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LONDON (Alliance News) - The following is a summary of top news stories Friday.
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COMPANIES
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Lloyds Banking Group PLC increased the stake it is selling in TSB Banking Group PLC, the high-street bank it is divesting to meet conditions of its state bailout during the financial crisis, after investors showed strong appetite for the shares. In a statement, Lloyds said it is selling 35% of the 500 million shares that TSB will have in issue on admission to trading on the London main market, an increase on the initial 25% it was set to sell. The share offer at 260 pence per share will raise GBP455 million gross and give TSB an initial market capitalisation about GBP1.3 billion, which is below its book value of about GBP1.5 billion but is enough to put it into the FTSE 250 index at the next review.
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J Sainsbury PLC moved to counter the recent success of discounters Aldi and Lidl by creating a jointing venture with Danish international discount grocery retailer Netto in the UK. Sainsbury's, the UK's third-largest supermarket chain by market share, said it is partnering with Netto to form a joint venture that will initially trial 15 stores by the end of 2015, starting this autumn, and then roll out across the UK if the trial is successful. Netto had stores in the UK up until 2010, when it departed after achieving little success. However, that was prior to the recent surge in popularity of discounters like Aldi and Lidl, and Sainsbury said the new Netto stores will be completely different from the previous Netto format.
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High-street department store chain Debenhams PLC said like-for-like sales rose slightly in the first 14 weeks of the second half of its financial year, supported by an increase in the gross value of transactions and a shift in strategy to reduce the level of promotions. Debenhams said like-for-like sales were up 0.7% in the 14 weeks to June 7, as it recorded a 1.6% increase in gross transaction value, which are sales on a gross basis before adjusting for concessions, consignments and staff discounts. "We expect our revised promotional strategy will continue to result in lower markdown leading to a stronger gross margin performance for the second half," the company said in a statement. Debenhams said its gross margin guidance for the full year remains unchanged, as it still expects to see a decline in margins of between 50 to 70 basis points, hit by heavy discounting earlier in the year, but supported by lower markdown in the second half of the year. Debenhams also said it will launch trial concessions to optimise space in its UK stores with sports product retailer Sports Direct International PLC, and with coffee chain Costa, owned by Whitbread PLC, before year end, stating that the two trials are "one of a number of initiatives they are working on".
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US pharmaceutical research and development company AbbVie Inc confirmed it has made three indicative takeover approaches which have been rejected by British pharma company Shire PLC, and talks between the two companies have now ended. Shire shares have been soaring in recent weeks, driven by speculation that it would be a target amid a pickup in merger and acquisition activity in the pharmaceuticals sector. In recent weeks, AstraZeneca PLC successfully fended off a takeover approach from US rival Pfizer Inc, while Valeant Pharmaceuticals Inc has taken a USD53 billion offer for Botox maker Allergan Inc direct to shareholders after repeatedly being rebuffed. Allergan was reported previously to have approached Shire.
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While overshadowed by TSB Banking Group PLC, a three other initial public offerings also came to market Friday and received a generally positive market response. Allied Minds PLC, a US-focused science and technology development and commercialisation company, priced its initial public offering at 190.00 pence a share, giving it an initial market capitalisation about GBP398.0 million. The shares were quoted firm at 190.50p in conditional dealings on the London main market Friday morning. Meanwhile professional services FDM Group (Holdings) PLC and recyclable metal trader Zibao Metals Recycling Holdings PLC also began trading Friday on the London Stock Exchange. FDM was quoted at 320 pence on the main market, 11% ahead of its 287 pence IPO price, while Zibao Metals was untraded on AIM.
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MARKETS
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UK stocks are modestly higher, buoyed by pharmaceutical and medical-product shares, following confirmation that Shire received multiple takeover approaches from a US company, continuing the merger and acquisition jostling within the sector.
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FTSE 100: up 0.3% at 6,828.31
FTSE 250: up 0.5% at 15,761.99
AIM ALL-SHARE: flat at 784.70
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The pound remains near its strongest level against the dollar in more than five years, despite an increase in UK government borrowing.
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GBP-USD: up at USD1.7050
EUR-USD: down at USD1.3604

GOLD: down at USD1,310.27 per ounce
OIL (Brent): flat at USD114.88 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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The UK budget deficit widened in May, official data revealed. Excluding the temporary effects of financial interventions, public sector net borrowing increased to GBP13.3 billion from GBP8.7 billion a year ago, the Office for National Statistics said. For the financial year 2013/14, public sector net borrowing came in at GBP94.9 billion, which was GBP14.2 billion higher than in the previous year.
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UK house prices continued to rise in June, although in most cases at slower pace than in the previous month, while expectations for future price growth eased to the lowest in six months, a combined survey by property consultancy Knight Frank and Markit Economics showed. The house price sentiment index fell to 62.5 in June from the record high of May's 63.2. Any score above 50 indicates the rising trend of prices. This was the fifteenth consecutive month of increase.
