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LONDON (Alliance News) - The quicker-than-expected removal of a large amount of political uncertainty in the UK has lifted stocks and the pound early Tuesday. With Theresa May set to be prime minister by Wednesday, the pound rose above USD1.31 and shares confounded indications of opening losses, registering small gains instead.

Outside politics, Shire shares were up 3.3% after the Irish drug company said the US Food & Drug Administration has approved its Xiidra dry eye treatment. Vodafone Group was down 1.7%, after the mobile telecoms stock was cut to Neutral from Buy by Citigroup, according to traders.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: flat at 6,694.81
FTSE 250: up 0.3% at 16,759.64
AIM ALL-SHARE: up 0.5% at 718.75
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Hang Seng: up 1.6% at 21,214.40
Nikkei 225: closed up 2.5% at 16,095.65
DJIA: closed up 0.4% at 18,226.93
S&P 500: closed up 0.3% at 2,137.16
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GBP: up at USD1.3113 (USD1.2985)
EUR: up at USD1.1101 (USD1.1043)

GOLD: soft at USD1,355.16 per ounce (USD1,358.46)
OIL (Brent): flat at USD46.64 a barrel (USD46.58)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in BST)

1000 UK BoE Carney speaks at inflation report hearings
1100 US NFIB business optimism index
1100 Ireland gross domestic product
1200 UK BoE Quarterly Bulletin
1355 US Redbook index
1415 US Fed's Tarullo speech
1435 US Fed's Bullard speech
1500 US JOLTS job openings
1500 US wholesale inventories
2130 US API weekly crude oil stocks
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David Cameron is preparing for his final Cabinet meeting as UK prime minister as his successor Theresa May mulls over who to appoint to her top team. May will take up office as Britain's second woman PM on Wednesday, after Cameron answers MPs' questions in the House of Commons for the last time and goes to Buckingham Palace to offer his resignation to the Queen. Cameron will chair a farewell meeting of Cabinet ministers on Tuesday. After being confirmed as new Tory leader, May was left with around 48 hours to put together a new team to lead the government, with Chancellor George Osborne's position thought to be under threat.
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A union has been accused by UK Transport Secretary Patrick McLoughlin of having an "absurd" attitude over its dispute with train operator Southern Railway. McLoughlin claimed he shared the "fury" of passengers and insisted that the government is "playing its part" by investing in the rail network.The bitter dispute between the Rail, Maritime and Transport union and Southern broke out over plans to transfer responsibility for closing train doors from conductors to drivers.
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The UK economic growth was uninspiring in the run-up to the EU Referendum, the British Chambers of Commerce said. According to Quarterly Economic Survey, several key indicators remained static, or at a low ebb just before the referendum. In the service sector, the main driver of economic growth, posted declines in domestic and overseas sales and manufacturing sales remained at a historically low ebb. The business lobby does not expect official data to show an improvement in the second quarter GDP.
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Like-for-like sales in the UK were down 0.5% on year in June, the British Retail Consortium said. That follows the 0.5% increase in May. Overall sales were up just 0.2%. For the second quarter of 2016, overall sales were up 0.5% on quarter and 1.2% on year.
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Britain's decision to leave the EU could reduce gross domestic product in the bloc by 0.2% to 0.5% next year, said EU Economy Commissioner Pierre Moscovici. The figure is a preliminary assessment and "can be changed if we are capable of limiting uncertainty and delivering the proper policy response," he noted. The commission expects the Brexit vote to reduce British GDP by between 1.0% and 2.5% in the same period, he added.
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Germany's consumer prices increased for the second straight month in June as initially estimated, latest figures from Destatis showed. The consumer price index climbed 0.3% year-over-year in June, following a 0.1% rise in May. The statistical office confirmed the preliminary estimate published on June 29. Meanwhile, German wholesale prices continued to drop in June but the pace of decline slowed further, Destatis said. Wholesale prices decreased 1.5% year-on-year in June, slower than the 2.3% fall seen in May and a 2.7% decline posted in April. The index has been falling since July 2013.
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The International Monetary Fund called on Italy to press on with reforms to head off the threat of a banking crisis and ensure the nation's economic growth continues to gain momentum. The eurozone's third biggest economy should expand this year by 1.1% before accelerating to a 1.3% growth rate in 2017 as unemployment falls and public debt levels edge lower, the Washington-based IMF said in its annual report on Italy. The Italian economy grew by 0.8% in 2015 after it emerged from its longest recession since the end of the Second World War.
