LONDON (Alliance News) - UK stock indices are trading mixed mid-morning Friday, with company news still taking much of the market's attention as ITV leads FTSE 100 gainers after Liberty Global increased its stake in the broadcaster.
Liberty acquired a further 138.7 million shares in ITV, increasing its total holding to 398.5 million or 9.9%. At the same time it has entered into a hedging transaction with respect to the new shares it has acquired and has obtained further financing from its hedge counterparty.
"Given ITV's operating and stock price performance, we were able to increase our stake to 9.9% with no incremental investment by hedging our existing equity position. This investment remains an opportunistic one for us in our largest market. ITV is a well-run company with attractive growth potential, and we are pleased to increase our position as their largest shareholder," said Mike Fries, Liberty Global's chief executive.
Liberum analyst Ian Whittaker says Liberty's purchase of a greater stake in ITV could suggest that a bid by another company for ITV could be near.
"The interesting question is why now: Liberty has stated it does not intend to make a bid for ITV but its move suggests that it thinks a move by another player is likely or, at least, an increasing possibility," Whittaker says.
ITV shares trade up 2.0%.
The FTSE 100 is down 0.1% at 6,661.41, the FTSE 250 is up 0.2% at 17,556.24, and the AIM All-Share is down 0.1% at 749.49.
In Europe, the French CAC 40 is up 0.3% and the German DAX 30 is flat.
Elsewhere, on the London Stock Exchange, InterContinetnal Hotels Group is the biggest blue-chip faller, down 3.6% having closed Thursday amongst the best performers with a 4.6% gain. The company late Thursday said it is not in talks with US hotel group Starwood Hotels & Resorts Worldwide Inc about a merger.
IHG said in a statement after the market close that it was responding to recent market speculation. "The board of directors of IHG states that it is not in talks with Starwood with a view to a combination of the businesses," the statement read.
The two companies have been the subject of frequent rumours in recent months, with IHG thought to be facing investor pressure to consider a tie-up. Jefferies, in an April note, said IHG, with its brands and geographic mix, would fill a strategic gap for Starwood.
Heavily weighted resource stocks also are causing a drag on the FTSE 100, with Antofagasta down 3.1%, Glencore down 2.4% and BP down 1.6%. Commodity prices continue to be hit by a stronger dollar on the back of expectations of a US rate hike.
Lloyds Banking Group reported higher profit in the first half, said it will consider returning surplus capital to shareholders in future, and raised its guidance for 2015.
However, the bank took a "disappointing" GBP1.4 billion provision for the payment-protection insurance scandal in the half. Lloyds said it made a GBP1.19 billion pretax profit in the six months to the end of June, up from GBP863 million in the corresponding half last year. Underlying profit, which strips out costs such as the provision for PPI, increased to GBP4.38 billion from GBP3.82 billion.
Mike van Dulken, head of research at Accendo Markets, says Lloyds results came in below expectations, and investors are frustrated by another PPI provision.
"Shares in Lloyds Banking Group are failing to light up the FTSE this morning after interim results disappointed markets with lower than expected first half profits and another frustrating provision GBP1.4 billion for PPI. Taking the grand total to a whopping GBP13.4 billion, and thus equating to two thirds of the bank's GBP20 billion 2008 bailout, it begs the question: will we ever see the back of this mis-selling overhang?" van Dulken says.
Lloyds trades down 0.6%.
In the FTSE 250, JD Sports Fashion is the best performer up 7.7%. The retailer said it anticipates beating market expectations for the full year, after the group said trading remained strong in its business in the first half of the year.
JD said like-for-like sales in the half year to August 1 have been ahead of its expectations, though the group has seen its margins squeezed by the weakness of the euro. But, assuming its current performance continues, JD Sports said it expects its headline pretax profit for the full year will be around 10% ahead of the current market consensus of GBP110 million.
UBM share trade up 5.1% after it said its first-half results were in line with expectations and said its full-year outlook remains unchanged despite pretax profit dropping on the back of a number of exceptional items. The media company reported a pretax profit of GBP58.4 million in the first half of 2015, falling from a GBP82.5 million profit a year earlier, despite revenue climbing to GBP456.0 million from GBP361.0 million.
At the other end of the mid-cap index, Essentra is the worst performer, down 6.3%. The plastic and fibre products company said its pretax profit fell in the first half of 2015 thanks to exceptional costs it booked in the period, but revenue surged on the back of the acquisition of Clondalkin Specialist Packaging.
Pretax profit for the company fell to GBP45 million from GBP49 million a year earlier, thanks to one-off costs Essentra booked, primarily related to the acquisition of Clondalkin. Revenue rose to GBP550.4 million in the half, up from GBP431.1 million, primarily thanks to the Clondalkin acquisition, as like-for-like revenue growth came in at 1.1%.
The euro gained some ground against other major currencies as the preliminary reading of eurozone consumer price index showed continued modest growth. Year-on-year prices grew 0.2% in July, meeting expectations and matching the growth seen in June. Core consumer prices, which excludes volatile components such as food, energy, alcohol and tobacco, grew 0.9% on the year, pipping expectations for it to match June's reading of an 0.8% rise.
"[European Central Bank President Mario Draghi's] QE programme, launched in March, has played a large part in keeping deflation at bay to date, but with stability on the horizon he?ll be contemplating his next step," says Dennis de Jong, managing director at UFX.com. "Slumping oil prices and weak currency all lend themselves to growth but, as with much of the financial world, Draghi will now be tempted to push up interest rates. We'll have to wait and see if and when he decides to do so."
Unemployment in the eurozone remained unchanged at 11.1% for a third consecutive month in June, with more people joining the jobless ranks in the European currency bloc, new data showed. The number of jobless people increased by 31,000 from May to June, but the change was not enough to push up the overall rate, according to the EU statistics agency Eurostat.
Against the dollar the euro rose from USD1.0935 to USD1.0960 after the data was released.
Greece is back in focus as the country's finance and economy ministers meet with the representatives of the country's creditors for talks on a new multi-billion euro bailout ahead of a looming debt repayment to the European Central Bank. The meeting follows three days of talks between technical teams on several issues including fiscal policy, pension, labour and product market reforms.
The meeting also follows a report in Thursday's Financial Times citing an internal document which showed the International Monetary Fund board had been told that Greece's levels of debt and past record of slow or non-existent reform disqualify it for a third bailout from the Washington-based crisis lender.
According to the leaked document, the IMF could take months to decide whether it will take part in a fresh bailout. A Greek Finance Ministry official denied the report, saying the IMF would participate in the bailout negotiations as planned.
"Whilst the last month has seen the calls for debt relief gain momentum, this is the first stance on the issue that could ignite real change. [German Finance Minister] Wolfgang Schauble both wants the IMF to be part of the deal AND is the biggest obstacle to debt relief, leaving the chance for plenty of Greek fireworks before the tentative August 20th deadline," says Connor Campbell, financial analyst at Spreadex.
Still ahead in the economic calendar are the Chicago purchasing managers index at 1445 BST and the Reuters/Michigan consumer sentiment index at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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