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LONDON (Alliance News) - Shares have opened mostly lower Wednesday, with the FTSE 100 index led down by Irish drug company Shire, off a staggering 27%.
US drug maker AbbVie said late Tuesday its board intends to reconsider its recommendation to acquire Shire amid proposed tax rule changes in the US. Shire said Wednesday it thinks AbbVie should proceed with the recommended takeover offer for the company, and noted that Shire would be due a break fee of about USD1.64 billion if the deal is called off.
In the FTSE 250, Balfour Beatty is up 10%, while Qinetiq is down 8.3%, after Balfour poached Qinetiq's CEO.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 0.7% at 6,345.95
FTSE 250: up 0.1% at 14,679.92
AIM ALL-SHARE: down 0.2% at 696.51
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Hang Seng: up 0.6% at 23,195.41
Nikkei 225: closed up 0.9% at 15,073.52
DJIA: closed marginally lower at 16,315.19
S&P 500: closed up 0.2% at 1,877.70
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GBP-USD: up at USD1.5917
EUR-USD: flat at USD1.2655
GOLD: down at USD1,225.90 per ounce
OIL (Brent): down at USD85.15 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
(all times British Summer Time)
09:30 UK Unemployment Rate And Average Earnings
10:00 Italy Public Deficit/GDP
10:00 Switzerland ZEW Survey
12:00 US MBA Mortgage Applications
13:30 US NY Empire State Manufacturing Index
13:30 US Producer Price Index
13:30 US Retail Sales
13:55 US Redbook index
15:00 US Business Inventories
19:00 EU ECB President Draghi's Speech
19:00 US Fed's Beige Book
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Germany's consumer price inflation held steady at 0.8% as initially estimated in September, final data from Destatis showed. This was the lowest rate since February 2010, when prices gained 0.5%. Month-on-month, consumer prices remained unchanged in September. The harmonized index of consumer prices rose 0.8% in September from last year and remained flat on a monthly basis.
Chinese consumer prices slowed slightly more than expected in September, figures from the National Bureau of Statistics showed. Consumer prices grew 1.6% year-over-year in September following the 2% rise in August. Economists had expected inflation to slow to 1.7%. This marked the second consecutive month of slowing.
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Police in Hong Kong cleared demonstrators from a tunnel near government headquarters early Wednesday, news reports said, as pro-democracy protests continued their third week. Security forces used pepper spray and arrested 45 people before dawn as they cleared Lun Wo Road, which had been blocked since the previous evening, the South China Morning Post reported. A video circulated online of a group of officers apparently leading a handcuffed protester around a corner and beating him. The authorities said there would be an investigation.
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Japan's industrial output was revised to show steeper decline in August, final figures from the Ministry of Economy, Trade and Industry showed. Industrial production fell 1.9% month-over-month in August, which was faster than the 1.5% drop estimated earlier. In July, production had decreased 0.4%. On a year-over-year basis, industrial output dropped 3.3% in September, exceeding the flash estimate for a 2.9% decrease. This follows the 0.7% fall in July.
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The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, The Telegraph quoted the Bank of International Settlements as warning. The newspaper quotes Guy Debelle, head of the BIS’s market committee, saying in a speech in Sydney that investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to “blow up” as the first sign of stress.
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The Republic of Ireland is to shut its so-called “Double Irish” corporate tax loophole from the beginning of next year, bowing to intense pressure to close one of the most controversial measures in international tax planning, the Financial Times reports. The strategy, which allowed US technology and pharmaceutical groups to avoid paying tax on billions of dollars of income over two decades, helped to create Ireland’s Celtic Tiger economy before the financial crisis. For years Dublin resisted intense pressure from its EU partners over what they regarded as unfair tax competition, the FT said.
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Ebola infection rates in West Africa will rise to 5,000-10,000 new cases per week in December, a senior World Health Organization (WHO) official said Tuesday in Geneva. The WHO hopes to slow the rate by the turn of the year by improving safe burial procedures and patient isolation, WHO assistant director general Bruce Aylward said. The total number of Ebola cases in Guinea, Liberia and Sierra Leone will top 9,000 this week, he said. More than 4,400 people have died in the three countries at the centre of the epidemic.
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The US-led coalition against Islamic State militants said Tuesday it had carried out its most intense bombardment yet of jihadist positions around the besieged Kurdish town of Kobane in northern Syria.
US and Saudi fighters and bombers carried out 21 strikes on Islamic State positions around the town between Monday and Tuesday, US Central Command said.
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BROKER RATING CHANGES
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TRADERS: CITIGROUP RAISES HARGREAVES LANSDOWN TO 'NEUTRAL' ('SELL') - PT 830 PENCE
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CREDIT SUISSE RAISES AVEVA TO 'OUTPERFORM' (NEUTRAL) - TARGET 1800 (1700) PENCE
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BARCLAYS RAISES LADBROKES TO EQUAL WEIGHT (UNDERWEIGHT) - TARGET 126 (137) PENCE
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COMPANIES - FTSE 100
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Irish drug company Shire said it thinks AbbVie Inc should proceed with its recommended takeover offer for the company, and noted that Shire would be due a break fee of about USD1.64 billion if the deal is called off. US drug maker AbbVie said late Tuesday that it intends to reconsider the recommendation made to its shareholders to adopt the takeover agreement to acquire Shire amid proposed tax rule changes in the US. It had sent Shire a notice about its intention to withdraw or modify its recommendation. In its response Wednesday, Shire said its board will meet to "consider the current situation" and it will make a further announcement in due course.
