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LONDON (Alliance News) - UK shares are narrowly mixed at the open Monday, as events in Iraq and Ukraine damp investor sentiment.
Low-cost airline Wizz Air Holdings PLC has pulled its planned initial public offering in London, blaming the recent volatility in airline stocks, but three other companies added themselves to the London IPO pipeline.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 0.03% at 6,775.71
FTSE 250: up 0.02% at 15,817.77
AIM ALL-SHARE: up 0.1% at 788.68
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Hang Seng: down 0.1% at 23,286.47
Nikkei 225: closed down 1.1% at 14,933.29
DJIA: closed up 0.3% at 16,775.74
S&P 500: closed up 0.3% at 1,936.16
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GBP-USD: up at USD1.6976
EUR-USD: down at USD1.3520
GOLD: up at USD1,282.40 per ounce
OIL (Brent): up at USD113.00 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times British Summer Time)
10:00 EU Consumer Price Index
13:30 US NY Empire State Manufacturing Index
14:15 US Industrial Production and Capacity Utilization
15:00 US NAHB Housing Market Index
16:30 US 3-Month Bill Auction
16:30 US 6-Month Bill Auction
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House prices in the UK remained almost unchanged in June, as demand matched supply, figures from Rightmove showed. On a month-over-month basis, prices rose 0.1% in June following the 3.6% hike in May. House prices rose 7.7% year-over-year in June, a slower rate of increase than the 8.9% rise in May. House prices in most of the regions declined in June compared to the previous month, with prices in London decreasing 0.5% due mainly to a combination of buyer reluctance and over 20% more sellers entering the market this month.
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Low investment in both physical and intangible capital weighed on the UK productivity, the Bank of England said in its Quarterly Bulletin. Nonetheless, the research paper indicated that there remains a large degree of uncertainty around any interpretation of the weakness in productivity. "Factors related to the nature of the financial crisis are likely to be having a persistent impact on the level of productivity - but there remains considerable uncertainty around any interpretation of the puzzle," it said.
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Jihadist militants fighting the Iraqi government Monday claimed further advances in the north of the troubled country. The Islamic State in Iraq and the Levant said it had captured the northern town of Tel Afar "with the exception of a small heavily guarded area known as the Green Zone," freeing "hundreds of prisoners." The claim came on a Twitter account used by the al-Qaeda splinter group for updates on its operations in northern Nineveh province.
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Russia will only deliver gas to Ukraine upon pre-payment, energy giant Gazprom said, after a deadline for arrears payment expired. "Today at 10 am Moscow time Gazprom in full accordance with contractual obligations, switched to pre-payment gas deliveries for Naftogaz Ukraine," the company said in a statement. It added that the decision was based on the Ukrainian gas provider's "chronic non-payment." Russia says Ukraine owes it some USD4.5 billion in unpaid gas bills.
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Ukraine's foreign minister threatened Sunday to sever diplomatic relations with Russia as scores of people were reported killed in days of Ukrainian government airstrikes near the eastern city of Kramatorsk. Ukraine observed a day of mourning for the 49 personnel killed aboard a military aircraft shot down Saturday by separatists near Luhansk, another city in the troubled east. Flags flew at half-mast, and all entertainment and sporting events were cancelled after President Petro Poroshenko threatened the pro-Russian separatists with retaliation.
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Israel continued large-scale arrests of Palestinians, including many Hamas members, as it searched for three Israelis suspected to have been kidnapped in the West Bank. A 20-year-old Palestinian was killed by Israeli soldiers in a refugee camp on the outskirts of the West Bank city of Ramallah during a confrontation with protesters, according to medics and witnesses. It is the first death in clashes since the Israeli youths went missing Thursday near a settlement bloc on the southern West Bank, north of Hebron, the largest Palestinian city in the territory. Israeli Prime Minister Benjamin Netanyahu has accused the militant Islamist Hamas movement of abducting the teenagers.
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At least 48 people were killed in the Kenyan coastal settlement of Mpeketoni near the tourist resort Lamu in an attack by about 50 gunmen, a news report said. "The situation is not good for now. The toll could be more than the 47 bodies that we have collected," Police Inspector General David Kimaiyo was quoted by The Standard newspaper as saying. Kimaiyo said those confirmed dead in Sunday's attack included a police driver.
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BROKER RATING CHANGES
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SOCGEN CUTS ROLLS-ROYCE TO 'SELL' ('HOLD') - TARGET 950 (1070) PENCE
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BARCLAYS RAISES DEBENHAMS TO 'EQUAL WEIGHT' ('UNDERWEIGHT') - TP 73 (64) PENCE
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Investec Cuts Majestic Wine To Add from Buy, PT 460p
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BARCLAYS RAISES RSA TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 538 (102) PENCE
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GOLDMAN RAISES HISCOX PRICE TARGET TO 607 (606,74) PENCE - 'SELL'
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LIBERUM INITIATES NCC GROUP WITH 'BUY' - TARGET 220 PENCE
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COMPANIES - FTSE 100
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Vodafone PLC said it plans to acquire Italian security and telematics company Cobra Automotive Technologies SpA through a voluntary tender offer of EUR1.49 per share, valuing it at EUR145 million. Telematics is the combination of telecommunications and informatics, often used to create technology for navigation systems in vehicles. Vodafone said it has inked an agreement with Cobra's main shareholders, who have a total 73.96% interest in the company, to tender their shares in the offer. It has also agreed with some minority shareholders to acquire their 20% holding for EUR20 million.
