9th Oct 2015 10:12
LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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The UK government has sold a further 1% shareholding in Lloyds Banking Group through the trading plan it launched in December, which it said took the total raised so far to GBP15.5 billion. This reduced the government's shareholding to below 11% to 10.97%. Retail Broker Hargreaves Lansdown said that some 120,000 people have expressed interest in buying shares in Lloyds in the three days since the government announced the retail sale of shares in the bank, the Times reported. The broker said the level of interest was 'tremendous' and exceeded the 100,000 who bought Royal Mail shares through it in 2013.
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The Royal Bank of Scotland Group said it received a notice from the UK government to convert 51.00 billion series 1 B shares the Treasury holds into 5.10 billion new RBS ordinary shares. Following this conversion, the UK government will hold 72.88% of the company's issued ordinary share capital. This will have no impact on RBS's retained earnings, the company said. The Dividend Access Share owned by the UK government remains outstanding, RBS said. The new ordinary shares will start trading October 14.
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The London Stock Exchange Group late Thursday said it has agreed to sell Frank Russell Co's asset management business, Russell Investments, to TA Associates for USD1.15 billion. The sale is subject to regulatory and other approvals. The LSE had originally announced it planned to sell the business in February. The LSE said that Reverence Capital Partners partnered with TA Associates, and will make a significant minority investment in Russell Investments.
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Glencore announced a 500,000 tonne per year reduction of contained zinc metal mine production across its operations in Australia, South America and Kazakhstan, in order to preserve the value of its reserves in the ground "at a time of low zinc and lead prices". This represents around a third of Glencore's annual zinc production, it said, and will reduce fourth quarter 2015 mine production by around 100,000 tonnes of contained zinc metal.
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BT Group said it is vital for the digital health of the UK that its broadband infrastructure arm Openreach remains part of the wider BT Group. UK telecoms regulator Ofcom has put on the table the potential separation of Openreach amongst other options as part of its Digital Communications Review. It closed a consultation that formed part of the review on Thursday. BT's response comes after rivals including Sky, TalkTalk Telecom Group and Vodafone Group called for the separation of Openreach. However, the Country Land and Business Association, which represents rural land owners and businesses, has called on Ofcom to not separate Openreach from BT, as it believes this would distract from efforts to roll out broadband in rural areas.
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Vedanta Resources reported a rise in production across most of its commodities in the first half of its financial year and said its net debt is expected to be below the USD8.0 billion mark as of the end of September. The FTSE 250-listed multi-commodity company said oil and gas production net to the company in the second quarter of 2015 rose 6% year-on-year to 205,361 barrels of oil equivalent per day from 194,508 barrels. All of that production comes from India. That brought first half oil and gas production to average 207,538 barrels of oil equivalent per day, a small 1% rise from 206,125 barrels a year ago. That lift was driven by its Ravva offshore oilfield increasing production 23% year-on-year, partially offset by production falling elsewhere.
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Petrofac said it has terminated the contract with ZPMC, the company that was constructing certain systems for the company's new Petrofac JSD 6000 deepwater multi-purpose offshore vessel. The move may lead to Petrofac abandoning its plans to construct the new vessel, marking another strategic reversal, but "not an unpopular one", according to Investec analyst Neill Morton. The FTSE 250-listed oil and gas service company said it had terminated its contract with ZPMC over "issues with ZPMC's performance in respect of the construction of the proprietary design" of the vessel.
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Ladbrokes said it has signed a GBP1.35 billion lending facility with a syndicate of relationship banks to provide committed financing for its proposed merger with Gala Coral Group. The betting company said the new facility has three tranches and will be available for drawing subject to completion of the GBP2.1 billion merger.
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MARKETS
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UK indices were trading higher after the release late Thursday of doveish minutes from the most recent US Federal Reserve policy-making meeting and as stronger commodity prices supported miners and oil related stocks.
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FTSE 100: up 0.9% at 6,429.24
FTSE 250: up 0.6% at 17,112.17
AIM ALL-SHARE: up 0.4% at 735.45
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GBP: up at USD1.5368
EUR: up at USD1.1325
GOLD: up at USD1152.05 per ounce
OIL (Brent): up at USD53.47 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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British construction output unexpectedly declined for a second straight month in August at its fastest pace since late 2012, figures from the Office for National Statistics showed. Construction output dropped 4.3% from July, when it fell 1%. Economists had expected a 1% gain. The pace of decline was the fastest since December 2012, when output decreased 5.1%. All new work decreased 3.6% in August. Repair and maintenance activity fell 5.6%. New housing output dropped 3%. Year-on-year, construction output declined 1.3% in August, defying forecasts for 1.4% growth.
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The UK visible trade deficit narrowed in August as car exports increased from July, the Office for National Statistics reported Friday. The deficit on trade in goods fell to GBP11.1 billion from GBP12.2 billion in July. It was expected to fall to GBP9.9 billion. Exports of goods climbed GBP0.8 billion to GBP23.6 billion. The increase was attributed to a GBP0.6 billion growth in shipment of cars to a record high GBP2.4 billion. Meanwhile, imports fell GBP0.3 billion to GBP34.7 billion.
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Downside risks to economic growth prevented the Federal Reserve from raising US interest rates in September, the minutes from the central bank's meeting confirmed. Most officials decided it would be "prudent" to wait for signs that problems overseas, especially in China, would dissipate. The Fed voted 9 to 1 to hold rates steady. Members were also concerned about anaemic inflation, which remains well below the Fed's 2% annual target rate. The Fed said it will consider raising interest rates before year's end, as policy makers "agreed that developments over the inter-meeting period had not materially altered the committee's economic outlook." However, the meeting took place September 16-17, a few weeks before the release of a disappointing jobs report.
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A group of MPs from the Conservative, Labour and UKIP parties and business leaders has formed to launch a new campaign aimed at taking the UK out of the European Union, dubbed 'Vote Leave', the BBC reported. Prominent figures include Labour's Kate Hoey, UKIP's Douglas Carswell, Tory donor Peter Cruddas, Labour backer John Mills and former UKIP treasurer Stuart Wheeler. It is the second eurosceptic campaign to launch ahead of referendum on a potential 'Brexit', which is due by 2017 at the latest.
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Christine Lagarde indicated for the first time that she is open to a second term as the head of the International Monetary Fund. "I'm certainly open to the fact that it would not be my last annual meeting," Lagarde said at a press conference in Lima, Peru, where this year's meeting is being held. But the decision is not for her to make, "it's for the membership," she said. Lagarde's term runs out in mid-2016. She previously had said she would make a decision on a second term toward the end of this year.
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The Trans-Pacific Partnership trade deal is "bound to be beneficial" for global economic growth, IMF chief Lagarde said. The deal, announced Monday by 12 Pacific Rim countries after five years of negotiations, is meant to lift most duties on trade and investment, set new business standards and protect intellectual property rights. Lagarde, speaking in Lima, said the Washington-based crisis lender is waiting to see still unreleased details of the 30-chapter pact, which will cover 800 million people with 40% of the world's gross domestic product. "As a matter of principle, such a trade agreement is bound to unleash some potential, is bound to create some value, is bound to open up more borders," she said.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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