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LONDON (Alliance News) - UK regulators have now confirmed they will investigate whether the country's major energy companies are preventing effective competition in the market, a decision that prompted British Gas parent Centrica to warn that the review could delay crucial investments in new infrastructure.

UK energy industry regulator Ofgem Thursday proposed that the Competition and Markets Authority investigates "once and for all" whether there are barriers to effective competition with the "Big Six" suppliers.

The news comes just a day after one of the energy companies, SSE, seemingly positioned itself to be split up, saying it was planning a legal separation of its retail and wholesale arms. It had also frozen prices until at least January 2016.

"A market investigation would conclusively determine whether vertical integration is in consumers' interests or whether there should be more separation between the largest companies' supply businesses and generation arms," Ofgem said in its report Thursday.

“We hope that a lengthy review process will not damage confidence in the market, when over GBP100 billion of investment in new infrastructure is needed. A prolonged period of uncertainty could damage investment at a time when Britain’s energy security is being seriously challenged,2 Centrica Chief Executive Sam Laidlaw said in a statement.

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FTSE 100: Down 0.6% at 6,565.60
FTSE 250: Down 0.4% at 16,180.62
AIM ALL-SHARE: Down 0.5% at 846.72
GBP-USD: Up at 1.6632
EUR-USD: Down at 1.3775
GOLD: Down at USD1,298.12 an ounce
OIL (Brent): Up at USD107.50 a barrel

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Key UK Corporate News

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FTSE 100: Glencore Xstrata is planning to suspend operations at its Ravensworth underground coal mine in Australia, after a major fall in coal market prices. A spokesman for the miner said it was no longer financially viable to operate the mine due to lower coal prices, high production costs, the strength of the Australian dollar and geological problems in future mining areas. Babcock International Group has agreed to buy helicopter firm Avincis Group for GBP920 million from Investindustrial and Kohlberg Kravis Roberts & Co, funding it with a fully-underwritten GBP1.10 billion rights issue. easyJet has agreed a seven-year deal with Gatwick airport, the airline's largest base. The airline will add slots and use bigger aircraft at the airport, and now has "certainty on passenger charges". London Stock Exchange Group said the total equity capital raised on its markets in the 11 months to date almost doubled compared with the corresponding period the previous year, adding that good signs of activity are continuing. Old Mutual has agreed to sell Skandia Germany and Skandia Austria to a Cinven and Hannover Re acquisition vehicle for EUR220 million in cash, as its wealth division continues to simplify its operations in Europe and focus on core growth markets. Compass Group said it expects organic revenue growth for the first half of the year to be just over 4%, with an operating profit margin of around 10 basis points, boosted by new business wins and strong growth. The Food and support services company warned, however, of a hit to the sterling results of its overseas operations from the strength of the pound. WPP will acquire a majority stake in Indian social media agency Social Wavelength via its JWT unit. Rolls-Royce Holdings has won a GBP1.1 billion deal to fix its Trent 100 engines to 25 new All Nippon Airways' Boeing 787 Dreamliner aircraft. Tullow Oil has failed to find commercial levels of oil at the Emong-1 exploration well and the Etuko-2 well, both onshore Kenya.

FTSE 250: Thomas Cook Group said that winter trading was satisfactory, despite a bookings hit from the continued political unrest in Egypt, while customer booking for its Summer 2014 programme are showing an improving trend, with around 50% of holidays already sold. Serco Group has won a 22-month deal to continue operating the Northern Rail franchise with its joint venture partner AbelIio. Serco, which expects its share of revenues to be GBP520 million, warned that the extension will be run at a lower profit margin than the current deal. Rigid plastic packaging business RPC Group expects fourth quarter revenue to be ahead of the previous, buoyed by acquisitions and as activity in its markets picks up. Its performance for the year is expected to be in line with management expectations. Ophir Energy has provisionally been awarded an exploration block in the Myanmar offshore licensing round, while drilling operations have now commenced on both the Affanga Deep-1 well on the Gnondo Block, offshore Gabon, and the Taachui well on Block 1, offshore Tanzania. Afren reported 5% revenue growth for the full-year, boosted by strong production figures and exploration success, but saw pretax profit tumble due to impairment charges and joint-venture losses.

AIM: Mediterranean Oil & Gas has jumped after Leni Gas & Oil said its fraudulent misrepresentation action against the company was not upheld. The dispute dates back to July 2012, when Leni Gas & Oil sold 10% of its interest in a Malta prospect license to Mediterranean Gas & Oil. Leni Gas & Oil argues that Mediterranean misled it regarding the potential sale in July 2012. eServGlobal is doing well after it said its fund transfer service business with BICS, HomeServe, has won a deal with MoneyGram. WYG is up after it said it expects pretax profit for the financial year that ends March 31 to be about 10% above current expectations, as revenues increased slightly but operating margins improved considerably as it won more profitable work. It also said it would resume paying a dividend this year. Eckoh is another gainer after its secure payments unit won three new payments contracts, two of which are with FTSE 100 companies. Eckoh did not disclose the financial terms of the deals, but said they are expected to go live in the first half of the new financial year. Sunrise Resources is up after it said drilling is due to start at its Cue Diamond project in Western Australia and it had received positive sampling results from its Strike copper project in Nevada. ReNeuron Group is doing well after it received final regulatory and ethical approvals to begin two new clinical trials using its CTXcyro stem cell product earlier than it had planned. It will begin a Phase II clinical trial of its ReN001 investigational therapy in stroke disability, and a Phase I clinical trial of its ReN009 therapy in critical limb ischaemia, a condition which restricts blood supply to tissues. Strategic Natural Resources has fallen sharply after it received notice from London Commodity Brokers asking for the company to be wound up. It said lawyers from the London Commodity Brokers filed a winding up petition, claiming an amount of USD1.15 million regarding contractual arrangements with Strategic Natural Resources. It disputes the claims and has been in discussions with the London Commodity Brokers concerning the amount due and settlement terms. Photonstar LED Group is down despite it posting a narrowed pretax loss in 2013 and saying that it had been trading in line with expectations in the first quarter of 2014, ahead of the previous year. Iofina is another faller after it said it had completed its latest extraction plant, but will delay building any new facilities until it has undertaken a review that will aim to improve construction methods and reduce build costs. Xcite Energy has fallen significantly despite the firm reporting that it swung to a profit in 2013, stemmed its cash outflows, and will select its preferred partners for its undeveloped oil field in the North Sea this year.