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Royal Bank of Scotland is in talks over a restructuring of its Ulster Bank unit that could overcome a hurdle to selling some of the government’s majority stake, The Sunday Times reported, without saying where it got the information. The taxpayer-backed lender is working on a plan to attract private equity into Ulster to boost its capital position before the business is merged with another Irish bank. Permanent TSB, owned by the Irish government, is considered the most likely partner for the creation of an enlarged Irish bank, the newspaper said. Any such transaction would enable RBS to cut its holding in Ulster below 50 per cent, where it would no longer have to consolidate the lender in its accounts, The Sunday Times added.
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COMPANIES - FTSE 250
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Mitchells & Butlers PLC said it has acquired the majority of the activities of pub and restaurant operator Orchid Group for GBP266 million in cash. The UK pubs and restaurant operator had said last month it was in exclusive discussions to buy the majority of the assets of Orchid. On Monday, it confirmed it has acquired a total of 173 "well-located" pubs mainly in the South Eat and North West of England, of which 158 pubs are freehold or long leasehold. It said the purchase will be immediately earnings enhancing, with double-digit earnings enhancement following cost cuts and revenue synergies, with returns well ahead of the cost of working capital.
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Ultra Electronics Holdings PLC said it has acquired Dorset-based Lab Impex Systems Ltd for GBP3.2 million in cash, financed from its existing facilities. Ultra Electronics has acquired the company from private investors, including Lab Impex's founder. Lab Impex produces radiation measuring products and services for the nuclear industry. Ultra Electronics said that the acquisition is expected to be fully earnings enhancing during 2015.
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COMPANIES - ALL-SHARE AND AIM
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UK wine retailer Majestic Wine PLC reported a slight uptick in profits for its last financial year, supported by revenue growth, but again warned of flatter profit growth in the year ahead as it invests heavily in the business. For the year ended March 31, the company posted a pretax profit of GBP23.8 million, compared with a GBP23.7 million pretax profit the prior year.
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Obtala Resources Ltd said a new independent report on its Mozambique timber concessions had drawn encouraging conclusions and substantiate its belief that those assets had previously been undervalued. In a statement, the company said the report by Honour Capital considered 11 concession areas in three separate clocks in northern Mozambique and forecast 10-year operational sales revenue at costs of USD391 million. It gave the assets net present value of USD197.2 million at an 8% discount rate, and a USD141 million net present value at a 15% discount rate.
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Picton Property Income Ltd said it swung to a profit in its recent full year, after its results in the previous year were hit by valuation losses. The company, which invests in commercial property in the UK, Isle of Man and the Channel Islands, posted pretax profit of GBP37.7 million for the year ended March 31, compared with a GBP14.3 million loss a year earlier. Picton benefited from valuation gains on property of GBP18.4 million in addition to GBP5.7 million in profit related to the disposal of investment properties. In the previous year Picton's results were hit by GBP30.9 million in valuation losses.
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Cloudbuy PLC said it doesn't know why its share price has declined recently, and it is expecting to win a number of significant contracts in the next few months after its prospects and leads accelerated ahead of plan. In a statement, the e-procurement company said it is pursuing a number of significant opportunities in Australia, New Zealand, Hong Kong, China, India, South Africa, the US and Canada, along with major opportunities in the UK, specifically in education, defence, health and social services.
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Afarak Group PLC said its Turkish unit has temporarily closed down the Tavas and Kavak mines in the country after employees went on strike Sunday. In a short statement, the company said its Elektrowerk Weisweiler GmbH processing plant in Germany has secured enough raw materials until the end of 2014.
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COMPANIES - OTHER
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Low-cost airline Wizz Air Holdings PLC pulled its planned initial public offering in London, blaming the recent volatility in airline stocks, but three other companies added themselves to the London IPO pipeline. Wizz Air is the fourth company to postpone or cancel a planned IPO in London in 2014. Last month, fashion retailer Fat Face Group Ltd pulled out of its UK stock market debut, citing weak conditions in the UK equity market as the main reason for backing out. Still, the London IPO pipeline was bolstered Monday by African construction services company Mota-Engil Africa, satellite technology company Global Invacom Group Ltd and biopharmaceuticals technology company Abzena Ltd, which is a portfolio company of Imperial Innovations Group PLC.
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Fast-food chain group SPP, which owns the Upper Crust and Caffe Ritazza brands, is set to announce plans for a GBP2 billion stock-market flotation this week, according to the Sunday Telegraph. SPP, which has fast-food outlets in more than 2,000 train stations and airports, is to announce plans for its summer stock market debut, with the group's owner, private equity firm EQT, looking to raise between GBP450 million and GBP500 million, by selling a roughly 25% stake, according to an article in the Sunday Telegraph. The flotation would give the group a market value of around GBP2 billion, making it one of the biggest companies to make an initial public offering in London so far this year.
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Medical device maker Medtronic, Inc. agreed late Sunday to acquire smaller rival Covidien PLC in a cash and stock deal valued at about USD42.9 billion. The deal will help Medtronic shift base to Ireland and save it from paying high US corporate taxes. The deal will see Dublin-based Covidien's shareholders receiving a consideration of USD35.19 in cash and 0.956 of an ordinary share of Medtronic PLC, implying a total consideration of USD93.22 per Covidien share, based on Medtronic's closing stock price of USD60.70 on Friday.
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Monday's Scheduled AGMs/EGMs
Tex Holdings
President Energy
CPP Group
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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