LONDON (Alliance News) - UK stocks are lower Monday midday, with Rolls-Royce leading FTSE 100 decliners after a newspaper report said that European regulators are investigating whether airlines are being forced to enter anti-competitive contracts to keep their aircraft flying.
The FTSE 100 index was down 0.4% at 6,388.42 points, and the FTSE 250 was down 0.3% at 17,040.01, while the AIM All-Share was up 0.2% at 737.44. In Europe, the CAC 40 in Paris was down 0.4%, while the DAX 30 in Frankfurt was up 0.3%.
Asian stocks ended higher, with the Hang Seng index in Hong Kong up 1.2% and the Shanghai Composite up 3.3%. The Tokyo Stock Exchange was closed for Health-Sports Day.
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq 100 were all pointed for a flat open.
"With US bond markets closed today due to Columbus Day it would appear that we could be seeing a little profit taking in Europe after last week's strong rebound, with trading expected to remain subdued ahead of a number of key data releases later this week and the first full week of US third-quarter earnings season," said CMC Markets chief market analyst Michael Hewson.
On Tuesday, there are inflation data from Germany and the UK, while the same from China and the US are due on Wednesday. US initial and continuing jobless claims also are expected on Thursday, while eurozone inflation is due on Friday.
In a light economic calendar on Monday, the UK Conference Board leading economic indicators index is due at 1430 BST. There are no economic data releases from the US, so the focus will be on speeches from US Federal Reserve members with Atlanta President Dennis Lockhart speaking at 1310 BST and Chicago President Charles Evans at 1530 BST.
However, analysts at Commerzbank believe that communication from the Fed is not sparking a reaction from the market.
"The [Federal Open Market Committee] members themselves are to blame for the fact that their comments are without effect. Many market participants are simply too disappointed that the rate step did not take place in September even though the environment for a rate step seemed almost ideal at the time," Commerzbank said.
"So who will still believe the Fed's affirmations that the key rate would now definitely be hiked in December? In particular as there will always be some reason to postpone the step again, at the moment this might be the low market-based inflation expectations which the Fed seems to be increasingly interested in these days having ignored them contemptuously so far," the German investment bank added.
On the London Stock Exchange, shares in aerospace and engineering company Rolls-Royce were being sold after European regulators launched a probe into aircraft maintenance contracts, according to a report in the Financial Times, to investigate whether airlines are being forced to enter into anti-competitive contracts.
Rolls-Royce, which provides the only engine for Airbus' new wide-body aircraft the A350 XWB, has been approached by the commission.
"We can confirm we have received a questionnaire from the European Commission and are working on our response," it said.
Rolls-Royce was leading blue-chip decliners in London, down 4.4%.
Commodities trader and miner Glencore was down 2.7% after it said it has begun a process to sell its wholly-owned Cobar copper mine in Australia and Lomas Bayas copper mine in Chile. The company said the sale process is in response to receiving a number of "unsolicited expressions of interest for these mines from various potential buyers".
Shore Capital said the proposed sales are "hardly votes of confidence in either the copper price outlook or Glencore's wider prospects."
The process may or may not result in a sale, Glencore noted, and it said it will issue an update only in the event that a sale is agreed or a disclosure "is otherwise required".
Emerging markets-focused bank Standard Chartered was off 2.3% after being downgraded by Investec to Hold from Buy. The broker and investment bank said that consensus forecasts for revenue and earnings remain "far too high", despite a raft of recent downgrades. Whilst Investec still regards the stock as slightly cheap, it said it sees much clearer value elsewhere.
Among large-cap stocks in the green, SABMiller was up 0.9% at 3,700.00 pence. The Times reported that Anheuser-Busch InBev is expected to increase its GBP65 billion offer for its fellow brewing giant early this week, ahead of the 1700 BST deadline on Wednesday.
The current offer stands at GBP42.15 per share, and the report suggested the offer is likely to be raised to between GBP43 and GBP44 per share. SABMiller rejected the GBP42.15 per share offer last Wednesday, saying it "substantially undervalues" the business.
Shares in the London-listed brewer have risen by 27% since September 14, when the talks between the two were first revealed.
In the FTSE 250, Carillion was the best performer, up 6.2%, after it reiterated confidence in achieving its targets for 2015 and ending the year with strong revenue visibility for 2016, as it said it has secured business worth around GBP1.7 billion since the end of its first half.
The construction and support services company said it has signed contracts, secured preferred bidder positions and been awarded frameworks worth around GBP1.7 billion since the end of June.
Carillion said that it and its joint ventures were selected by Network Rail for a number of frameworks and early contractor involvement contracts that it expected to generate over GBP400 million in revenue.
Bank of Georgia Holdings, up 5.3%, is set to spin off its healthcare subsidiary in a float on the London Stock Exchange. Georgia Healthcare Group intends to raise USD100 million when it floats on the London Main Market, while Bank of Georgia Holdings wants to sell an unspecified number of existing shares through its intermediate holding company.
A further 10% of the total number of shares being sold under the offering will be made available to shareholders by Bank of Georgia Holdings in the form of an over-allotment option. Shares in the company were up 3.3%.
In AIM, Mobile Streams' share price more than doubled to 10.7p. The mobile media company expressed confidence for its future prospects, as it continued to take steps to mitigate a hit from the devaluation of the Argentinian peso, reporting a rising in pretax profit for its recently ended financial year despite a drop in revenue.
Sefton Resources was down 35%. The company said Chief Financial Officer Raylene Whitford will leave the company no later than November 10, and that the prospective nominated adviser it intended to appoint to replace Allenby Capital has decided not to proceed.
Allenby has said it will resign if the new directors that have been put forward by a group of shareholders are appointed, and Non-Executive Directors Tom Milne and Keith Morris resign.
Under AIM rules the company's shares will be automatically suspended in Allenby Capital resigns, and the company would be left with a month to find a new nomad before its shares are cancelled.
By Daniel Ruiz; danielruiz@alliancenews.com
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19 May 2016 11:28