HSBC Holdings Share News (HSBA)

LONDON (Alliance News) - UK share prices were higher midday Monday, but the pound was being hit by political worries after Prime Minister David Cameron confirmed a date for the UK's in-out European Union referendum, with several prominent Conservative MPs, including London Mayor Boris Johnson, saying they will support the campaign to leave the EU.

The FTSE 100 index was up 1.3%, or 75.31 points, at 6,025.54, with HSBC Holdings leading the fallers after the bank's 2015 numbers fell short of analyst forecasts.

The FTSE 250 was up 0.8%, or 134.16 points, at 16,292.22 and the AIM All-Share up 0.4%, or 2.56 points, at 686.33. In Europe, the CAC 40 in Paris was up 1.7% and the DAX 30 in Frankfurt up 2.0%.

"So far the London stock market is showing little concern about the Brexit debate, although as ever with such things the currency market is already moving in response to the weekend's many developments," said IG analyst Chris Beauchamp.

After the market close Friday, European Union President Donald Tusk confirmed the EU's 28 leaders have granted their "unanimous support" to a reform deal with Britain. David Cameron said the UK will have a "special status" in the EU following the agreement struck with his EU counterparts.

Following a meeting with his ministers on Saturday, Cameron announced the referendum on the country's membership in the EU will be held on June 23.

Cameron had said he will support the campaign for staying in the EU, and will outline details to the members of Parliament in a Commons statement later Monday afternoon at 1530 GMT.

The prime minister has given free rein to ministers in his Conservative party to back his bid to stay in a reformed EU or support a so-called 'Brexit' from the bloc.

IG's Beauchamp said the broker's "Brexit binary" points firmly for the outcome of the referendum to be the UK staying in the EU, indicating a 67% chance.

However, the uncertainty around the referendum weighed on the pound, which traded the dollar at USD1.4106 Monday midday, against USD1.4325 at the London equities close on Friday. That is the lowest level for sterling against the greenback in a month.

"Given that we have many weeks of this ahead of us, such falls in the pound are either a monumental value opportunity (if you think the gloomy case is excessive) or a chance to ride the speculative wave lower," noted Beauchamp.

Stocks in New York point to a higher open, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq 100 all seen up 1.2%.

In the US corporate calendar, Motorola Solutions releases its fourth-quarter results after the US market close.

Still in the economic calendar, the Chicago Federal Reserve's national activity index is due at 1330 GMT, while US flash Markit manufacturing, composite and service purchasing managers' index readings are due at 1445 GMT.

Already released, eurozone's flash composite PMI dropped to 52.7 in February from 53.6 in January. It was forecast to fall more slightly to 53.5 in February. A reading above 50 indicates expansion in the sector.

The eurozone's services PMI came in at a 13-month low of 53 versus 53.6 a month ago, with economists expecting the indicator to remain unchanged at 53.6. The PMI for manufacturing slid to 51 from 52.3 in January. The expected score was 52.

Meanwhile, Germany's private sector growth slowed to a seven-month low in February primarily due to weaker manufacturing expansion. The flash composite output index fell to 53.8 in February from 54.5 in January. The services Purchasing Managers' Index edged up to 55.1 from 55 in January. It was expected to remain unchanged at 55.

On the London Stock Exchange, shares in HSBC Holdings were at the bottom of the FTSE 100, down 2.9%. The lender reported a 1.0% increase in annual pretax profit, missing analyst expectations after a loss-making fourth quarter, as the bank grappled with slowing Chinese economic growth, declining commodity and oil prices, and historically low interest rates.

HSBC lifted its dividend for the year to USD0.51 per share from USD0.50, as pretax profit rose to USD18.87 billion in 2015, from USD18.68 billion in 2014. Coming one week after HSBC decided to remain in the UK, rather than move to its historic home of Hong Kong, the results missed analyst expectations of a USD21.78 billion pretax profit, according to consensus estimates compiled by the bank.

Chairman Douglas Flint said the group had a "broadly satisfactory" financial performance in 2015, which he said was marked by "seismic shifts" in global economic conditions, and cautioned that China's slower economic growth will "undoubtedly" play its part in a "bumpier" financial environment. Nevertheless, Flint expects China to be the driver of global growth, as the Asian giant's economy transitions to services from manufacturing.

HSBC made a fourth-quarter pretax loss of USD858.0 million, compared with a USD1.73 billion pretax profit in the corresponding three months of 2014.