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Ukrainian President Petro Poroshenko is expected on Friday to present a peace plan to end the unrest that has taken hold in the east of the country. Poroshenko discussed the plan with President Vladimir Putin late on Thursday, with the Russian leader calling for the immediate disarmament of government forces. Moscow has voiced doubts about the plan, which offers a ceasefire on the condition that the insurgents lay down their arms. Insurgent leaders have roundly rejected it, calling it a ploy to defeat them.
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Russia is not concentrating more troops along its frontier with Ukraine but only increasing border security, President Vladimir Putin's spokesman says. Putin ordered the border security reinforcements weeks ago and received positive reactions from European leaders, Dmitry Peskov says.
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Iraq's second-largest oil company reduced its daily production for the first time since 2003, while the government said it is in control of the country's largest refinery that was taken over by militants. The state-run Northern Oil Company said it was cutting production from 650,000 to 300,000 barrels per day - the drop coming after it stopped supplying the Biji refinery and a halt to northern exports. The Biji refinery, some 200 kilometres north of the capital Baghdad, accounts for almost a third of Iraq's refining capacity. While the government said it had repulsed an offensive by Sunni-led insurgents in Biji, sources in the area said militants of the Islamic State in Iraq and the Levant (ISIL) are in control of areas outside the refinery.
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Iraq must move urgently to form a new government that includes all sectors of Iraqi society, not just the Shiite majority, if it is to survive the onslaught of Islamist militants. That was the message Thursday from US President Barack Obama, who is sending military advisors to Iraq and could approve airstrikes if intelligence on the ground is good enough and if the situation warrants. In announcing his decision, Obama made clear that there was "no military solution" to the growing threat within Iraq, but rather a political solution that must come from the Iraqi people themselves.
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The US would not need the approval of the UN Security Council for military operations in Iraq if it acts on a request by the Baghdad government, UN Secretary General Ban Ki-moon has said. The US "will have to decide whether they intervene in the conflict with ground troops or other military means, and whether they will coordinate such a course of action with the regional power of Iran," Ban told the Swiss daily, Neue Zuercher Zeitung. He added that "if Iraq asks both countries to take such a step, it would surely not need a decision by the UN Security Council."
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Republicans in the US House of Representatives Thursday elected Kevin McCarthy of California as their new leader to replace the outgoing Eric Cantor, who unexpectedly lost in a primary election earlier in the month. Cantor, a Republican from Virginia, announced that he would step down as majority leader on July 31. McCarthy, 49, who was first elected to the House in 2006, was previously the number three Republican in the chamber and had served as Cantor's majority whip.
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Germany's producer prices declined for the tenth consecutive month in May, Destatis reported. Producer prices were down 0.8% year-over-year in May, but slightly slower than the 0.9% drop seen in April. Economists had forecast a 0.7% fall. Excluding energy, producer prices dropped 0.2% from May 2013. While prices of consumer non-durable goods increased 1.2% annually, prices of intermediate goods decreased 1.3% and cost of energy by 2.6%. On a monthly basis, producer prices slipped 0.2% versus April's 0.1% drop. Prices were expected to remain flat in May.
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Eurozone finance ministers approved the next bailout tranche for Cyprus on Thursday, praising its reform progress, amid concerns that neighbouring Greece is veering off its path to economic health. "Cyprus's positive track record ... has played an important role in enhancing confidence and permitting the successful return to the financial markets," the ministers said in a statement issued after their talks in Luxembourg. The decision puts Cyprus on track to receive EUR600 million from the eurozone's bailout fund in the first half of July, the ministers said, with the International Monetary Fund expected to contribute a further EUR86 million.
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A review of EU rules on budgetary discipline is due to take place at the end of the year, says Jeroen Dijsselbloom, the chief of the Eurogroup of eurozone finance ministers. The decision came following a debate over whether the bloc should focus more on promoting growth. Such a review clause is "baked in" to two sets of rules granting the EU's executive greater scrutiny of national budgets, said EU Economy Commissioner Olli Rehn. "We have a good chance of assessing what works and what might be improved in this context," he added. Meanwhile, International Monetary Fund chief Christine Lagarde said the EU should pay more attention to countries' ratio of debt to gross domestic product - a figure that can be curbed by boosting economic growth.
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Luis Suarez scored twice to give Uruguay victory a 2-1 over England in Group D, all but knocking out Roy Hodgson's team. The Liverpool striker headed Uruguay in front on 39 minutes from an Edinson Cavani cross, losing Phil Jagielka at the back post to head past Joe Hart. Wayne Rooney, who had hit the bar from a Steven Gerrard free-kick before Uruguay scored, equalised in the second half turning in Glen Johnson's cross. But Suarez got the winner running on to a inadvertent flick from Steven Gerrard to fire past Hart. The win means Uruguay join Costa Rica and Italy, who play on Friday in Recife, on three points in Group D.
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