LONDON (Alliance News) - Shares in London opened slightly weaker Thursday, ahead of an ECB policy decision and press conference and amid another full day of UK company reporting.
Building products firm Travis Perkins and miner Anglo American led blue-chip decliners, down 6.1% and 4.1%, respectively, after providing trading updates.
In the FTSE 250, bookie Ladbrokes and department store Debenhams led gainers, up 4.4% and 3.1%, respectively, after their better received updates.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 6,336.95
FTSE 250: down 0.4% at 16,969.28
AIM ALL-SHARE: up 0.1% at 745.48
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Hang Seng: down 0.7% at 22,819.16
Nikkei 225: closed down 0.6% at 18,435.87
DJIA: closed down 0.3% at 17,168.61
S&P 500: closed down 0.6% at 2,018.94
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GBP: down at USD1.5439 (USD1.5469)
EUR: flat at USD1.1342 (USD1.1350)
GOLD: up at USD1,168.50 per ounce (USD1,166.40)
OIL (Brent): flat at USD48.09 a barrel (USD48.14)
(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)
09:00 Italy Trade Balance
09:30 UK Retail Sales
12:45 EU ECB Interest Rate Decision
13:30 US Chicago Fed National Activity Index
13:30 US Initial and Continuing Jobless Claims
13:30 EU ECB monetary policy statement and press conference
13:30 Canada Retail Sales
14:00 US Housing Price Index
15:00 US Existing Home Sales
15:00 US CB Leading Indicator
15:00 EU Consumer Confidence preliminary
15:30 US EIA Natural Gas Storage
16:00 US Kansas Fed manufacturing activity
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The UK's competition watchdog ruled out any major structural reform of the UK retail banking market, and said there should be no end to free if-in-credit banking. The provisional findings of the investigation, which examined the supply of personal current accounts and of banking services to small and medium-sized enterprises, had been highly anticipated after the probe was confirmed by the Competition and Markets Authority in November 2014. Big structural changes, such as forcing the break-up of large retail banks, have been provisionally rejected, according to the CMA, which said that it was decided that such a radical step would be unlikely to address the competition concerns it honed in on. The CMA said there was "no convincing evidence" that free if-in-credit accounts distort competition.
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Bank of England Governor Mark Carney used a speech on Wednesday to deliver a positive view on the UK's membership of the European Union, saying Britain has arguably been the leading beneficiary of the EU single market. Carney, in a speech to St Peter's College at Oxford University, said Britain's membership of the EU single market has helped to drive economic growth in the country in the four decades since it first joined. But Carney also cautioned on the knock-on effects of financial regulatory change in the EU. "Closer union between euro-area member states is likely to necessitate further harmonisation of financial regulation across the euro area. By extension, those regulations can affect the rest of the EU," he said.
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The European Central Bank is expected to leave interest rates on hold Thursday but to open the door to further monetary action amid the threat of deflation and a slowdown in major emerging economies. Last month's 0.1% fall in annual eurozone inflation along with cooling growth in economies such as China, Brazil and Russia has increased the pressure on the ECB to extend its ambitious EUR1.1-trillion-bond-buying plan under its quantitative easing programme.
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US Vice President Joe Biden will not run for president, he said, ending months of uncertainty in the Democratic field. Biden said the window "has closed" for him to mount a successful campaign as his family continues to mourn the death of his son, Beau, in May. After the announcement, former secretary of state Hillary Rodham Clinton, the Democratic front runner, called Biden "a good friend and a great man," and said she was "inspired by his optimism and commitment to change the world for the better."