Miners were up, with Anglo American up 7.5%, BHP Billiton up 6.0%, Rio Tinto up 6.0% and Glencore up 5.2%.

"All are following the recent global equity rally, benefiting from bets that oversupply will begin to reduce as well as a return of risk-on appetite," said Mike van Dulken, head of research at Accendo Markets, noting that mining stocks also were benefiting from a rise in the price of copper, nickel and iron ore.

Associated British Foods was up 1.6%, after saying the underlying trading outlook for the business remains unchanged for the first half of its financial year, with some progress in adjusted operating profit to be made.

The group, which owns discount fashion retailer Primark alongside its food businesses, said the weakening of sterling in recent weeks, particularly against the euro, means that foreign exchange will hit its results by just GBP10 million for the half year ending February 27, having previously estimated a GBP25 million hit.

In the FTSE 250, shares in Home Retail Group were up 12% at 171.90 pence, making them the best mid-cap performer. The gains were made after Frankfurt-listed Steinhoff International Holding said after the market close on Friday that it has put forward a proposal to Home Retail for a possible all-cash offer which would be for 175.0p per Home Retail share.

This offer is considerably higher than the deal currently on the table from J Sainsbury earlier this month, which implied a price of around 161.3p per Home Retail share. The offer made by Sainsbury earlier this month was thought to be towards the lower end of the range that Home Retail would be willing to sell at, according to reports prior to the deal being unveiled - making the higher offer by Steinhoff even more significant.

Home Retail Group, in its own statement Friday, confirmed it has received the proposal from Steinhoff, which will have until March 18 to make a firm offer or walk away from the deal.

Cantor Fitzgerald said this rival offer for Home Retail could be a "blessing in disguise" for Sainsbury's shareholders. Cantor analyst Mike Dennis said initial work on Argos uncovered several issues including questions about whether Argos' sales and profitability would grow under the Sainsbury's banner and control.

Dennis said Sainsbury's will need to see evidence of higher potential synergies and maybe some asset sales from Home Retail, if it were to come back with an improved offer. However, the analyst believes Steinhoff can increase its bid depending on Sainbury's response.

Cantor reiterated its Hold rating and 270.00 pence price target for Sainsbury's. It also has a Buy recommendation and 195.00p target for Home Retail.

Sainsbury's was one of the worst performers in London's blue-chip index, down 1.8%.

Veterinary drugs company Dechra Pharmaceuticals was up 7.6% after it said its pretax profit rose in the first half of its financial year on stronger revenue, with good growth in its existing portfolio and encouraging signs from its pipeline.

The FTSE 250 company said its pretax profit for the six months to the end of December was GBP14.2 million, up from GBP12.6 million a year earlier, as revenue increased to GBP110.7 million from GBP100.9 million.

Dechra said it saw good growth in its European franchise, led by its Genera business, though this was offset by the weak euro, which wiped out the vast majority of revenue growth in the region. In North America, revenue rose significantly, up 59% thanks to the investments made by the group in expanding in the region in recent years.

Cairn Energy and EnQuest said they increased their holdings in the Kraken oil project in the UK North Sea, buying out the third partner on the project.

Cairn said it has increased its stake in the project to 29.5% after it bought a further 4.5% interest in the project from First Oil PLC. EnQuest said it had bought another 10.5% stake in the project to raise its total holding to 70.5%.

Cairn Energy was up 5.0% in the FTSE 250, while FTSE All-Share-listed Enquest was up 3.6%.

In AIM, Regency Mines was up 69% after it said it is buying a 5% stake in Horse Hill Development from Angus Energy for GBP400,000 in a cash and shares deal. Horse Hill owns a 65% participating interest in the PEDL 137 and PEDL 246 licences in the UK Weald Basin. A discovery was announced in October at the Horse Hill-1 oil discovery well at PEDL 137, and successful flow tests were announced earlier this month at the first of three zones to be tested at the well, Regency said.

LiteBulb Group was down 25%. The branded products developer said it has received an extension on repayment for the first tranche of its convertible loan notes until March 23.

The first tranche of loan notes are worth GBP800,000 and were originally due for repayment on February 20. LiteBulb said it is in active discussions to secure additional financing of around GBP2.0 million through an equity fundraising. "While the board has made significant progress towards achieving this, it notes that the company's current cash position remains tight," Litebulb said.

By Daniel Ruiz; danielruiz@alliancenews.com

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