BP Share News (BP.)

LONDON (Alliance News) - Shares in London ended lower Monday, with oil stocks hit after crude touched a new 11-year low, while Dublin-based pharmaceutical giant Shire ended in the red after announcing a much anticipated agreement for US-based Baxalta.

The FTSE 100 index ended down 0.7% at 5,871.83 points, the FTSE 250 down 0.4% at 16,658.32 and the AIM All-Share down 0.8% at 720.07. Similar in Europe the French CAC 40 ended down 0.5% and the German DAX 30 closed down 0.3%.

UK stocks drifted between gains and losses throughout most of the session, somewhat shrugging off another session of declines for Asian stocks after a mixed set of economic data from China that didn't help reassure confidence in the country's economic health for investors. The Shanghai Composite closed down 5.3% and the Hang Seng in Hong Kong dropped 2.8%. The Tokyo market was closed for the Coming of Age holiday.

Though a China-inspired selloff was avoided, London gave back its afternoon gains when the buyers went out of the market after crude prices headed south to touch a new 11-year low, dragging oil-related stocks.

At the London close, Brent oil was standing at USD31.74 a barrel, its lowest level since 2004, that surpassed last Thursday's low of USD32.14 a barrel. Similarly, US benchmark West Texas Intermediate was also down at USD31.59 a barrel at the close.

BG Group ended down 1.9%, while Royal Dutch Shell 'A' and 'B' shares closed down 1.4% and 0.3%, respectively. However, BP ended up 0.2% after Goldman Sachs raised the company's price target. Midcaps Tullow Oil and Cairn Energy ended down 4.5% and 2.3%, respectively.

Shire ended down 1.1%, as investors digested the details of its much anticipated acquisition of US peer Baxalta.

Shire has agreed to buy Baxalta in a deal that values the Chicago-based company at around USD32 billion and which will involve both a cash and shares portion within the consideration. The confirmation of the deal came after a five month courtship and after settling concerns over a potential tax liability that had threatened to derail the deal.

Shire will pay USD18.00 in cash and 0.1482 Shire American depositary shares per Baxalta share. Based On Shire's closing ADS price last Friday this implies a total current value of USD45.57 per Baxalta share, Shire said.

This is a premium of around 37.5% to Baxalta's share price on August 3, when Shire announced its initial offer for Baxalta. Shire had initially made an offer for Baxalta, which was spun-off from US medical group Baxter International Inc only the month before, which valued the company at around USD30.0 billion.

Baxalta, however, rejected the USD30.0 billion offer as "significantly" undervaluing the business and suggested a merger at such an early stage in the company's existence would be "severely disruptive". Despite the rebuff from Baxalta, Shire remained committed to pursuing a deal and decided to sweeten its offer with a cash element.

At the London close, US stocks were mixed ahead of the start of the US earnings season, with the Dow 30 up 0.2%, the S&P 500 flat and the Nasdaq Composite down 0.2%.

US aluminium giant Alcoa will release fourth-quarter earnings after the New York close. Alcoa's results are traditionally considered the unofficial start of the US earnings season. Results from financial powerhouses JPMorgan Chase, BlackRock, and Citigroup are expected later in the week.

Still in the US economic calendar, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, will make a speech at 1740 GMT.

At the London close, the pound was standing at USD1.4545, while the euro was at USD1.0885. Gold was at USD1,098.88 an ounce.

Elsewhere on the London Stock Exchange, broker rating changes acted as a catalyst for stock movements in either direction.

Owner of Premier Inn and Costa Coffee, Whitbread, rose 2.1% after it was upgraded to Buy from Neutral by Bank of America Merrill Lynch, while Sage Group ended up 2.0%, also benefiting from an upgrade to Buy from Underperform by BofA.

Defence contractor BAE Systems closed up 1.7% after JPMorgan lifted it to Overweight from Neutral, with the broker saying that 2016 should be a positive year for the defence sector.

At the other end of the FTSE 100, Sports Direct International ended down 3.3%, after Liberum downgraded the sporting goods retailer to Hold from Buy, following the company's profit warning last week.

St James's Place and Prudential dropped 1.6% and 0.5%, respectively, after Deutsche Bank cut both life insurers to Hold from Buy.

In the FTSE 250, Laird closed as the best midcap performer, up 9.7%. The wireless components manufacturer could be a takeover target for US electronics group Amphenol, according to a report in The Sunday Telegraph.

The newspaper said it understood Amphenol, which makes electronic and fibre optic connectors, cables and interconnector systems, has been running the rule over Laird. The process is at an early stage and may not ultimately lead to a bid, the Telegraph said, but Amphenol is understood to have been attracted by Laird's relative discount to peers.

Shares in Home Retail ended up 8.1% after several shareholders in the Argos and Homebase owner have demanded more than GBP1.6 billion for the business from J Sainsbury, the Sunday Times reported. According to the newspaper, the supermarket now faces an uphill struggle to acquire Home Retail, following news last week that it had made an offer for the company in November.

The first offer was thought to have valued Home Retail at GBP1.1 billion, according to the report, which said three big shareholders told the Sunday Times they wanted at least GBP1.6 billion, compared to Home Retail's current market cap of GBP1.2 billion.

Shares in Sainsbury's rose 0.6%.

In the corporate calendar Tuesday, Wm Morrison Supermarkets, Debenhams, Michael Page International, Greggs, Grafton Group, AO World, Boohoo.com, Saga and Mears Group issue trading statement.

In the economic calendar, China's consumer confidence index is due at 0500 GMT. UK's industrial and manufacturing production data are due at 0930 GMT. In the US, the redbook index is due at 1355 GMT, JOLTS job openings data are due at 1500 GMT. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond makes a speech in Columbia.

By Daniel Ruiz; danielruiz@alliancenews.com

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