LONDON BRIEFING: Draghi's Bazooka Is Starting Pistol For Early Gains

LONDON (Alliance News) - London shares were a sea of green at the open Friday, still luxuriating in the more-aggressive-than-expected stimulus measures served by Mario Draghi's European Central Bank on Thursday.

Marks & Spencer was a lonely decliner in the FTSE 100, off 0.7%, after the retailing stock was cut to Underperform from Neutral by Merrill Lynch.

Insurer Aviva and banks Barclays, Standard Chartered and Royal Bank of Scotland led blue-chip gainers, as Draghi also signalled that eurozone interest rates won't be cut further into negative territory anytime soon. Negative interest rates hurt bank earnings.

Meanwhile, shares in Old Mutual were flat after confirming breakup plans.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 1.8% at 6,142.77
FTSE 250: up 1.1% at 16,563.33
AIM ALL-SHARE: up 0.3% at 699.54
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Hang Seng: closed up 1.1% at 20,199.60
Nikkei 225: closed up 0.5% at 16,938.87
DJIA: closed flat at 16,995.13
S&P 500: closed flat at 1,989.57
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GBP: down at USD1.4263 (USD1.4293)
EUR: down at USD1.1134 (USD1.1161)

GOLD: up at USD1,271.30 per ounce (USD1,265.21)
OIL (Brent): up at USD40.74 a barrel (USD39.78)