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Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, spoke out against spending more public money on struggling banks, with Italian lenders particularly in the spotlight. Stock market values for Italian banks have tumbled following the Brexit referendum on June 23. The worst hit by the crash has been Monte dei Paschi di Siena, whose stock value has fallen by 50% to a record low. Rome has been in talks with the European Commission on ways to carry out public bank rescues - a move that could run counter to EU rules aimed at putting the onus of bailouts on shareholders and creditors, rather than taxpayers.
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Producer prices in Japan were down 0.1% on month in June, the Bank of Japan said. That was in line with expectations following the downwardly revised 0.1% gain in May (originally 0.2%). On a yearly basis, producer prices dropped 4.2% after shedding 4.3% in the previous month.
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An inmate on his way to court in the northern US state of Michigan wrestled a gun away from a sheriff's deputy and shot and killed two court security officers, the county sheriff said. Sheriff Paul Bailey told an evening press conference that a civilian and a sheriff's deputy were also wounded in the shooting at Berrien County Courthouse in the south-western Michigan town of St Joseph.
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BROKER RATING CHANGES
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TRADERS: CITIGROUP CUTS VODAFONE TO 'NEUTRAL' (BUY)
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UBS RAISES ITV TO 'NEUTRAL' ('SELL') - TARGET 170 (195) PENCE
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EXANE BNP CUTS SPORTS DIRECT TO 'NEUTRAL' ('OUTPERFORM') - TARGET 280 (380) P
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TRADERS: MERRILL LYNCH CUTS ROTORK TO 'UNDERPERFORM'
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COMPANIES - FTSE 100
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ITV late Monday said it has agreed to sell Irish entertainment channel UTV Ireland to Liberty Global's Virgin Media, after having purchased the subsidiary from Wireless Group earlier this year. ITV bought UTV Television, which comprised of UTV Ltd and subsidiary UTV Ireland, from Wireless Group, then called UTV, in February for GBP98.0 million.
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Irish pharmaceuticals company Shire late Monday said the US Food & Drug Administration has approved its Xiidra dry eye treatment. Shire said Xiidra is the only prescription eye drop indicated for the treatment of both signs and symptoms of dry eye disease, and it anticipates it will launch in the US in the third quarter of 2016.
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COMPANIES - FTSE 250
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Recruitment firm PageGroup said gross profit growth in the second quarter was in line with the first and said it is too early to predict what impact the UK's vote to leave the European Union will have on the recruiting sector. The company, which changed its name from Michael Page International in June, said total gross profit growth in the second quarter to the end of June was 8.0% year-on-year. It was 3.7% in constant currencies, broadly in line with the constant currency growth seen in the first quarter. Gross profit in the UK, however, declined 2.3%, hit by the uncertainty prior to the UK's Brexit referendum.
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Builders merchanting and DIY group Grafton Group said the UK's vote to leave the European Union is likely to weigh on demand in the new housing and repair, maintenance and improvement markets over the remainder of the year, after posting a rise in revenue in its first half. Grafton said its revenue for the six months ended June 30 came in at GBP1.23 billion, up 13% from the GBP1.08 billion recorded a year earlier, with the largest gain made in its merchanting businesses, which make up 92% of total revenue.
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Construction and housebuilding company Galliford Try said it expects to post full-year results in line with management's expectations, after it sold more houses at higher prices and saw revenue growth in its construction arm. Within its Linden Homes housebuilding arm, the company said it made 3,078 completions during the year, compared to the 2,769 recorded a year earlier, and noted its average private sales price rose to GBP335,000 from GBP327,000. Its forward sales position grew 27% at the year-end to GBP380.0 million.
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Veterinary pharmaceuticals company Dechra Pharmaceuticals said trading in the year to the end of June was strong, with robust revenue growth boosted by acquisition contributions. Dechra said revenue growth including acquisitions in the year to June 30 was 21% at both constant and actual currencies. Excluding acquisitions, revenue grew 11%, the company said.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Online fashion retailer ASOS reported growth in revenue in the third quarter of its financial year and said it expects full-year sales to be at the top end of its guidance. However, retail gross margin shrank slightly. Revenue in the four months ended June 30 grew by 30% to GBP514.6 million from GBP396.7 million the year before, as total retail sales also rose by 30% to GBP500.5 million from GBP386.0 million. Revenue includes retail sales, plus delivery receipts and third-party revenue.
