit rose to GBP93.7 million from GBP86.6 million. Tullett maintained a total dividend of 16.85 pence in 2015. Revenue increased to GBP796.0 million in 2015, from GBP703.5 million the prior year, while administrative expenses rose to GBP747.2 million from GBP677.0 million.
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MARKETS
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UK indices were higher with gains by shares of London Stock Exchange Group set against losses by Barclays and Ashtead. The pound rose to a four-day high against the dollar, shrugging off weaker-than-expected manufacturing PMI figures. Wall Street was pointed to a higher open.
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FTSE 100: up 0.6% at 6,131.55
FTSE 250: up 0.8% at 16,736.63
AIM ALL-SHARE: up 0.6% at 697.20
GBP: up at USD1.4008 (USD1.3933)
EUR: flat at USD1.0875 (USD1.0860)
GOLD: up at USD1,240.00 per ounce (USD1,233.70)
OIL (Brent): flat at USD36.83 a barrel (USD36.48)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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The UK manufacturing sector expanded at the slowest pace since early 2013 in February, data from Markit showed. The Chartered Institute of Procurement & Supply/Markit Purchasing Managers' Index fell more-than-expected to 50.8 in February from 52.9 in January. This was the lowest reading since April 2013. It was forecast to drop to 52.3 in February.
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Eurozone manufacturing growth eased to a one-year low in February, final data from Markit showed. The final manufacturing Purchasing Managers' Index fell to 51.2 in February, a 12-month low, from 52.3 in January. It was slightly above the flash estimate of 51. The PMI has remained above the neutral 50.0 mark for 32 successive months.
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The euro area unemployment rate fell to the lowest level since mid-2011 in January, data from Eurostat showed. The jobless rate came in at 10.3% in January, down from 10.4% in December. This was the lowest since August 2011. It was expected to remain at 10.4%.
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Germany's unemployment rate declined marginally in January, provisional data from Destatis showed. The jobless rate fell slightly to adjusted 4.3% in January from 4.4% in December. In the same period last year, the rate was 4.8%. Similarly, the unemployment rate, on an unadjusted basis, came in at 4.3%, down from 4.5% a month ago.
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Ireland's manufacturing activity expanded at the weakest pace in two years in February, survey results from Markit Economics showed. The Investec Purchasing Managers' Index dropped 52.9 in February from 54.3 in the previous month.
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Manufacturing activity in China continued to contract in February, as output declined at the steepest pace since last September on a sharp decrease in new work. The Caixin manufacturing Purchasing Managers' Index fell unexpectedly to 48 in February from 48.4 in January, survey results from Markit showed. This was the lowest reading in five months. Economists had forecast the index to have remained unchanged at 48.4.
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The race to win the party nominations to run for US president will reach a crucial juncture on Tuesday as voting takes place across 11 separate states, with the victor effectively assured victory and a spot on the ballot to run for the White House. On the Democrat side, Hillary Clinton is expected to secure the nomination following a tougher-than-expected campaign against Bernie Sanders, the veteran left-leaning senator. For the Republicans, Donald Trump remains the front-runner going into Super Tuesday, but concerns have been raised over a split in the GOP, with rival candidates raising the possibility they will back a third-party candidate should the businessman win the nomination. Voting will take place on Tuesday in Alabama, Arkansas, Colorado, Georgia, Massachusetts, Minnesota, Oklahoma, Tennessee, Texas, Vermont and Virginia.
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At least 30 people were killed and over 63 others injured in a suicide attack carried out Monday in Muqdadiyah city in Diyala province, north-east of the Iraqi capital Baghdad, medical and security sources said. A suicide bomber wearing an explosive belt blew himself up inside a funeral where members of the Popular Mobilization Forces, a paramilitary group known for fighting Islamic State, were present, the sources added.
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German Foreign Minister Frank-Walter Steinmeier and US Secretary of State John Kerry said that a pause in the fighting in Syria that began Saturday and has mostly held is a hopeful sign. The two diplomats spoke Monday with reporters at the State Department after their face-to-face meeting. Kerry and Steinmeier were cautiously optimistic about the cessation of hostilities holding despite reports of violations. Kerry said each violation would be investigated, and the parties involved would also work on a "construct" to guarantee that attacks are indeed against terrorist groups that are not part of the ceasefire.
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The Brazilian justice minister resigned in the midst of an investigation into a corruption scandal involving the state-controlled oil company Petrobras. Jose Eduardo Cardozo stepped down, the president's office in Brasilia announced. According to media reports, Cardozo was under pressure from the ruling Workers Party because he did not put a stop to a corruption investigation by federal police who work in his department.
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Argentina reached an agreement with a group of US hedge funds that sued the nation in connection with the country's 2001 debt default. "The 15-year pitched battle between the Republic of Argentina and Elliott Management, led by Paul E Singer, is now well on its way to being resolved," Daniel Pollack, the mediator in the case, said. The agreement, which still must be approved by Argentina's parliament, calls for a total payment of USD4.7 billion to NML Capital, the fund managed by Elliott, and the funds Aurelius, Davidson Kempner and Bracebridge Capital, who had sued alongside NML. The payment sum amounts to about 75% of the original investments of all parties, including principal and interest, plus a payment to settle other claims and certain legal expenses during the last 15 years.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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