LONDON (Alliance News) - UK shares have opened lower Tuesday, as negative company news overrides positive Chinese economic data.
Drug and medical-device stocks are leading blue-chip declines, with Shire, AstraZeneca and Smith & Nephew the top three FTSE 100 losers. The US government on Monday announced a crackdown on US companies that use mergers and takeovers to move their headquarters to countries with lower taxes, the so-called inversions that have led to a string of takeover offers for UK companies in the drug and medical sector.
Tesco is down again after saying it is bringing forward the start date for its new CFO, following Monday's shock profit revision.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 0.5% at 6,738.23
FTSE 250: down 0.6% at 15,653.30
AIM ALL-SHARE: marginally lower at 759.54
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Hang Seng: down 0.3% at 23,882.05
Nikkei 225: closed for Autumnal Equinox Day
DJIA: closed down 0.6% at 17,172.68
S&P 500: closed down 0.8% at 1,994.29
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GBP-USD: flat at USD1.6359
EUR-USD: up at USD1.2855
GOLD: up at USD1,216.41 per ounce
OIL (Brent): up at USD97.30 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times British Summer Time)
09:00 EU Markit Manufacturing, Services and Composite PMI Preliminary
09:30 UK BBA Mortgage Approvals
09:30 UK Public Sector Net Borrowing
13:55 US Redbook index
14:00 US Housing Price Index
14:45 US Markit Manufacturing PMI Preliminary
15:00 US Richmond Fed Manufacturing Index
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China's manufacturing sector expanded at an accelerated pace in September, the preliminary PMI reading from HSBC and Markit Economics revealed - showing a score of 50.5. That was up from 50.2 in August, and it topped forecasts for an even 50.0. A score above 50 signals expansion in a sector, while a reading below 50 means contraction. "Economic activity in the manufacturing sector showed signs of stabilization in September. However, overall the data still point to modest expansion," said Hongbin Qu, Chief Economist, China & Co- Head of Asian Economic Research at HSBC.
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The US government Monday announced a crackdown on US companies that use mergers and takeovers to move their headquarters to countries with lower taxes. US Treasury Secretary Jacob Lew said the practice, known as corporate inversion, was an "unfair loophole" that puts a larger tax burden on all other taxpayers, including small businesses. The new rules - including a ban on companies using foreign cash without paying US taxes - would apply to deals that close starting Monday, Lew said, according to Bloomberg news agency.
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The US and allied forces launched airstrikes against Islamic State militants in Syrian territory for the first time, the Pentagon said late Monday. The military was "using a mix of fighter, bomber and Tomahawk Land Attack Missiles," in the ongoing operation, Pentagon Press Secretary Rear Admiral John Kirby said in a statement. The bombings were the first against Islamic State militants in Syria. The US had previously bombed Islamic State targets in Iraq, but said that it would pursue the group in Syria if necessary.
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The US Secret Service is reviewing security at the White House after an armed intruder managed to scale a fence and enter the executive mansion, White House spokesman Josh Earnest said Monday.
The intruder, Omar Gonzalez, who was armed with a knife, also had 800 rounds of ammunition, two hatchets and machete in his car, and posed a threat to US President Barack Obama, prosecutors said in court, according to the Washington Post.
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BROKER RATING CHANGES
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Cantor Fitzgerald Raises easyJet To Buy From Hold, PT Up To 1,600p From 1,500p
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DEUTSCHE BANK RAISES GO-AHEAD TO 'BUY' ('HOLD') - TARGET 2790 (2270) PENCE
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CREDIT SUISSE CUTS SHANKS GROUP TO 'NEUTRAL' ('OUTPERFORM') - TARGET 105 (115) PENCE
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UBS INITIATES MONITISE WITH 'BUY' - TARGET 80 PENCE
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COMPANIES - FTSE 100
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Tesco said incoming Chief Financial Officer Alan Stewart will begin in the new role with immediate effect, just a day after the supermarket giant saw GBP2 billion wiped off its market capitalisation on Monday after it said it had overstated its first-half pretax profit guidance. Upon his appointment in July, Tesco said that Stewart would join the company on December 1, 2014. The company has been without a finance head for some time; outgoing CFO Laurie McIlwee has not been in the office for some time and has not been involved in recent weeks, Tesco said Monday. Stewart was poached from Marks & Spencer PLC, where he served as CFO.
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Engineering group IMI said Daniel Shook has been appointed as its next finance director. Shook will join the company on January 1, 2015 as finance director designate and will then succeed Douglas Hurt in the role in early 2015, the FTSE 100 company said. Hurt will step down from the board of the company and retire from his position with IMI following its annual general meeting on May 7, 2015. Shook is currently chief financial officer at Borealis AG, the Austria-based chemical and plastics producer.
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Meggitt said it has been selected by Bell Helicopter, a Textron Inc company, to provide an oil sensing package for the new 525 Relentless commercial super-medium helicopter, in a deal expected to generate USD30 million in gross sales over the production life of the helicopter.
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British Land Co said it has fully let the recently completed 39 Victoria Street development in Victoria, London, meaning its West End portfolio is approaching being fully let. The property group said the letting at 39 Victoria Street follows from the lettings secured at its other West End developments. Its 10-30 Brock Street and 10 Portman Square properties are both also fully let or under offer. The company's West End office portfolio now has a 96% occupancy rate, up from 88% at March 31, it said.
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Standard Chartered is holding advanced talks over the sale of its Hong Kong consumer finance arm to Pepper Australia Pty Ltd, Reuters reported. Pepper and Hong Kong-based Chow Tai Fook Enterprises were the two top contenders to buy the PrimeCredit arm following two bidding rounds, Reuters said, citing people familiar with the deal. The sale could reach between USD500 million and USD700 million.