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Hotel Chocolat Group said revenue in its recently-ended financial year was slightly ahead of market expectations. The British chocolatier and retailer said revenue in the full year ended June 26 grew by 12% year-on-year to GBP92.6 million, which it said was slightly above market expectations. The digital retail channel saw revenue rise by 20%. Hotel Chocolat said its new store opening programme has continued to progress well since the company listed on AIM in May, with one new store opened in Sheffield that same month and a further four new stores expected to open later this year.
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COMPANIES - INTERNATIONAL
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Alcoa, the largest producer of aluminium in the US, reported a decline in profit for the second quarter, as sales dropped 10% reflecting low aluminium prices. Nevertheless, both the earnings and revenues trumped Wall Street analysts' estimates, sending its shares up by a near 4% in the after-hours trading. Alcoa's earnings report are closely watched by investors as it is one of the first major US companies to report quarterly results and unofficially kicks starts the US earnings season. The company is on track to complete its separation in the second half of 2016, Alcoa said. Last year, Alcoa announced its decision to separate into two companies-- a higher-margin manufacturing operations and a smelting and refining business.
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Italian banking giant UniCredit said its board has approved the sale of 10% stake in financial services company FinecoBank. UniCredit will sell the stake in FinecoBank to certain institutional investors through an accelerated bookbuilding process. The placement will start "immediately," the company said in a statement. UniCredit, Italy's largest bank by assets, currently holds about 65% stake in FinecoBank and plans to maintain a majority stake. UniCredit also announced the approval for an in-depth review of the bank's strategy under new CEO Jean Pierre Mustier.
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Johnson Controls announced that it has entered into a settlement with the US Securities & Exchange Commission with respect to Foreign Corrupt Practices Act issues that it had self-reported related to the company's marine business in China. After discovering evidence of potential improper behaviour on the part of employees in its marine business in China, the company voluntarily reported the circumstances to the US government, conducted a thorough investigation and fully cooperated with the US authorities.
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The US SEC is investigating whether Tesla Motors breached securities laws by failing to disclose to investors a fatal crash in May involving an electric car that was driving itself, the Wall Street Journal reported people familiar with the matter. The May 7 accident killed the driver, Joshua Brown, a 40-year-old Tesla owner who collided with an 18-wheel semi-truck that pulled in front of him on a Florida highway. Tesla reportedly alerted the National Highway Traffic Safety Administration, the US car-safety regulator, to the crash and investigated to determine whether the car was using the company's Autopilot system, which lets cars drive themselves under certain circumstances. But Tesla didn't disclose the crash to investors in a securities filing.
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The world's biggest planemakers are wooing the recovering Indian budget carrier, SpiceJet, for a potential blockbuster order worth about USD12 billion, Bloomberg reported. Boeing and Airbus Group are locked in a battle to supply SpiceJet with as many as 100 planes, and both are offering aggressive discounts in negotiations that have intensified in the past few months, the report said citing people familiar with the matter.
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UBS Group imposed a partial hiring freeze at its wealth-management business to cut costs, Bloomberg reported quoting two people familiar with the matter. The restrictions apply only to support functions, not client advisers, at the bank's largest unit. They exclude the firm's brokerage business in the US and Canada.
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German auto giant Daimler said its EBIT adjusted for special reporting items for the second quarter was significantly above market expectations. Its deliveries at its Mercedes-Benz unit soared even as the company set aside money for air-bag recalls and legal charges. Daimler expects group EBIT adjusted for special reporting items will slightly increase in 2016.
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Venezuela took over a factory abandoned last week by the US consumer products company Kimberly-Clark and will restart production of its product line, which includes facial tissue, toilet paper and diapers, Venezuelan Labour Minister Oswaldo Vera said. The Kimberly-Clark plant in Maracay in Venezuela's northern Aragua region closed on Friday. The Dallas, Texas-based company said the country's economic situation, a lack of hard currency and raw materials made it impossible to continue operations there.
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Tuesday's Shareholder Meetings

Marks & Spencer Group
N Brown Group
Mitie Group
NewRiver Retail
Quantum Pharma
Biotech Growth Trust
Perpetual Income & Growth Investment Trust
Hunter Resources
Establishment Investment Trust
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite

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