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(Alliance News) - Stocks in London opened mixed on Monday, with HSBC weighing on the FTSE 100, while Burberry was higher on a positive read-across amid M&A activity in the luxury-goods sector.
The FTSE 100 index was down 28.06 points, or 0.4% at 7,296.41. The FTSE 250 was up 4.49 points at 20,108.00. The AIM All-Share was flat at 891.01.
The Cboe UK 100 index was down 0.2% at 12,388.02. The Cboe UK 250 was flat at 18,032.62. The Cboe UK Small Companies was flat at 11,240.18.
In European equities, the CAC 40 index in Paris was flat and the DAX 30 in Frankfurt was up 0.2%.
In the FTSE 100, fashion house Burberry Group was up 1.3% after French peer LMVH, according to news reports, made a bid for US jeweller Tiffany, known for its engagement rings and diamonds.
LVMH, which owns Louis Vuitton, Dior and the champagne brands Veuve Clicquot and Moet, was up 1.4% in Paris.
Tiffany, whose flagship New York store is next to Trump Tower on 5th avenue, has not yet responded to the offer, which comes as the luxury industry is jittery about the possible effects of the US-China trade war.
The French luxury giant made an offer for the US company at the start of the month, a source told AFP late on Saturday. AFP's source, who asked to remain anonymous, did not say how much LVMH offered for Tiffany but was not sure the talks would result in a deal.
The jeweller's stock-market value was around USD11.9 billion at the end of trading on Wall Street Friday. Tiffany shares were up 20% in pre-market trading on Monday at USD118.00.
"Tiffany shareholders are unlikely to accept this initial bid given that the bid is only a modest premium to its current valuation of USD12bn, and could hold out for more, however its profits and sales have been hit hard from the fallout in the US, China trade war, as well as the unrest in Hong Kong. Other shares in the luxury sector including Burberry have edged higher on the back of this morning's bid news," CMC Markets analyst Michael Hewson said.
At the other end of the large cap index, HSBC Holdings was the worst performer, down 3.5% after the global lender reported a sharp drop in third-quarter earnings suffering amid "challenging" conditions, in particular within its European and US businesses.
For the three months ended September, pretax profit narrowed 18% to USD4.84 billion from USD5.92 billion the year prior. This was after operating income fell 3.2% to USD13.36 billion from USD13.80 billion the year before.
Looking ahead, HSBC now no longer expects return on equity of at least 11% to be achieved in 2020. The FTSE 100-listed firm will, therefore, focus on rebalancing its capital away from low-return businesses as well as adjust its cost base.
These changes could result in "significant" charges in the fourth quarter of 2019. Such costs would be related to goodwill impairments and additional restructuring charges.
The Asia-focused bank is London's second largest company by market capitalisation behind oil major Royal Dutch Shell.
"We are therefore accelerating plans to remodel them, and move capital into higher growth and return opportunities," Chief Executive Officer Noel Quinn said.
Informa was down 2.5% after Goldman Sachs cut the events and publishing company to Sell from Neutral.
In the FTSE 250, Drax Group was the best performer, up 3.6% after HSBC raised the biomass- and coal-fired power station operator to Buy from Hold.
At the other end of the midcaps, Aston Martin Lagonda was the worst performer, down 5.7% after Bank of America downgraded the DB11 and Rapide sports car maker to Underperform from Neutral.
The pound was quoted at USD1.2842 Monday, firm against USD1.2831 at the London equities close Friday.
UK Prime Minister Boris Johnson will likely fail to secure "super majority" support for a December general election - but knows he will require 100 fewer MPs to grant the same request just 24 hours later.
The prime minister's election bid on Monday, to be made under the Fixed-Term Parliaments Act, would require a two-thirds Commons majority - 434 MPs - to agree to an election on December 12.
Labour's lack of support for the proposal means it is likely to be defeated when voted upon on Monday evening. But the Liberal Democrats and Scottish National Party have offered Johnson a way out of the deadlock.
Johnson has already had two requests for an election refused. Lib Dem leader Jo Swinson and the SNP's Westminster leader Ian Blackford have put forward a tightly-drafted Bill that would grant an election on December 9 - three days earlier than the PM's suggested polling date - as long as the EU grant an extension until January 31.
With the SNP and Lib Dems supporting the initiative, the Bill is likely to pass even without Labour backing.
The Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite closed up 0.9%, while the Hang Seng index in Hong Kong closed up 0.8%.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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