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Barclays is to pay a GBP38.0 million fine for failing to segregate clients' assets properly, Sky News reported late Monday. According to the report, the Financial Conduct Authority will announce as soon as Tuesday that the British lender will pay the fine. Citing insiders, the report said the regulator's announcement is to be clear that losses for the bank's clients were theoretical and not actual. The offences took place prior to the appointment of current Chief Executive Antony Jenkins.
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COMPANIES - FTSE 250
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Sweeteners and starches company Tate & Lyle said it faced a challenging first half, and warned that supply chain issues will hit its annual profit. In a trading statement, the company, known for its low-calorie sweetener Splenda, said supply constraints due to a severe winter in the US, caused operational difficulties in its US corn plants, which left it with much-lower inventories than usual, wiping around GBP10 million off its profit for the first quarter. The company's supply chain was also hit by an industrial accident at it Singapore facility, which drove up costs.
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Close Brothers Group reported a 19% increase in pretax profit in its recent financial year, driven by the performance of its banking division, which showed loan book growth and was helped by an improved credit environment. In a statement, the FTSE 250 financial services group said it made a GBP195.7 million pretax profit in the year ended July 31, compared with GBP163.8 million in the prior year.
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Scottish soft-drinks maker AG Barr said an increase in volume and strong demand for its Strathmore water brand and its iconic Irn Bru drink, drove an increase in its first half profit and revenue, and also announced a new 10 year franchise deal to sell the Snapple brand in the UK and EU. The company also raised its interim dividend by 10% to 3.11 pence.
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PZ Cussons Says Performance Since June In Line With Management Expectations; Says Trading Condition Remain Challenging
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COMPANIES - LONDON MAIN MARKET AND AIM
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Nighthawk Energy said it has appointed Richard McCullough as executive chairman, effective October 1, as Stephen Gutteridge prepares to step down from the position. The US-focused oil development and production company said McCullough will be based in Denver, USA. He has more than 30 years' experience in the US energy and oil and gas industries with over 20 years at the executive level, holding the chief financial officer, chief executive and then chairman positions at PDC Energy Inc after joining in 2006.
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The Innovation Group said it has agreed to buy Driven Solutions Inc and associated companies for USD7.2 million. Innovation, which provides software and business process services to the insurance, fleet, automotive and property industries, said it would pay USD0.9 million upon completion of the deal, with the remainder to be withheld in order to settle a pre-closing deferred liability which had been assumed upon the acquisition and which will be settled over the next two to four years.
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Catering services and in-flight products business Journey Group reported a drop in profit and revenue for the first half of 2014, as it was hurt by the weakening of the dollar during the period. The company, which supplies airlines with catering services, posted pretax profit of GBP596,000 for the six months to June 30, down from GBP690,0000 a year earlier, as revenue dipped to GBP18.8 million from GBP19.2 million.
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Venture Life Group said it has signed long-term distribution deals with four new partners which are expected to generate revenue of EUR5.1 million over the ten year terms of the agreements. The consumer self-care group, which addresses the needs of the ageing population, said that it has signed deals with Valeant, Lyfis, Symphar and Deltapharma which give the distributors exclusive rights to sell certain Venture Life products across a total of nine European territories, including Germany.
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COMPANIES - INTERNATIONAL
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Cereal maker Kellogg Co, Canadian pension fund Ontario Teachers' Pension Planand Turkish biscuit company Ulker Biskuvi Sanayi are among the first round bidders to acquire UK snack and cookie maker United Biscuits Holdings Ltd, according to media reports on Monday. The bids reportedly value the company at about GBP2 billion. Some of the others in the fray are smaller domestic rival Burton's Biscuit Co, Italian chocolate company Ferrero SpA, Mondelez International, Inc, Campbell Soup Co Chinese private equity group Hony Capital, and the Philippines-based conglomerate San Miguel Corp.However, they are yet to put in their bids. The second-round of bidding is reportedly expected by the middle of October.
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Social networking giant Facebook will next week introduce a new advertising platform that is designed to help marketers target Facebook users more effectively, the Wall Street Journal reported Monday, citing people familiar with the company's plans. According to the WSJ report, the move is also aimed at helping Facebook to challenge Google's dominance of the online advertising space.
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Botox maker Allergan is in advanced talks to buy Salix Pharmaceuticals Ltd in order to fend off a USD53 billion hostile bid from Canada-based Valeant Pharmaceuticals Inc, according to media reports on Monday. A deal could reportedly be announced later this week or in the next week. However, Raleigh, North Carolina-based Salix Pharma is itself merging with a unit of Italy's Cosmo Pharmaceuticals SpA as part of a tax-inversion deal.
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Italian banking giant UniCredit and Spanish commercial bank Banco Santander is in final stage talks to combine their asset management units, according to media reports on Monday. The deal to combine UniCredit's Pioneer Investments unit with Santander Asset Management is expected to win approval at a UniCredit board meeting later in the week. The companies are expected to announce the deal as early as next week. The combined entity, which will be Europe's largest asset manager with more than EUR350 billion of assets under management, will be equally held and jointly controlled by UniCredit and Banco Santander.
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Adobe Systems Inc said Monday it has acquired privately held Aviary, a developer of mobile Software Development Kits for the delivery of creative apps.
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Tuesday's Scheduled AGMs/EGMs
WYG
Marwyn Management Partners
City of London Group
Sirius Minerals
PZ Cussons
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2014 Alliance News Limited. All Rights Reserved.
21 Aug 2014 11:26