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BROKER RATING CHANGES
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GOLDMAN INITIATES CENTAMIN WITH 'CONVICTION BUY LIST'
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TRADERS: CREDIT SUISSE CUTS STHREE TO 'NEUTRAL' ('OUTPERFORM')
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TRADERS: CREDIT SUISSE CUTS HAYS TO 'NEUTRAL' ('OUTPERFORM')
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TRADERS: JPMORGAN RAISES LONMIN TO 'OVERWEIGHT' ('NEUTRAL')
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TRADERS: LIBERUM CUTS LONMIN TO 'SELL' ('HOLD')
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COMPANIES - FTSE 100
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Oil giant BP and China National Petroleum Corp entered into a framework agreement on strategic cooperation covering potential shale gas exploration and production in the Sichuan Basin and future fuel retailing ventures in China and other international partnerships. The agreement was signed during Chinese President Xi Jinping's visit to the UK. It is expected to add several billion dollars in future trade to BP's already significant business with China. In addition to these agreements to explore opportunities within China, BP and CNPC have agreed to explore oil and LNG trading opportunities globally, work together on carbon emissions trading, and share knowledge around technology and management practices. BP also announced an agreement with China Huadian Corp under which BP will sell Huadian up to 1 million tonnes of liquefied natural gas per year worth up to USD10 billion over the next 20 years.
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BP also said it will invest USD229.0 million with its partners on three new exploration blocks that it has been awarded in Egypt. The oil company was awarded the three blocks through the 2015 Egyptian Natural Gas Holding Co bid round, and the USD229.0 million will be invested over those three blocks "over different phases," it said in a statement.
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Anglo American reported quarter-on-quarter falls in production across most of its commodities and cut its production guidance across several divisions. The miner reported a 12% quarter-on-quarter fall in iron ore production from its Kumba project in the third quarter to end September to 11.4 million tonnes from 13.0 million tonnes, pushing year-to-date production to 33.9 million tonnes compared to 35.8 million tonnes a year earlier. Anglo lowered its full-year 2015 guidance for the Kumba mine to 43.0 million tonnes from its previous guidance of 44.0 million tonnes.
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Engineer GKN said its sales in the first nine months edged higher but noted that its trading environment has shown signs of softening in the final quarter of the year. The company, which makes automotive and aerospace components and systems, said its sales for the nine months to the end of September were GBP5.68 billion, with a currency boost of GBP29.0 million offset by a GBP54.0 million decline due to disposals.
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Travis Perkins said its 2015 earnings are set to come in at the low end of market expectations due to continued challenges in its key markets in the third quarter. The builders' merchant and home improvement retailer said that despite planning for a reduction in repair, maintenance and improvement markets over the summer months, the actual slowdown in the market was worse than had originally been expected. For the third quarter to the end of September, Travis Perkins posted total sales growth of 5.5%, with like-for-like sales growth of 2.6%.
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London Stock Exchange Group said it has made a good start to the fourth quarter, with payments processor Worldpay Group floating in the biggest initial public offering on its markets in 2015 to date. In a statement, the markets operators said it has an "encouraging pipeline" of companies seeking to join its markets in Italy and the UK. The update came as the LSE said that it made "good progress" in the third quarter of its current financial year, despite being hurt by currency exchange movements, with the euro weakening against sterling and the US dollar strengthening.
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Standard Chartered is leaning toward raising equity, in a move that could be completed early next month, the Wall Street Journal reported on Wednesday, citing people familiar with the matter. The Asia-focused bank has been considering whether or not to go to the market for equity capital to bolster its financial strength, amid an uptick in bad loans and tougher economic conditions in some of its key markets. The report said that a decision has not been made. The matter is set to be discussed by the board after Standard Chartered reports its third-quarter earnings on November 3.
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COMPANIES - FTSE 250
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London-based estate agency Foxtons Group said it has seen an increase in customer activity in the third quarter in some areas of its property sales, but said the market is taking time to recover following the slowdown around the General Election. Foxtons said the slowdown has particularly hit the central London market, where transactions remain at historically low levels due to strong recent price growth and changes to the stamp duty regime. Revenue for the third quarter to the end of September was up 8.8% year-on-year, Foxtons said.
