LONDON (Alliance News) - UK shares have opened higher Monday amid relief there were no big surprises from the European bank stress test results published on Sunday.
Despite the generally positive reaction to the weekend's news, Lloyds Banking Group is leading FTSE 100 losers, down 2.1%, after Jefferies downgraded the UK bank to Underperform from Hold. The brokerage says Lloyds fared worse-than-expected in the European tests, which doesn't bode well for the upcoming, tougher, UK tests.
Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: up 0.6% at 6,424.19
FTSE 250: up 0.4% at 15,142.88
AIM ALL-SHARE: up 0.1% at 709.54
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Hang Seng: closed down 0.7% at 23,143.23
Nikkei 225: closed up 0.6% at 15,388.72
DJIA: closed up 0.8% at 16,805.41
S&P 500: closed up 0.7% at 1,964.58
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GBP-USD: flat at USD1.6094
EUR-USD: flat at USD1.2689
GOLD: down at USD1,229.31 per ounce
OIL (Brent): flat at USD86.04 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times in GMT)
holiday Ireland October Holiday (Halloween)
09:00 Germany IFO - Business Climate, Expectations and Current Assessment
09:00 EU M3 Money Supply and private loans
10:00 UK CBI Distributive Trades Survey
13:45 US Markit Services and Composite PMI Preliminary
14:00 US Pending Home Sales
14:30 US Dallas Fed Manufacturing Business Index
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Twenty-five eurozone banks failed a stress test intended to gauge their financial stability, the European Central Bank (ECB) said Sunday, adding that nearly half of those must raise EUR10 billion euros in the next nine months. Twelve banks have already raised EUR15 billion in capital to adjust their balance sheets in 2014. The tests on 130 banks were based on balance sheets as of December 2013. Nine Italian banks failed the stress tests, according to the ECB, and five of these have already been recapitalized. One German institution, Munich Hypotheken eG, was among the 25 failing financial institutions, but it has also been recapitalized. No UK banks failed.
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Brazilian President Dilma Rousseff called for dialogue and unity Sunday after winning her bid for a second four-year term in the country's presidential election run-off. Dialogue will be a central concern of her new mandate, the 66-year-old told supporters in Brasilia, saying she doesn't believe Brazil has been divided by the just-concluded election campaign. She promised Brazilians she would ask for a referendum on political reform. "I want to be a much better president than I have been thus far," she said. She also assured Brazilians that she would conduct a decisive fight against corruption. The centre-left Workers' Party (PT) candidate narrowly defeated challenger Aecio Neves, official results showed. Rousseff received 51.45% to Neves' 48.55% with 98% of the votes counted.
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Ukrainian President Petro Poroshenko on Sunday claimed a landslide victory for pro-western parties in the country's key parliamentary elections. More than half of the votes went to pro-government parties, and "a constitutional majority" of more than 75% of voters supported Ukraine's course towards Europe, Poroshenko said in a statement. "The Ukrainian government won a compelling vote of confidence from the people," he said, adding that he will speed up reforms in the crisis-hit country.
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Outgoing European Commission president Jose Manuel Barroso's team may have engaged in "sabotage" by demanding that Britain pay an extra EUR2.1 billion euros to the EU's budget, a ruling Conservative Party lawmaker said on Sunday. Former education secretary Michael Gove likened the situation to the change-over between US presidents Bill Clinton and George W Bush when Ws were allegedly removed from computer keyboards and desk drawers glued shut.
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The last British military base in Afghanistan has closed and British combat operations in the 13-year campaign have ended, officials in London said Sunday. The Afghan National Security Forces have taken over Camp Bastion and British troops are to leave Helmand province in the coming days, the Ministry of Defence said in a statement. At the height of the conflict there were 10,000 British personnel in Helmand. Brigadier Rob Thomson, the most senior British soldier in Helmand, paid tribute to the 453 British lives lost and the 140,000 British troops who had fought in Afghanistan.
