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LONDON (Alliance News) - London shares were higher Monday shortly after the open, with ITV gaining on a newspaper report of bid interest but with Rolls-Royce Holdings suffering from an article that raised concerns about the performance of the group's diesel engine business.
The FTSE 100 index was up 0.5% at 6,083.40 points, while the FTSE 250 was up 0.2% at 17,146.56 points and the AIM All-Share was up 0.2% at 726.23 at points. In Europe, the French CAC 40 was down 0.2% and the German DAX 30 was up 0.2%.
Rolls Royce was down 1.1%. The Financial Times reported on Sunday that Rolls-Royce Chief Executive Warren East voiced "disquiet" about trading conditions in the diesel engine unit. The diesel engine business is the only part of the broader aerospace group to have avoided a downgrade in the past five profit warnings, the FT noted.
"If you look at our competitors in our reciprocating engines part of the business, there have been some fairly serious downgrades on next year,? East said in an interview with the FT. "When I look at that, I do have a feeling of a little bit of disquiet...I've got to say, that?s a risk area."
Associated British Foods was down 1.6%, the worst blue-chip performer, after RBC Capital downgraded the owner of discount fashion retailer Primark and of British Sugar to Underperform from Sector Perform, according to traders.
Marks & Spencer also was heading south, down 0.5%, after RBC Capital took the retailer out of its Top Pick list, downgrading it to Outperform.
BHP Billiton was up 0.6% even though it is preparing to cut its dividend in the new year, according to the Sunday Times, which reported that the miner will become the latest in the sector to take the axe to shareholder payouts.
Citing senior City sources, the Sunday Times said that plunging oil prices were "almost certain to decide the issue" for the FTSE 100 miner. The report said that although BHP is better known for its mines, it is also a big producer of oil, with fields and pipelines in Australia, the Gulf of Mexico, Algeria, Pakistan and Trinidad and Tobago.
In addition, the report said BHP's directors are "eager to keep" financial flexibility so they can acquire attractive assets in the event they become available for sale, as other commodities companies assess their balance sheets.
ITV was the best blue-chip performer, up 2.4%, after executives from US media giant Comcast are believed to be considering a GBP11.0 billion bid for the British broadcaster, the Mail on Sunday reported. Talks have been held between ITV and Comcast?s TV and film arm NBCUniversal, the newspaper report said without citing its source.
ITV and NBCUniversal both declined to comment to the Mail on Sunday, it said.
Mining stocks were up, with Glencore up 2.7%, Anglo American up 2.3% and Rio Tinto up 0.9%. The gold price was at USD1,071.30 an ounce, compared the USD1,065.60 an ounce at the London close on Friday.
Brent oil price remained under pressure Monday morning. Shortly before the London open, Brent oil was priced at USD36.13 a barrel, having already touched an low so far on Monday of USD36.12 a barrel, its lowest level since December 2008. At the London close on Friday, Brent oil price stood at USD37.57.
In Asia on Monday, the Shanghai Composite ended up 1.8%, while the Hang Seng index in Hong Kong closed up 0.2%. The Japanese Nikkei 225 index finished down 0.4%
Japan's economy is expected to continue recovering moderately, the Bank of Japan repeated in its monthly report released on Monday. The bank said exports are expected to increase moderately as emerging economies move out of their deceleration phase. The bank last month said exports are expected to remain more or less flat.
On Sunday, the ruling party of Spanish Prime Minister Mariano Rajoy fell short of an absolute majority in elections Sunday that saw both major traditional parties lose ground and left it uncertain who would form the next government. Though Rajoy said he will try to for a government, he admitted that coalition talks will not be easy, requiring lots of conversation and the hammering out of agreements among parties.
Four parties will have strong fractions in parliament with the leftist Podemos party and liberal Ciudadanos parties earning seats for the first time.
"We could now be facing an era on political paralysis and instability in Spain unless a more likely coalition of the left is formed, which again could create an even bigger headache for eurozone leaders insisting on fiscal responsibility," said Oanda analyst Craig Erlam.
The economic calendar is quiet on Monday as the festive week begins. The Deutsche Bundesbank's monthly report is at 1100 GMT at the same time as the results of the Confederation of British Industry's trades survey. The Chicago Federal Reserve national activity survey index is at 1330 GMT and preliminary reading of eurozone consumer confidence is at 1500 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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