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

09:30 Italy industrial output
09:30 UK consumer inflation expectations
09:30 UK trade balance
12:30 US export and import price indices
12:30 Canada unemployment rate
14:00 US Reuters/Michigan consumer sentiment index preliminary
17:00 US Baker Hughes US oil rig count
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The British Chambers of Commerce downgraded its economic growth outlook citing weaker than expected expansion across most sectors, reflecting a general global slowdown. In its Quarterly Economic Forecast, the BCC lowered its UK GDP growth forecast to 2.2% from 2.5% this year. For 2017, the lobby forecast 2.3% growth instead of 2.5%. Lower than predicted actual growth in the fourth quarter of 2015, and downward revisions of earlier ONS figures for the first three quarters of 2015, also contributed to the downgrade, BCC said. The lobby expects the Bank of England to hike its interest rate in the fourth quarter of this year to 0.75% from a record low 0.50%.
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The value of the US and UK's special relationship has been reaffirmed in the wake of US president Barack Obama's criticism of UK Prime Minister David Cameron for his actions over Libya. The president was critical of European nations, including the UK, which joined the US in military action to prevent a massacre in Libya in 2011, but then failed to prevent the north African country becoming a "mess" in the aftermath of war. In a lengthy interview in The Atlantic magazine, Obama said Cameron became "distracted" from Libya by other priorities. But the Prime Minister was described as a "close partner" of Obama in a statement from a US National Security Council spokesman in the wake of the interview.
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During a welcoming ceremony for Canadian Prime Minister Justin Trudeau, Obama praised the often overlooked relationship between the US and Canada. In remarks from the south lawn of the White House, Obama said the friendship between the US and Canada is not expressed often enough, in part because of the two country's national characters. Obama and Trudeau are widely expected to have a better relationship than the president had with former Canadian leader Stephen Harper.
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The US military has carried out strikes on suspected Islamic State chemical weapons sites, the Pentagon confirmed. Information about the sites came from Sleiman Daoud al-Afari, a former chemical and biological weapons expert under Saddam Hussein's regime, who was captured by US forces several weeks ago. He has since been turned over to the Iraqi government, Pentagon spokesman Peter Cook said. Cook declined to provide exact details about the strikes but said: "We are confident that the strikes have disrupted their capability."
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The remaining four Republican candidates vying to become their party's nominee to run for US president opened the 12th debate of the campaign Thursday, answering questions on trade, education and social benefits for the elderly. The candidates gathered for the debate in Miami for the last debate before crucial make-or-break primaries in five states on Tuesday. The candidates disagreed on trade policy, with front-runner Donald Trump complaining about existing trade deals.
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The new Irish parliament opened on Thursday with no immediate prospect of a government being formed following last month's inconclusive general election. Outgoing prime minister Enda Kenny and his biggest rival, opposition Fianna Fail leader Micheal Martin, both failed to win enough support in parliament to become the new prime minister, as the vote split along party lines. Kenny received 57 votes in the 158-seat parliament, while 43 members voted for Martin and 24 voted for Gerry Adams, the leader of nationalist party Sinn Fein. Kenny's Fine Gael party remains the largest party in the Dail, or lower house of parliament, with 50 seats, despite losing 24 seats in the election on February 26.
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The ECB on Thursday lowered its benchmark interest rate, the main refinancing rate, by five basis points to a record low zero, while economists had expected the rate to be left unchanged. The already-negative deposit rate was cut by 10 basis points to -0.40%, in line with economists' expectations. The marginal lending facility rate was reduced by five basis points to 0.25%, while economists had expected the rate to be held steady. Further, the bank expanded the monthly purchases under the asset purchase programme by EUR 20 billion to EUR 80 billion starting in April. Economists were looking for an increase of at least EUR 10 billion. Additionally, the bank announced a new series of four targeted longer-term refinancing operations, dubbed TLTRO II, each with a maturity of four years. President Mario Draghi said to expect euro area interest rates to remain very low for a long period of time but signalled that there were limits to how much they can be reduced.
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Germany's consumer prices remained unchanged in February from a year ago as initially estimated, final data from Destatis showed. The consumer price index was unchanged after rising 0.5% in January and 0.3% in December. Meanwhile, Germany's wholesale prices declined at the fastest pace in a year in February largely due to a sharp decrease in fuel prices, Destatis said. Wholesale prices dropped 1.9% year-on-year versus 1% decrease in January.
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BROKER RATING CHANGES
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EXANE BNP CUTS ANGLO AMERICAN TO 'UNDERPERFORM' ('NEUTRAL')
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EXANE BNP CUTS ANTOFAGASTA TO 'NEUTRAL' ('OUTPERFORM')
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UBS CUTS ACACIA MINING TO 'NEUTRAL' ('BUY') - TARGET 275 PENCE
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TRADERS: MERRILL LYNCH CUTS MARKS & SPENCER TO 'UNDERPERFORM' ('NEUTRAL')
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TRADERS: JPMORGAN CUTS CARILLION TO 'NEUTRAL' ('OVERWEIGHT')
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COMPANIES - FTSE 100
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Old Mutual, the Anglo-South African financial services company, said there is "limited rationale" for its four main divisions to be part of the same group, confirming that it intends to separate them by the end of 2018 in a move to cut debt, costs and complexity. Bruce Hemphill, a former executive at African lender Standard Bank Group, said the review he began when he succeeded Julian Roberts as Old Mutual's chief executive in November 2015 showed that there is "very little commonality" between the businesses. The group's four divisions are comprised of its 54% stake in South African lender Nedbank, an emerging markets business also based in South Africa, a UK-focused wealth arm, and a US institutional asset manager. As Old Mutual manages their separation and sells assets, it will consider returning any excess capital generated to shareholders.