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Egypt will take "radical" measures to tighten security on its border with the Palestinian Gaza Strip, President Abdel-Fattah al-Sissi said on Saturday, a day after a suicide attack on an army post killed 30 soldiers. "Radical measures will be taken soon in the border area with the Strip to confront terrorism," al-Sissi said in a televised address, without elaborating. Egypt imposed an indefinite closure of the Rafah border crossing, Gaza's only border gate not controlled by Israel.
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The number of people infected with Ebola has risen to more than 10,000, the World Health Organization (WHO) said Saturday. The Geneva-based WHO said 10,141 people have been diagnosed with the deadly virus, an increase from its previous estimate of some 9,000 cases. It added that 4,922 people have been died from the virus, which has hit Guinea, Liberia and Sierra Leone the hardest. The UN organization said no new cases or deaths linked to the virus had been recorded in Liberia in the previous three days.
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BROKER RATING CHANGES
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JEFFERIES CUTS LLOYDS TO 'UNDERPERFORM' ('HOLD')
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COMPANIES - FTSE 100
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Smiths Group said Finance Director Peter Turner will step down to pursue other opportunities, although he will stay on for another six months while the company looks for a successor.
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Old Mutual's South African banking subsidiary Nedbank Group said it is on track to meet its full-year guidance, after reporting high net interest and non-net interest income in the first nine months of the year. In a statement, Nedbank said it remains well positioned to meet its full-year guidance for growth in organic diluted headline earnings per share of greater than nominal GDP growth in 2014.
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Mining giant Anglo American said it has made the first delivery of ore on ship from its Minas-Rio iron ore project in Brazil, within the targeted budget. In a statement, the company said the first cargo of more than 80,000 tonnes of iron ore for the pellet feed market has been loaded onto a chartered vessel at the export terminal at the port of Açu in Rio de Janeiro state and the vessel is currently en route to customers in China.
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Reckitt Benckiser is expected to send a circular to investors in November detailing plans to spin off its pharmaceutical division into a separately listed entity, The Daily Telegraph reported on Sunday. The FTSE 100 consumer goods group is expected to tell shareholders on November 17 that it will hand them shares in the new business in proportion to the shares they already hold in the company, the paper said. The listing will not be open to new investors, nor be used to raise new money, it added, citing sources.
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Vodafone Group said it has started an audit into potential VAT fraud at Grupo Corporativo Ono SA, the Spanish cable operator it acquired in July, Bloomberg reported on Sunday. "As soon as Vodafone became aware of the issue we instigated a forensic audit to investigate the facts relating to the alleged fraud," said Vodafone spokesman Ben Padovan, according to Bloomberg. The probe is understood to be focused on potential fraud in VAT and whether Ono inflated sales of international calling minutes prior to the acquisition by Vodafone, Bloomberg said, citing reports in Spanish newspaper El Pais.
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Randgold Resources said the remedial measures implemented to overcome the technical problems that have impacted the Tongon mine are starting to produce the desired results. The mine's performance is improving, said Randgold Resources Chief Executive Mark Bristow. Bristow said mill throughput and the recovery rate, the main challenges faced by the mine, were both being turned around by a determined effort on the part of the Tongon management team.
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COMPANIES - FTSE 250
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Ophir Energy said it has entered a deal to buy seven deepwater production sharing contracts in Indonesia from Niko Resources, expanding its South East Asia presence. Under the deal, Ophir will pay USD31.3 million for interests in the seven contracts, six of which it will operate itself. It will pay the initial consideration in cash, with further payments dependent on exploration success. Drilling activity on the contracts is due to start in 2016, Ophir said. Following the acquisition, Ophir said the new contracts will expand its total gross licensed acreage by 40%.
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Salamander Energy confirmed press speculation over the weekend, saying it is in talks with two potential buyers. Salamander said it has received a conditional proposal from Ophir Energy with regard to a potential offer and said it has received an approach from a consortium led by Spanish energy group Compañía Española de Petróleos and investment group Jynwel Capital. It said it is in talks with both of the bidders over a possible takeover offer, but said there is no certainty that any offer will be forthcoming and advised its shareholders to take no action right now.
