LONDON (Alliance News) - UK company news jumped back into the equities market foreground on Thursday, amid price-moving announcements by Glencore and Vodafone in the FTSE 100 and by Essentra and RPC Group in the FTSE 250.
Essentra shares were down 27% after it issued a warning about 2016 results due to issues faced by its cigarette filters business. British Polythene Industries was up 31% on an agreed takeover by RPC.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.4% at 6,277.75
FTSE 250: down 0.5% at 17,097.24
AIM ALL-SHARE: flat at 744.54
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Hang Seng: market shut for holiday
Nikkei 225: closed down 1.0% at 16,668.41
DJIA: closed up 0.4% at 18,005.05
S&P 500: closed up 0.3% at 2,119.12
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GBP: down at USD1.4503 (USD1.4550)
EUR: flat at USD1.1398 (USD1.1392)
GOLD: flat at USD1,260.16 per ounce (USD1,261.37)
OIL (Brent): up at USD52.70 a barrel (USD52.18)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in BST)
holiday China Dragon Boat Festival
09:30 UK trade balance
11:00 Ireland gross domestic product
13:30 US initial and continuing jobless claims
13:30 Canada capacity utilization
13:30 Canada new housing price index
15:00 US wholesale inventories
15:30 US EIA natural gas storage
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Consumer prices in China were up 2.0% on year in May, the National Bureau of Statistics said. That was slower than forecasts for 2.3%, which would have been unchanged from the April reading. On a monthly basis, consumer prices slipped 0.5% after dipping 0.2% in April. The bureau also said that producer prices fell 2.8% on year versus expectations for a decline of 3.2% and after sliding 3.4% in the previous month.
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The house price balance in the UK fell to 19% in May, the Royal Institution of Chartered Surveyors said. That was well shy of forecasts for 35% and down sharply from 39% from the April reading. Analysts suggest that the steep drop is the result of uncertainty surrounding the potential for a British exit from the EU in the coming weeks.
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The UK economy grew at a faster pace in three months to May, data from the National Institute of Economic and Social Research showed. The think tank said the gross domestic product grew 0.5% in the three months to May, faster than the 0.4% expansion seen in three months to April. The institute expects acceleration in the second half of 2016.
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EU Neighbourhood Policy Commissioner Johannes Hahn called on Turkish President Recep Tayyip Erdogan to say if Ankara is serious about wanting closer ties to the EU, warning that if so, it has to play by the bloc's rules. Turkey, an EU membership candidate, has stepped up cooperation with the EU to clamp down on migration flows towards the bloc, with Brussels offering aid and benefits - such as the prospect of visa-free EU access for Turkish citizens - in return. At the same time, Erdogan has been accused of a clampdown on media and the opposition.
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A presidential election is "not reality TV", US President Barack Obama said in an interview with late night talk show host Jimmy Fallon. Obama praised Hillary Clinton, who a day earlier secured his Democratic Party's nomination, but did not endorse her outright ahead of a meeting Thursday with rival candidate Bernie Sanders. "The main role I'm gonna be playing in this process is to remind the American people that this is a serious job," Obama said, according to a transcript of the interview that is to air Thursday. "You know, this is not reality TV."
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BROKER RATING CHANGES
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BERENBERG INITIATES HASTINGS GROUP WITH 'BUY' - TARGET 210 PENCE
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BERENBERG RAISES DIRECT LINE TO 'BUY' ('HOLD') - TARGET 414 (329) PENCE
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BERENBERG CUTS ESURE GROUP TO 'SELL' ('HOLD') - TARGET 238 (236) PENCE
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BERENBERG RAISES ADMIRAL GROUP TO 'HOLD' ('SELL') - TARGET 1657 (1269) PENCE
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TRADERS: RBC CAPITAL RAISES WOLSELEY TO 'OUTPERFORM' ('SECTOR PERFORM')
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TRADERS: BARCLAYS RAISES PREMIER OIL TO 'OVERWEIGHT' ('EQUAL WEIGHT')
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TRADERS: BARCLAYS CUTS GENEL ENERGY TO 'UNDERWEIGHT' ('OVERWEIGHT')
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COMPANIES - FTSE 100
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Multi-commodities miner and trading house Glencore said it has agreed to sell a further stake in its Agricultural Products business to British Columbia Investment Management. Glencore will sell a 9.99% stake in the business to British Columbia Investment for USD624.9 million, which values the total unit at USD6.25 billion. The deal is in addition to the USD2.5 billion sale of a 40% stake in the Agricultural Products business to Canada Pension Plan Investment Board, announced back in April.
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Drugmaker AstraZeneca said it has entered a commercialisation deal with Aspen Global Inc, part of US pharmaceuticals company Aspen Group, for the rights to Astra's anaesthetics portfolio outside the US. The agreement will cover seven established medicines and five local anaesthetics. Aspen will buy the commercialisation rights to the portfolio for an upfront USD520.0 million and will pay AstraZeneca up to USD250.0 million more under a product sales-related payment, along with double-digit percentage trademark royalties on sales of the products.
