Melrose Share News (MRO)

(Alliance News) - Stock prices in London were lower at midday on Thursday, ahead of a policy announcement by the European Central Bank in which the Frankfurt-based institution is expected to lay the groundwork for policy tightening.

The FTSE 100 index was down 31.38 points, or 0.4%, at 7,561.51. The mid-cap FTSE 250 index was down 30.45 points, or 0.2%, at 20,280.54. The AIM All-Share index was down 5.08 points, or 0.5%, at 971.55.

The Cboe UK 100 index was down 0.3% at 753.44. The Cboe 250 was down 0.4% at 17,937.66, and the Cboe Small Companies was down 0.2% at 14,800.21.

In mainland Europe, the CAC 40 in Paris was down 0.1% and the DAX 40 in Frankfurt was down 0.3%.

The decision is due at 1245 BST and will be followed by a press conference with ECB President Christine Lagarde at 1330 BST.

The bank is expected to start to end its bond-buying stimulus programme and signal that interest rates will rise, starting with the July meeting. A hike would be the ECB's first since 2011.

The euro was priced at USD1.0720, lower against USD1.0737 late Tuesday.

"For the European Central Bank, the question is no longer if, but when and by how much, it will hike interest rates this summer. Once the rate lift-off has started, the next question will be how far the ECB can go," said analysts at ING.

In the FTSE 100, Melrose Industries was the best performer, up 4.7%. The stock was extending gains from Wednesday, after Melrose had unveiled a GBP500 million share buyback programme. The stock closed up 11% on Wednesday.

Avast was up 1.5% after HSBC raised the cybersecurity provider to 'buy' from 'hold'.

Conversely, British American Tobacco was down 1.5%, reversing an earlier gain. The Dunhill and Kent cigarette maker maintained its annual revenue guidance, but expects global tobacco industry volumes to shrink in 2022.

BAT maintained its 2022 guidance for revenue growth of 2% to 4% at constant currency and mid-single-figure adjusted diluted earnings per share growth at constant currency. At current foreign exchange rates, BAT expects a translation tailwind of 2% on adjusted diluted earnings per share growth for the half year and 5% for all of 2022.

BAT flagged that the global tobacco industry volume is now expected to shrink by 3% in 2022, worse than the 2.5% decline previously forecast, due to the continuing global uncertainty over the ongoing Ukraine and Russia war.

In the FTSE 250, Mitie was the best performer, up 9.4%, after the outsourcer swung to an annual profit as revenue climbed thanks to new contract wins.

In the year ended March 31, total revenue, including the share of joint ventures and associates, was up 58% to GBP4.00 billion, from GBP2.53 billion. Excluding JVs and associates, group revenue rose by 56% to GBP3.90 billion, versus GBP2.50 billion in the same period last year.

Mitie swung to a pretax profit of GBP52.3 million from a loss of GBP13.7 million the year prior.

It will be reinstating a final dividend with a 1.4p per share payout, which takes the total dividend for the year to 1.8p per share. It did not pay a dividend in the previous financial year. Consistent with its "capital allocation strategy", Mitie also said it has started an initial GBP50 million share buyback scheme.

Mediclinic International was up 4.3% at 433.00p after the private hospital operator knocked back an unsolicited offer from a consortium that includes Johannesburg-listed investment firm Remgro.

Mediclinic said the offer - which was made by SAS Shipping Agencies Services - came in on May 26 and was for 460 pence per share, plus Mediclinic's proposed final dividend for financial 2022 of 3p.

Remgro noted that Mediclinic's closing share price on May 25, the day before its proposal was made, was 373p. SAS Shipping Agencies Services is a consortium comprising Remgro and MSC Mediterranean Shipping Co. Remgro currently holds a 45% stake in Mediclinic.

"The board of Mediclinic (excluding the Remgro representative) considered the proposal, together with its advisers, and concluded that it significantly undervalued Mediclinic and its future prospects," Mediclinic said.

FirstGroup shares were flat after the transport operator rejected a possible takeover offer from I Squared Capital Advisors, saying the firm cash component undervalues the company and the contingent component doesn't give shareholders enough certainty.

Late last month, FirstGroup said it had received a series of offers from I Squared, the last being 118 pence per share in cash, plus 45.6p more contingent on the proceeds of FirstGroup's recent disposals of its First Transit and Greyhound businesses in the US.

Having considered the proposal, FirstGroup said the cash component undervalues its "continuing operations and future prospects", while the contingent right doesn't provide shareholders with "sufficient certainty".

At the other end of the mid-caps, CMC Markets was by far the worst performer, down 17%, after the contract-for-difference provider slashed its dividend following a drop in annual profit.

For the financial year that ended March 31, net operating income was down 31% to GBP281.9 million from GBP409.8 million in financial 2021 and pretax profit plunged to GBP92.1 million from GBP224.0 million.

CMC declared a final dividend of 8.9 pence per share, down from 21.4p per share a year ago. This resulted in a total dividend of 12.4 pence for financial 2022, cut by 60% from 30.6p paid out in 2021.

Looking ahead, CMC said it will focus on revenue diversification and how best to address the realisation of future value for the leveraged and non-leveraged businesses supported by its technology platform. Leveraged business is spread betting and contracts-for-difference trading, while non-leveraged business is share trading.

As part of this, CMC expects its new business expansion to grow net operating income by 30% over the next three years.

For the financial year that ended March 31, net operating income was down 31% to GBP281.9 million from GBP409.8 million in financial 2021 and pretax profit plunged to GBP92.1 million from GBP224.0 million.

CMC declared a total dividend of 12.4 pence for financial 20222, cut by 60% from 30.6p paid out the year before.

Elsewhere in London, DFS Furniture was down 11% after the sofa retailer said it has seen a reduction in orders in its fourth quarter.

For its third quarter, which ended March 27, DFS saw double-digit growth in the volume of orders versus the same period in financial 2019, which was pre-pandemic.

However, DFS warned it has seen a shift in customer demand over its fourth quarter and a fall in orders. Further, DFS noted the drop in orders was akin to the recent 2.1% decline in consumer spending reported by Barclaycard for April compared with pre-pandemic levels.

The pound was quoted at USD1.2530 at midday Thursday, down from USD1.2545 at the London equities close Wednesday.

Against the yen, the dollar was trading at JPY133.39 in London, down from JPY133.94 late Wednesday.

Brent was priced at USD123.22 a barrel on Thursday at midday, up sharply from USD122.00 late Wednesday. Gold stood at USD1,850.33 an ounce, lower against USD1,858.48 late Wednesday.

New York was pointed to a higher open in an attempt to recover from Wednesday's losses.

The Dow Jones Industrial Average was called up 0.6%, the S&P 500 up 0.5%, and the Nasdaq Composite up 0.2%. The indices had closed down 0.8%, 1.1%, and 0.7% respectively on Wednesday.

Twitter will yield to Elon Musk's demand for internal data central to a standoff over his troubled USD44 billion bid to buy the social media platform, the Washington Post reported on Wednesday.

The newspaper cited an unnamed source familiar with the negotiations as saying Twitter's board decided to let Musk access its full "firehose" of internal data associated with the hundreds of millions of tweets posted daily at the service.

"This would end the major standoff between Musk and the board on this hot button issue which has paused the deal," Wedbush analyst Dan Ives said in a tweet.

Twitter shares were down 0.3% in pre-market trade in New York.

In Thursday's economic calendar, the latest US jobless claims numbers are due at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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