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Top Economics And General

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UK retail sales recovered at a stronger-than-expected pace in February, buoyed by food stores turnover, signaling positive developments in consumer spending. Retail sales volume including automotive fuel rose 1.7% from January, the Office for National Statistics said. Sales were expected to grow 0.5% after falling by a revised 2% in January. Excluding auto fuel, retail sales gained 1.8% in February, in contrast to a 2% fall in the previous month. Economists were looking for a 0.3% rise.
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The US and the EU jointly pledged to impose stronger sanctions if Russia further destabilizes Ukraine, hours after Moscow announced its intention to boost its military presence in Crimea. "If there is further escalation, we Europeans and Americans are ready to intensify sanctions," said EU President Herman Van Rompuy. "The goal is a negotiated solution, in respect of Ukraine's sovereignty and of international law." "We are united in our commitment to Europe's security," added US President Barack Obama during a visit to EU institutions in Brussels. "We are united in our determination to isolate Russia and impose costs for Russia's actions."
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Egyptian Army chief Abdel-Fattah al-Sissi has resigned to run for the presidency, he said in a recorded address on state television. "Today I speak to you for the last time in military uniform. ... Today I leave behind this uniform, again to protect the nation," said al-Sissi, 59. The former military intelligence chief, who overthrew Egypt's first freely elected president, Islamist Mohammed Morsi, in July, is widely favoured to win the upcoming presidential race.
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Egypt's prosecutor general referred 715 alleged supporters of Morsi to trial on capital charges, local media reported. The defendants - of whom only 160 are in custody - have been charged with rioting and murder during the violence that gripped the southern province of Minya in the wake of a deadly police raid on pro-Morsi protest camps in August in Cairo.
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A Malaysia Airlines official said the firm was ready for a possible lawsuit against it in connection with missing flight MH370, as the search for the plane was called off temporarily due to bad weather in the southern Indian Ocean. "We will face this lawsuit when it comes," the official said, requesting not to be named. "I have not heard of relatives of Malaysian passengers and crew talking about a lawsuit, but that is their right if they want to sue us," she added. On Wednesday, a US firm said it expected to represent relatives of passengers in a lawsuit against Malaysia Airlines and Boeing over the disappearance of the Boeing 777-200 on March 8, according to media reports.
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South Korea and the US began a large-scale amphibious landing drill, the Yonhap News agency reported, amid heightened tensions on the peninsula. The Ssang Yong (double dragon) exercise involves more than 10,000 naval and marine troops from both countries. It is the largest joint marine drill between the two nations since 1993, and is taking place on the south-eastern coast of the peninsular until April 7. North Korea's state-run Rodong Sinmun newspaper on Monday denounced the drill and a joint aerial training exercise, accusing Washington of raising tensions, Yonhap said. Pyongyang test-fired two missiles into the sea early Wednesday, reports said, prompting international condemnation.
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The EU will drop an anti-dumping investigation into Chinese exports of hardware used in mobile telecommunication networks, the bloc's top trade official said Thursday, days before a landmark visit by China's president. The EU will, however, "keep alive" an anti-subsidy case in the same area, Trade Commissioner Karel De Gucht said, noting that this is where "the real problem lies."
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Afternoon Watchlist

14:00 US Pending Home Sales
14:30 US EIA Natural Gas Storage change
15:00 US Kansas Fed manufacturing activity
23:30 Japan National Consumer Price Index
23:30 Japan Unemployment Rate
23:50 Japan Retail Trade

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Friday's Key UK Corporate Events

Hydrodec Group Full Year Results
Songbird Estates Full Year Results
Optimal Payments Full Year Results
Baillie Gifford Japan Trust Full Year Results
Chesnara Full Year Results
Asia Resource Minerals Full Year Results
Stanley Gibbons Group Full Year Results
Johnston Press Full Year Results

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Friday's Key Economic Events

00:05 UK Gfk Consumer Confidence
01:30 US Fed's Evans Speech
07:00 Germany Import Price Index
07:45 France Consumer Spending
09:00 Italy Producer Price Index
09:30 UK Current Account
09:30 UK Gross Domestic Product
09:30 UK Total Business Investment
10:00 EU Economic Sentiment Indicator
12:30 US Personal Income/Spending
13:00 Germany Consumer Price Index
14:55 US Reuters/Michigan Consumer Sentiment Index
16:45 US Fed's George Speech

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By Steve McGrath; steve.mcgrath@alliancenews.com; @stevemcgrath1

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