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(Alliance News) - Stocks in London were mixed early on Monday, despite positive trading in Asia overnight, amid investor concerns on EU digital tax proposal and a weakening US dollar.
US Treasury Secretary Janet Yellen on Sunday urged the EU to reconsider its plans for a "discriminatory" digital tax, saying the new global reform deal should make it redundant.
Meeting in Venice, G20 ministers, including Yellen, on Saturday endorsed a plan agreed by 132 countries to overhaul the way multinational companies, including US digital giants, are taxed.
"The agreement that we've reached in the OECD framework discussion calls on countries to agree to dismantle existing digital taxes that the US has regarded as discriminatory and to refrain from erecting similar measures in the future," Yellen told reporters.
"So it's really up to the European Commission and the members of the EU to decide how to proceed. But those countries have agreed to avoid putting in place in the future and to dismantle taxes that are discriminatory against US firms."
Yellen is due in Brussels on Monday for talks with Eurozone finance ministers.
The FTSE 100 index was down 47.02 points, or 0.7%, at 7,074.86 early Monday. The mid-cap FTSE 250 index was down 46.24 points, or 0.2%, at 22,863.32. The AIM All-Share index was up 0.2% at 1,250.81.
The Cboe UK 100 index was down 0.6% at 704.27. The Cboe 250 was down 0.3% at 20,540.53, and the Cboe Small Companies down 0.3% at 15,349.19.
England is "tantalisingly close" to lifting all remaining coronavirus restrictions, UK Prime Minister Boris Johnson has said, as he is expected to push ahead with the next stage of unlocking.
The prime minister will host a press conference on Monday where he is expected to say that the country can move to step four of the plan to lift measures, including ending the legal requirement to wear masks.
But he will also warn that cases will rise as rules designed to suppress the coronavirus are removed.
Johnson will host a press conference on Monday afternoon while Health Secretary Sajid Javid will announce the plans in Parliament.
The pound was quoted at USD1.3889 early Monday, higher than USD1.3831 at the London equities close on Friday.
The euro traded at USD1.1866 early Monday, up from USD1.1856 late Friday in London. Against the yen, the dollar was quoted at JPY110.19, unchanged from JPY110.20.
"Federal Reserve buying has run ahead of US government issuance in the second quarter, and the end of the US debt ceiling suspension looms at the end of the month," commented OANDA Senior Market Analyst Jeffrey Halley. "A consequent fall of the US dollar and rally in stock markets is likely right in front of our faces."
In mainland Europe, the CAC 40 in Paris was down 0.5% while the DAX 30 in Frankfurt was 0.1% lower early Monday.
The selling prices in German wholesale trade rose by 11% in June when compared with the prior year, the highest monthly annual rate of change since October 1981.
In May and in April, the annual rates of change had been 9.7% and 7.2%, respectively.
On a monthly basis, the index rose by 1.5%.
Turning to company news, Admiral was the best performer among the blue-chips, up 3.0% early on Monday. The Cardiff, Wales-based insurer said it is set to report a higher than expected pretax profit from continuing operations for the six months to the end of June, in the range of GBP450 million to GBP500 million.
For the first half of 2020, Admiral posted pretax profit of GBP286.7 million.
The strong performance was boosted by "unusually positive" development in the UK motor bodily injury claims which has led to higher reserve releases and profit commission revenue.
In addition, the company said the proposed 2021 interim dividend is expected to be in the range of 110 pence to 125p per share, up from 70.5p paid the year before.
Among the mid-caps, Tate & Lyle was the best performer, up 2.1%, as it has agreed to sell a controlling stake in a new company and its subsidiaries, comprising its Primary Products business in North America and Latin America as well as its interests in the Almidones Mexicanos and DuPont Tate & Lyle Bio-Products joint ventures.
The assets will be sold to KPS Capital Partners. Tate & Lyle said it expects to receive gross cash proceeds of USD1.3 billion, resulting in net cash proceeds of USD1.2 billion after adjustments and transaction costs.
Following completion, the company said it intends to return GBP500 million to Tate & Lyle's shareholders through a special dividend and associated share consolidation. Completion is expected in the first quarter of 2022.
Tate & Lyle and KPS will each own 50% of new company - valued at around USD1.7 billion - with KPS having board and operational control.
On the other side of the FTSE 250 index was Wizz Air, down 3.0%, after Morgan Stanley cut the airline to Equal Weight from Overweight.
Elsewhere, Photo-Me International jumped by 5.5% as it reported a better than initially expected start to the current financial year, with a "promising" return to pre-Covid business conditions.
Revenue for the six months to April 30 was up 3.4% to GBP94.6 million, resulting mostly from reduced restrictions on the movement of people and customers compared with a year ago.
The company swung to a pretax profit of GBP12.0 million from GBP24.2 million loss posted in the first half of its financial 2020.
"We have completed a multi-country restructuring programme which has radically reorganised our business areas and our country management. This includes a restructure of operations in the UK, which is expected to return to a cash positive position in the short-to-medium term," said Chief Executive & Deputy Chair Serge Crasnianski.
Going forward, the company said it intends to continue to focus on new product innovation and diversification of operations "to meet ever-changing consumer needs".
In Asia on Monday, the Japanese Nikkei 225 index closed up 2.3%. In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong closed up 0.5%.
Japan's machine tool orders growth slowed in June, preliminary figures from Japan Machine Tool Builders' Association showed.
Machine tool orders in June rose 97% after more than doubling in the same month the year prior, both from pandemic-hobbled comparison months in 2020.
On a month-on-month basis, machine tool orders rose by just 2.5%. This was helped by domestic orders, which spiked 18%, after a 2.2% decline in May. In contrast, foreign orders fell for the first time in a year, by 4.5%, after a 2.7% increase in May.
Gold was quoted at USD1,800.43 an ounce early Monday, down from USD1,809.40 on Friday. Brent oil was trading at USD75.19 a barrel, down from USD75.70 late Friday.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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