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Debenhams reported growth in profit in its recently-ended financial year as it announced that Chief Executive Michael Sharp will step down from his role in 2016. The department store operator reported a 7.3% rise in pretax profit in the year ended August 29 to GBP113.5 million from GBP105.8 million the year before, in line with market expectations. Revenue grew slightly to GBP2.32 billion from GBP2.31 billion, as like-for-like sales increased 0.6%. Debenhams will pay a final dividend of 2.4 pence, maintaining its full-year dividend at 3.4p.
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Building products company SIG said its sales performance has diverged in the first nine months between its UK and European operations and said continued weakness in the latter, plus some softness in the UK repair, maintenance and improvement market, mean it now expects its underlying pretax profit to fall year-on-year. SIG said it now expects its underlying pretax profit for the year to the end of December to be GBP85 million to GBP90 million, compared to GBP98.1 million in 2014.
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Ladbrokes said group net revenue fell in the third quarter of 2015 as it faced a tough comparative period, and it reported a decline in earnings due to increased games duty and taxes. The betting company reported a 0.7% fall in group net revenue in the three months ended September 30, but said it would have grown 2.0% excluding the FIFA World Cup which took place in the comparative period last year. Earnings before interest and tax also declined 57% to GBP14.3 million, which Ladbrokes said was due to an increase in machine games duty, point of consumption tax and lower comparative margins. Ladbrokes added that its proposed merger with Gala Coral is on track.
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Investment manager Rathbone Brothers reported a 13% increase in third-quarter net operating income, despite a tough time in financial markets. Net operating income was GBP55.6 million in the three months ended September 30, compared with GBP49.0 million in the third quarter the prior year. Funds under management, a key driver of earnings, fell to GBP27.6 billion at the end of September from GBP28.3 billion at the end of June.
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COMPANIES - INTERNATIONAL
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In its first earnings report since spinning off its PayPal business, online auction company eBay reported a decline in its third-quarter earnings, once one-time items are stripped out. However, the bottom line came in above what market analysts were projecting. eBay also provided a forecast for the fourth quarter that was generally in line with what analysts were predicting. The company reported income from continuing operations of USD545 million, or USD0.45 per share. This was up from USD509 million, or USD0.41 per share, in the same period last year.
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American Express Co reported a 14% drop in profit for the third quarter, hurt largely by lower revenues and higher expenses. Earnings for the quarter missed Wall Street estimates, as did revenues. New York-based American Express' third-quarter profit dropped to USD1.27 billion or USD1.23 per share from USD1.48 billion or USD1.40 per share a year ago.
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Apple announced two new programs aimed at reducing the carbon footprint of its manufacturing partners in China. The programs will avoid over 20 million metric tons of greenhouse gas pollution in the country between now and 2020, equivalent to taking nearly 4 million passenger vehicles off the road for one year. Apple also announced that construction on 40 megawatts of solar projects in the Sichuan Province is now complete.
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French drinks company Pernod Ricard said its first-quarter sales improved 9% to EUR2.22 billion from last year's EUR2.04 billion. Organic growth was 3%. According to the company, the Top 14 posted a good performance of 2% growth organically, driven by Jameson and The Glenlivet.
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Swiss pharmaceutical giant Roche Holding said its sales for the first nine months of the year improved 2% to CHF35.525 billion from CHF34.757 billion in the prior year. The growth was 6% in constant currency. Based on the strong performance recorded in the first nine months of 2015, Roche now expects sales growth in the mid-single digit range, at constant exchange rates. Core earnings per share are targeted to grow ahead of sales at constant exchange rates. Roche also expects to further increase its dividend in Swiss francs.
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Paints and coatings maker Akzo Nobel reported that its net income attributable to shareholders for the third-quarter 2015 rose 39% to EUR285 million from EUR205 million in the prior year. The company said it is on track to deliver its 2015 targets.
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Thursday's Scheduled AGMs/EGMs
Go-Ahead Group
BHP Billiton (London)
Monitse
Ryanair
Griffin Mining
Ashmore Group
Argos Resources
Castleton Technology
Standard Life UK Smaller Companies Trust
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
11 Jan 2016 13:46