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Petra Diamonds said its revenue grew by more than half in its fiscal first quarter, buoyed by higher production and the proceeds from the sale of an exceptional blue diamond. In a statement, Petra said revenue for the three months to end-September rose 55% to USD100.8 million, from USD65.1 million a year earlier, as production rose 2% to 833,744 carats, its highest ever quarterly production, and it sold an 85% interest in the 122 carat Cullinan blue diamond for USD23.5 million.
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Renishaw said it expects the revenue growth trend it experienced in the first quarter to continue through the second half of its financial year, extending the guidance it gave for the second quarter. On October 16, the company said its pretax profit for the three months to end-September, its fiscal first quarter, rose to GBP21.3 million, from GBP10.6 million a year earlier, even though exchange rate movements knocked GBP3.3 million off this year's figure. It had previously reported that first quarter revenue increased 28% to GBP101.4 million, from GBP79.0 million a year before, and said that it expected the revenue growth trend to continue in its fiscal second quarter.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Scottish football club Rangers International FC said Chief Executive Officer Graham Wallace has resigned with immediate effect, following Friday's departure of Executive Director Philip Nash, after Mike Ashley demanded earlier this month that both directors should be removed from the board. In its statement Monday, Rangers said Wallace also has resigned with immediate effect, and its subsidiary, The Rangers Football Club Ltd, has entered into a new credit facility agreement with MASH Holdings for GBP2 million, funds it said it will use for general working capital. It said the facility is for six months and is interest free. Rangers said that under the terms of the facility, MASH has the right to appoint up to two directors onto Rangers board.
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C&C Group is understood to be seeking a partner to make a full cash bid to buy Spirit Pub Co and hijack the takeover of the company by Greene King PLC, The Sunday Times reported. C&C confirmed on Friday that it had made a preliminary bid for Spirit, which the latter said the day before it had turned down, and the news of the bid sent shares in C&C spiralling lower on the back of concerns the bid for Spirit indicated a possible strategic shift for the Ireland-based maker of Magners cider and Tennent's lager. After the share price fall on Friday, C&C is thought to have started considering teaming with another bidder in order to make an all-cash offer for Spirit. Earlier last week, Spirit said it would recommend a rival offer made by FTSE 250-listed Greene King.
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Condor Gold said it has now completed its GBP6.1 million fundraising, following an equity subscription agreement with International Finance Corp to raise gross proceeds of around GBP3.5 million. The gold exploration company said the IFC, the private sector arm of the World Bank Group, has subscribed for 3.2 million units, at a price of 90 pence per unit. Each unit consists of one share, plus a four-year entitlement to purchase an additional share for 144 pence, it said.
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Synectics warned that it expects its underlying profit for the second half of its financial year to be "significantly" below market expectations of GBP5.0 million, after it was hit by contract award delays and extended delivery periods for contracts it had already won, the company's third profit warning of the year.
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Outsourcing company Regenersis announced new business wins for its Depot arm in Mexico, Poland and the US worth a total of GBP15 million per year.
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COMPANIES - INTERNATIONAL
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Novartis announced that it agreed to divest its influenza vaccines business to Australian biotech firm CSL Ltd. for an agreed price of USD275 million. This transaction requires regulatory approvals and is expected to close in the second half of 2015. The Novartis influenza vaccines unit will be combined with CSL's subsidiary, bioCSL.
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Japanese car maker Toyota Motor Corp confirmed that it sold some of its shares in Tesla Motors Inc, said media reports on Friday. However, the details about the size or timing of the sale was not revealed. Reports said the sale was a result of Toyota's regular review of investments and that the company might continue to work with Tesla on future projects.
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Computer and printer maker Hewlett-Packard Co is seeking a buyer for its corporate-networking business in China, the Wall Street Journal reported citing people familiar with the matter. The company has begun sounding out private-equity firms in China that might be interested in the business, H3C Technologies Co. The process is in the early stages and Hewlett-Packard is expected to sell at least 51% of H3C. In a full sale, the business could be worth roughly USD5 billion, the report said.
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Monday's Scheduled AGMs/EGMs
Mid Wynd International Investment Trust
Avingtrans
City of London Investment Trust
Brooks Macdonald Group
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2014 Alliance News Limited. All Rights Reserved.
2 Apr 2015 13:12