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Glencore said a third body has been found at the Katanga mine in the Democratic Republic of Congo following the geotechnical fault which occurred at the site earlier this week. A geotechnical failure at the north wall of the KOV open pit mine at the operation had already led to two confirmed deaths, but Glencore said Thursday Katanga Mining, which operates the mine and in which Glencore holds a 75% stake, had uncovered a third body on the site. It said the search for the remaining individuals is ongoing and it has allocated all available resources to the search.
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COMPANIES - FTSE 250
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Just Retirement Group and Partnership Assurance Group said they remain confident of achieving at least GBP40.0 million of cost savings through the GBP1.6 billion merger of the life insurers. The pair said they expect their merger to complete in April, with the aim of creating JRP Group PLC, as they separately reported earnings. Just Retirement said it swung to a first-half pretax profit of GBP26.1 million in the six months ended December 31, from a GBP9.2 million pretax loss in the corresponding period of 2014. Partnership swung to a full-year pretax loss of GBP16.5 million in 2015, from a GBP24.1 million pretax profit in 2014, saying it was hit by one-off costs, particularly the new Solvency II rules for insurers across the EU, and lower sales volumes.
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Block paving manufacturer Marshalls said pretax profit grew by more than half in 2015, after strong public sector and commercial market sales lifted revenue. The company posted a pretax profit of GBP35.3 million for 2015, up 57% from GBP22.4 million in 2014, as revenue rose 8.0% to GBP386.2 million from GBP358.5 million. Marshalls recommended a final dividend of 4.75 pence per share, which means its full-year dividend is 7.00p per share, up from 6.00p in 2014. The company also proposed a supplementary dividend of 2.00p per share, in light of its strong cash flow, meaning shareholders will receive 9.00p in total for 2015. Marshalls said it has completed phase one of its strategy to return to pre-recession profitability, and has now launched the next phase of its growth strategy which will take it to 2020.
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Oil services company Petrofac said it has secured a deal to act as the duty holder supporting Anasuria Operating Co, the joint venture operating the Anasuria cluster licences in the North Sea east of Aberdeen. Petrofac said the five-year deal is worth an initial USD250.0 million and will secure 65 jobs. Petrofac will handle the floating petroleum storage and offloading vessel at Anasuria, along with monitoring the pipelines.
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JD Wetherspoon reported a fall in profit in the first half of its financial year as its operating margin took a further hit from wage increases, but revenue was lifted by increases in like-for-like bar and food sales. The pub company said its pretax profit in the 26 weeks ended January 24 edged down to GBP36.6 million from GBP37.5 million, as its operating margin shrank to 6.3% from 7.4% due to a lower gross margin and higher rates of pay for pub staff. Revenue, however, rose to GBP790.3 million from GBP744.4 million, with like-for-like bar and food sales up by 2.9%. Wetherspoons will pay an interim dividend of 4.0 pence, which is flat year-on-year.
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IT infrastructure services provider Computacenter said its pretax profit rose as a result of a one-off gain and lower restructuring costs in 2015, though revenue dipped amid continued challenges in France. The company said pretax profit jumped 66% to GBP126.8 million for the year to the end of December from GBP76.4 million in 2014. The increase was driven by a one-off gain made from the sale of Computacenter's RD Trading recycling subsidiary and from lower restructuring costs related to a redundancy programme in France. The group said it will pay a second interim dividend of 15.0 pence per share, taking its total payout to 21.4p for 2015 from 19.8p in 2014.
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COMPANIES - INTERNATIONAL
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Apple is inviting media to a March 21 event at its headquarters in Silicon Valley, where the company is widely expected to introduce a new, smaller iPhone and the iPad's next generation. With an invitation reading "let us loop you in" - a reference to the company's address at One Infinite Loop, or perhaps a hint at something else - Apple set off speculation about what products, updates, designs or other news it might announce at its annual spring media event. Citing unnamed sources at the company, industry media reported that Apple is expected to announce the entry-level iPhone SE, with a 4-inch screen, and a tricked-out iPad with support for accessories including Apple Pencil, as well as new bands for the Apple Watch.
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US authorities bashed Apple's refusal to hack an iPhone linked to the San Bernardino terrorist shooting, decrying the company's "false" rhetoric and accusing it of alarmism over privacy, security and rights concerns. In the latest in a series of dueling briefs filed in federal court, government lawyers argued that Apple must comply with a February 16 court order demanding the company find a way to access encrypted data that investigators believe may be stored on an iPhone used by Syed Rizwan Farook in the December 2 attack, in which 14 people were killed.
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Colgate-Palmolive disclosed in a regulatory filing it will cut more jobs as part of a restructuring program that was originally slated to end this year but has been extended through 2017. Separately, the company said that it increased the ongoing quarterly common stock cash dividend by 3%. It is expected that, when it has been fully implemented, the 2012 Restructuring Program will have contributed a net reduction of about 3,300-3,800 positions from the Company's global employee workforce.
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American Express reaffirmed its financial outlook for 2016 and 2017. In remarks prepared for the company's annual Investor Day today, Chief Financial Officer Jeffrey Campbell said: "For the full year, our 2016 and 2017 EPS outlook remains unchanged from what we told you on our fourth quarter earnings call." The company continues to expect earnings of USD5.40 to USD5.70 per share for 2016 and to be at least USD5.60 per share for 2017.
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Nestlé USA is voluntarily recalling select DiGiorno, Lean Cuisine and Stouffer's products due to concerns about glass shards.
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Friday's Scheduled AGMs/EGMs

No Events Scheduled
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite

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