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Sky Network Television and Vodafone Group announced that they have reached an agreement to create a leading integrated telecommunications and media group in New Zealand, via a combination of Sky Network and Vodafone New Zealand. Sky will acquire all of the shares in Vodafone NZ for a total purchase price of NZD3.44 billion, through the issue of new Sky shares giving Vodafone Europe BV a 51% interest in the combined group and cash consideration of NZD1.25 billion, to be funded through new debt.
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HSBC Holdings said it has received regulatory approval for the sale of its Brazilian business to Banco Bradesco for USD5.2 billion in cash. HSBC said the Brazilian Administrative Council for Economic Defence, the country's competition watchdog, had unanimously recommended the approval of the deal.
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The private investment group which owns Harry Ramsden's fish and chip restaurants is set to be unveiled this week as the buyer of Tesco's Giraffe restaurant chain, Sky News reported. Boparan Ventures, the vehicle run by entrepreneur Ranjit Boparan, is understood to be paying a modest amount to acquire the Giraffe business, which was loss-making in Tesco's last financial year.
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COMPANIES - FTSE 250
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Plastic and fibre products company Essentra issued a profit warning for 2016 following a deteriorating in trading in its filter products business. Essentra said it is "unlikely" to meet the trading expectations for the year to the end of December that it had set out in its annual results in February. Essentra said its Filter Products unit, which makes filters for cigarettes, has been hit by a challenging market backdrop and projects either not being commercialised or being delayed.
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Plastic products firm RPC Group said it has agreed a deal to acquire fellow UK-listed firm British Polythene Industries and will launch a share placing to part-fund the deal. RPC will pay 470.00 pence per share in cash and 0.60141 of new RPC shares for British Polythene, valuing the group at a total of GBP261.0 million. The total per share value of the deal will be around 940.00p per British Polythene share, a 30% premium to the stock's closing price of 725.00p per share on Wednesday. To part-fund the deal, RPC will place shares through an accelerated bookbuild, run by Deutsche Bank and Panmure Gordon, to raise around GBP90.0 million.
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Automotive marketplace operator Auto Trader Group launched a rolling programme of share buybacks, as its annual pretax profit rocketed higher and underlying results also were strong. Auto Trader said its pretax profit for the financial year to March 27 was GBP155.0 million, a massive rise on the GBP10.9 million it made the year before due to costs booked that year on its listing in London and higher financing costs for the group's debt. Operating profit, before the one-offs and finance costs, grew to GBP169.6 million from GBP133.1 million, up 27%. The group also declared a final dividend of 1.0p per share, meaning its total annual payout will be 1.5p.
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US e-commerce giant Amazon.com has launched its AmazonFresh food delivery service in the UK, potentially posing a significant challenge to other grocers and particularly delivery specialist Ocado Group. AmazonFresh will initially offer a full grocery service only in parts of central and east London, operating from a distribution centre in the east of the capital. It said it will be using small and medium-sized logistics firms to handle the deliveries.
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Home Retail Group reported growth in sales in the first quarter of its financial year and said its takeover by J Sainsbury remains on track to complete in the third quarter of 2016. Home Retail said total sales at digital retail chain Argos grew by 2.6% year-on-year in the 13 weeks ended May 28 to GBP868 million, with like-for-like sales up by 0.1%. Net new space contributed 2.5% to total sales growth, as a result of store openings in the previous financial year. Gross margin at Argos, however, declined by 100 basis points, due to adverse movements in foreign exchange rates and shipping costs, as well as a negative sales mix impact resulting from the improved performance of margin-dilutive electrical products. Home Retail also said it will increase by GBP30 million its provision for customer redress, after the group's financial services division "erroneously collected excess fees" in relation to the late payment of amounts due from certain customers.
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Bellway said it expects its housing completions to rise in its full year by at least 10% and its average selling price to grow 10%, with market conditions robust and demand for homes remaining healthy.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Flybe Group said it turned to a small profit in the second year of its three-year turnaround plan after reporting a significant rise in revenue as the airline opened up new routes. The company, which claims to be the largest regional airline in Europe, turned to a GBP2.7 million profit in the financial year to the end of March from the GBP23.6 million loss that was booked in the previous year following a material rise in revenue to GBP623.8 million from GBP574.1 million.
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COMPANIES - INTERNATIONAL
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E.ON said its shareholders approved the spinoff of a 53.35% majority stake in Uniper to shareholders. The new E.ON focuses on the new energy world and has three core businesses: energy networks, customer solutions, and renewables. Uniper focuses on the conventional energy business with an emphasis on power generation and energy trading.
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Google has overtaken Apple to take the top spot as the world's most valuable brand, according to an annual report released. With a value of USD229.2 billion, Google is 32% more valuable than a year ago, according to the BrandZ study listing the world's 100 top brands as compiled by market research firm Millward Brown.
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Thursday's Scheduled AGMs/EGMs
Wm Morrison Supermarkets
AA
Dignity
Shawbrook Group
SOCO International
Michael Page International
Robert Walters
Avocet Mining
Intelligent Energy (re fundraising)
Source BioScience
London & Associated Properties
P2P Global Investments
SciSys
Martin Currie Global Portfolio Trust
BlackRock Smaller Companies Trust
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2016 Alliance News Limited. All Rights Reserved.
18 Jul 2016 15:07