ValiRx Share News (VAL)

LONDON (Alliance News) - UK stocks are higher midday Tuesday as sentiment is being driven by company news and the movement in gold prices, while Wall Street is called for a mixed open ahead of the release of results from several US technology giants.

The FTSE 100 is up 0.2% at 6,798.97 points, the FTSE 250 is up 0.2% at 17,816.81, and the AIM All-Share is up 0.1% at 759.10. European major indices also are higher, with the CAC 40 in Paris up 0.2%, and the DAX 30 in Frankfurt up 0.1%.

US futures point to a mixed open, with the DJIA pointed down 0.1%, the S&P 500 flat, and the Nasdaq 100 up 0.2%. The Nasdaq Composite reached Monday a new record closing high at 5,218.85 points.

US technology stocks Apple, Microsoft or Yahoo are set to report results on Tuesday after the US market close, following IBM, which reported results Monday after the market close.

IBM said that its second quarter profit fell 17% from last year, as revenue declined 13.5%. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast. At the same time, IBM maintained its full year operating earnings outlook. The company now expects a modest increase in free cash flow, improved from its prior expectation of flat.

Gold is slightly higher on the day Tuesday at USD1,106.41 per ounce. The price of gold has recovered after slumping Monday morning to USD1,073.40 an ounce, a level it hasn't seen since early 2010. The precious metal traded at USD1,144.17 an ounce on Friday before its recent sell-off.

The decline in the gold has come amid speculation that the Federal Reserve will hike US interest rates as soon as September. Fed Chair Janet Yellen told Congress last week that the economy is improving at a pace that should allow the US central bank to begin normalizing rates by the year's end.

Kit Juckes, analyst at Societe Generale, says,"September and December Fed Funds futures are moving higher (in rate terms), with a third-quarter (ie, Sept) hike seen now as a distinct possibility again, and a fourth quarter hike as a strong probability."

The US dollar strengthened against most major currencies on Tuesday morning, in response to comments by St. Louis Federal Reserve President James Bullard that there is more than a 50% chance for a Fed rate hike in September.

"I see September having a 50% probability right now" for a boost in the Fed's overnight short-term interest rate target, Bullard told Fox Business Network. "The economy is much closer to normal today than it's been in quite a while, certainly over the last five years," he added.

The pound has recovered some of the ground gained by the dollar and is now flat at USD1.5555.

London-listed miners were hit Monday by the slump in gold prices. On Tuesday, the stocks are rebounding, with Fresnillo up 3.3%, Randgold Resources up 2.1%, Antofagasta up 0.9%, and BHP Billiton up 0.7%. In the FTSE 250, KAZ Minerals is up 2.7% and Acacia Mining is up 1.9%.

Outside miners, general insurers Admiral Group, up 3.5%, and RSA Insurance Group, up 1.5%, are higher after roadside assistance company AA found that car and home insurance premiums are set to rise due to an upcoming increase in the UK's insurance premium tax. AA said it thinks premiums may rise due to the decision by the UK government to increase the standard rate of insurance premium tax to 9.5% from 6%.

AO World is the biggest gainer in the FTSE 250, up 9.7%, after it said it is on track with its long-term strategic process as it continues to build brand awareness and plans to expand its services in Europe.

The online domestic appliances retailer said that sales continue to "build satisfactorily" in Germany, where it has entered into a ten-year lease for a new European distribution facility in Bergheim near Cologne, expecting to take occupation during the first half of the financial year 2017. The property will replace two of its existing sites and will facilitate expansion into countries surrounding Germany, the company said.

In the UK, AO World said revenue grew 6.5% in the three months to June 30, with orders up 13.9%, while AO.com experienced revenue growth of 11.2%. It said it had a strong start to trading in July and is encouraged by the indications of growth in housing transactions and disposable income in the broader market.

In the AIM All-Share index, ValiRx is up 23% after the life sciences company provided a positive update on the ongoing phase I/II dose escalation clinical trial of its cancer drug VAL201. The company said that over the last month the trial has continued to demonstrate safety and tolerability and no significant adverse effects have been recorded. The next dose escalation has been approved as a result of safety and tolerability data, which ValiRx said "may prove sufficient to show anti-tumour activity."

Meanwhile, Versarien is up 12%. The advanced engineering materials company posted a widened pretax loss for its recently ended financial year as higher costs offset strong growth in revenue, but expressed optimism for its current year. The company reported a pretax loss of GBP866,000 for the year to end-March, widened from a pretax loss of GBP653,000 a year before, as a rise in revenue to GBP5.0 million from GBP3.0 million was offset by a rise in operating expenses and exceptional costs of GBP307,000.

Nasstar is down 13%. The cloud computing services company said that while its first half trading in 2015 was in line with its expectations, it now expects to miss its forecasts for the full year due to a series of challenges set to hit the business in the second half. Among those challenges, a key client is consolidated its IT services in the second half and the group is set to lose licensing revenue from another client.

In economic news, UK public sector net borrowing decreased in June from last year, the Office for National Statistics said. Excluding public sector banks, PSNB dropped GBP0.8 billion to GBP9.4 billion in June. It was equivalent to 0.5% of gross domestic product. The decline in net borrowing was resulted from an increase of GBP0.1 billion in central government net borrowing being more than offset by a decrease of GBP1 billion in local government net borrowing.

Still in a very light economic calendar Tuesday is the US Redbook index, due at 1355 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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