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Mining giant Rio Tinto reported late Tuesday higher iron ore shipments and production in the third quarter, and backed its iron ore production forecast for the full year, while lifting guidance for copper output. While production of copper increased, bauxite aluminium and coal saw a decline from last year. For the third quarter, the company's global iron ore shipments rose 15% year-over-year to 78.0 million tonnes. Global iron ore production grew 12% to 76.8 million tonnes. Sequentially, iron ore shipments grew 3%, and production increased 5%.
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Precious metals miner Fresnillo raised its 2014 gold production target to take account of its recent acquisition of the whole of its former Penmont joint venture, although third quarter gold production was down on the year due to a stoppage at another mine. In a statement, the company said it now expects consolidated attributable gold production to be 590,000 ounces in 2014, reflecting the full consolidation of the Penmont assets and temporary disruptions it suffered at the Herradura mine up until March.
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Oil company BG Group poached Helge Lund from rival Statoil to be its new chief executive from next March, and separately said it had started production at a block in Brazil early. In a statement, BG Group said Lund, currently Statoil's CEO, will start as its own CEO On March 2, 2015. Separately, BG Group said it had started production on the Iracema area in block BM-S-11 in the Santos Basin offshore Brazil early.
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The Weir Group said it has entered into an agreement to buy Chinese-American crushing and separation equipment manufacturer Trio Engineering Products. The FTSE 100-listed group will pay USD220 million to buy the company, which it said will expand its portfolio for mining customers and will provide it with scale in growing aggregates markets. Weir will fund the deal via existing bank facilities and said the deal will be immediately earnings accretive, with post-tax returns from the deal expected to exceed the cost of capital for Weir group within its first year of ownership.
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Barclays's auction of its index business has hit a snag, Reuters reported late on Tuesday. According to the report, which cited two people familiar with the matter, would-be buyers realised that some crucial bond pricing data that does not belong to the British bank will not be part of the package. The data in question belongs to third parties, including Bloomberg LP and Interactive Data Corp, the sources told Reuters, adding that those entities won't allow the data to be sold as part of the deal.
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COMPANIES - FTSE 250
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Balfour Beatty confirmed it has poached the chief executive of defence products company QinetiQ Group, Leo Quinn, to be its own CEO from January 1, 2015, a job that will involve turning the struggling company around after a string of profit warnings, a failed merger attempt from a rival, and the disputed sale of its US project management business. QinetiQ confirmed Quinn's departure at the end of this year, saying it has started looking for a replacement. Chief Financial Officer David Mellors will become acting CEO on January 1 until a replacement is found.
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CSR said it has reached an agreement to be acquired by Qualcomm Inc for 900 pence per share in cash, valuing the company at GBP1.6 billion. In a statement, CSR said the price represents a premium of approximately 56.5% on its closing price on August 27, and a 66.3% premium on the average closing price of CSR shares in the one month since August 27.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Low & Bonar said it is continuing to face a difficult trading environment in Europe which is impacting its civil engineering business, but said it expects earnings for the financial year to end November to be in line with market forecasts on a constant currency basis. The performance materials group said the fall in demand for its civil engineering business in Europe reported in its last update in September has continued. It said it was being impacted by the difficult economic conditions in continental Europe, including a slowdown in landfill projects in Germany and the ongoing geopolitical tensions in eastern Europe.
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Connect Group announced the launch of 'Pass My Parcel', a new click-and-collect delivery service with online retailer Amazon as a partner. In a statement, Connect Group said the service, developed by its news and media division, has the potential to be part of the division's diversification strategy. The news came separately to the group's results for the year ended August 31, which showed an increase in pretax profit to GBP43.1 million from GBP38.9 million.
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Mears Group said it has struck a deal to buy social housing services provider Omega Group for up to GBP40 million. Mears will pay an initial GBP20 million for the company, with a further GBP20 million to be paid at a multiple of 6.8 applied to average EBITDA over the 36 month period to 31 October, 2017. Mears, the social housing and care sector support services company, said Omega has a portfolio of around 1,700 properties has a client base of 24 local authorities and housing associations.
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COMPANIES - INTERNATIONAL
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Intel posted net income of USD3.3 billion in the third quarter, a 12% increase from the year-ago period, the semi-conductor manufacturer said Tuesday. Revenue rose by 8% to USD14.6 billion, up from USD13.48 billion a year ago. Third-quarter revenue was the highest in Intel's history, according to Intel chief executive Brian Krzanich.
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Wednesday's Scheduled AGMs/EGMs
No Events Scheduled
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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