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LONDON (Alliance News) - UK shares closed mixed Thursday amid a flurry of UK company activity and earnings reports, while the pound got hit twice in the day by disappointing UK retail sales data followed by better-than-expected US jobless claims numbers.
Grabbing the most attention in London on the corporate front, publisher Pearson said it is selling FT Group, which includes the Financial Times newspaper, to Japanese media group Nikkei for GBP844 million in cash, meaning the company will now concentrate on its education business.
Quick confirmation of the deal came only hours after Pearson had confirmed advanced talks to sell the FT Group. Nikkei, which says flagship daily newspaper The Nikkei has about three million subscribers, was seen as one of the leading contenders to buy the FT Group, in competition with German publisher Axel Springer. The deal doesn't include the sale of property at One Southwark Bridge in London - the home of the FT newspaper - nor Pearson's 50% stake in the Economist Group, which publishes the Economist magazine.
Pearson shares jumped following the announcement and closed up 2.1%. The publisher is set to release its half-year results on Friday, which may have forced the pace of the sale announcement.
The FTSE 100 closed down 0.2% at 6,655.01 points, and the FTSE 250 finished down 0.2% at 17,619.10, while the AIM All-Share outperformed, ending up 0.4% at 756.28.
European major indices also ended mixed, with the CAC 40 in Paris up 0.1% and the DAX 30 in Frankfurt down 0.1%.
Data in the morning from the Office for National Statistics showed that UK retail sales declined 0.2% from the prior month, reversing a 0.3% rise in May. This was the first drop in three months and went against expectations of a 0.4% gain. On a yearly basis, growth in retail sales including automotive fuel eased unexpectedly to 4.0% from 4.7% in May. Economists had expected 4.8% expansion.
The pound dropped to USD1.5582 from USD1.5652 before the data. Sterling declined even more after a better-than-expected US jobless claims reported in the London afternoon pushed the dollar higher. At the European equities markets close, the pound was at USD1.5524.
US jobless claims fell to their lowest level in more than forty years in the week ended July 18. The Labor Department released a report showing that initial jobless claims dropped to 255,000, a decrease of 26,000 from the previous week's unrevised level of 281,000. Economists had expected jobless claims to edge down to 279,000.
With the much bigger-than-expected decrease, jobless claims fell to their lowest level since hitting 233,000 in November of 1973.
The positive data comes after US Federal Reserve Chair Janet Yellen, in her testimony before Congress last week, lent support to the expectation of higher interest rates later this year, if the US economy shows sustained recovery.
At the European stock market close, Wall Street was mixed, with the Dow Jones Industrial Average down 0.3%, the S&P 500 index down 0.2% and the Nasdaq Composite up 0.2%. Among many other companies on one of the busiest days of the US earnings season, retailer Amazon.com is expected to report its second-quarter results after the US market close.
In London, ARM Holdings was the best performer in the FTSE 100, up 4.6%, recovering from Wednesday's losses but still trading at lows the chip maker hasn't seen since the start of the year. ARM was sold on Wednesday after the poorly received results of major customer Apple.
Shire finished up 3.0%. The Dublin-based drug company upped its full-year earnings guidance as it posted a decline in pretax profit for the first half of 2015, as a result of an increase in operating costs following its acquisition of NPS Pharmaceuticals and investments in its pipeline. Additionally, Shire expressed confidence in reaching USD10 billion in product sales by 2020, and also said it expects to meet its target of USD6.5 billion of product sales in 2016, with the possibility of exceeding this target with the contribution from its acquisition NPS Pharmaceuticals.
Also in the FTSE 100, Kingfisher ended up 2.0% Thursday. The DIY retailer reported a rise in sales on a constant currency basis in the second quarter of its financial year, as it demonstrated growth in each of the regions in which it operates and as it continued with its strategy to create a unified 'ONE' Kingfisher. Regionally, the UK and Ireland demonstrated the strongest growth with total sales up 6.7%, while France grew 2.6% and Other International, comprising Russia and Poland, grew 4.3%.
However, Investec analyst Kate Calvert is cautious about the growth figures in Europe. "We believe it is too early to get excited about a European recovery as the improved performance was driven by seasonal rather than core," writes the analyst. "In addition, there is a material pound-euro headwind". Investec reiterates a Sell recommendation on Kingfisher.
Unilever shares ended up 1.6% after its results beat expectations. The consumer goods group posted underlying sales growth of 2.9% in its first-half, slightly ahead of the consensus for 2.7% growth, while second-quarter underlying sales growth, also of 2.9%, beat consensus estimates for 2.6% growth. The underlying figures strip out the impact of currency movements and any acquisitions or disposals.
Aberdeen Asset Management was the worst blue-chip performer, down 7.6%, having hit its lowest level in over a year. The company said its assets under management dropped in the third quarter of its financial years amid outflows related to volatility in Asian and emerging markets. Aberdeen said its assets under management fell to GBP307.3 billion at the end of June, down from GBP330.6 billion at the end of March. Aberdeen attributed the fall to market conditions and foreign exchange movements.
SSE closed down 5.0%. The UK energy supplier said production across most all of its divisions, except coal, rose in the first quarter of the financial year, but it reported a fall in customer accounts and average customer consumption. SSE said the number of retail electricity and gas customers at the end of March had fallen to 8.49 million from 8.58 million at the end of March 2014.
In the FTSE 250, Britvic said it has bought Brazilian soft drinks company Empresa Brasileira de Bebidas e Alimentos for GBP113.6 million, partly financed by a share issue, and reported an increase in revenue in the third quarter of its financial year. Later in the day, Britvic confirmed the completion the placing of about 12.4 million shares, 4.97% of the existing number, through an accelerated bookbuild process. It raised GBP87.8 million, issuing the shares to existing and new institutional investors at 710 pence per share.
Shares in Britvic ended down 1.9% at 720.95p.
Howden Joinery Group finished down 7.9%. The kitchens and joinery products manufacturer hiked its interim dividend on the back of a rise in pretax profit and revenue in the first half of 2015, but shares in the company fell after analysts said the profit missed expectations and little potential remains for upgrades.
In the UK corporate calendar Friday, in addition to Pearson, Vodafone Group issues a first-quarter interim management statement, while Anglo American, Beazley and Hammerson release half-year results. Volex publishes a first-quarter interim management statement, and Close Brothers Group issues a trading update, while Helical Bar releases an interim management statement, Lonmin issues a third-quarter interim management statement and production report, and AG Barr provides a trading update.
In the economic calendar, China's manufacturing Purchasing Manager's Index is due at 0245 BST. Manufacturing and services PMIs for France, Germany and the eurozone are expected at 0800 BST, 0830 BST and 0900 BST, respectively. In the US, manufacturing PMI is due at 1445 BST and new home sales are due at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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