LONDON BRIEFING: UK Stocks Feel Effect Of Chinese Market Plunge

LONDON (Alliance News) - Shares have opened sharply lower in London Monday, following another rout in Chinese and other Asian stock markets.

The Shanghai Composite Stock Index dropped 8.5% Monday on fears of a slowdown in the world's second-largest economy. The plunge in Chinese equities followed last week's losses of 11%.

Sentiment remains fragile despite China's State Council publishing finalized rules to allow pension funds managed by local governments to invest in domestic stock markets.

Brent and US crude oil futures hit fresh six-and-a-half year lows in Asian deals, and copper fell more than 2%, while gold hovers near its highest level in almost seven weeks.

Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 2.5% at 6,032.76
FTSE 250: down 2.8% at 16,405.78
AIM ALL-SHARE: down 2.0% at 717.73

Hang Seng: down 4.7% at 21,349.34
Nikkei 225: closed down 4.6% at 18,540.68
DJIA: closed down 3.1% at 16,459.75
S&P 500: closed down 3.2% at 1,970.89

GBP: down at USD1.5665
EUR: up at USD1.1462

GOLD: down at USD1,155.42 per ounce
OIL (Brent): down at USD44.40 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
(all times in BST)

11:00 Ireland Retail Sales
13:30 US Chicago Fed National Activity Index
20:55 US Fed's Lockhart speech
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China is planning to allow its state pension fund to invest in stock markets for the first time, the BBC reported, citing a report by Chinese official news agency Xinhua. The BBC said the new rules will allow the fund to invest up to 30% of its net assets in domestically-listed shares. The fund currently holds CNY35 trillion in assets, according to Xinhua. The move is the latest made by the Chinese government to arrest the slide in the country's stock market seen in recent weeks. The fund will be allow to invest not only in shares but in a range of market instruments, including derivatives.
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The UK economy is expected to grow at a faster pace this year as household spending and productivity growth pick up. The Confederation of British Industry forecast 2.6% growth this year, up from the prior estimate of 2.4%. Similarly, the outlook for 2016 was raised to 2.8% from 2.5%.
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The number of dead in the crash of a military jet taking part in an air show in Britain could be as high as 11, a police spokesman said. The victims were primarily pedestrians on a busy road in southern England where the Hawker Hunter military jet plunged to the ground Saturday, just 400 metres away from viewers at the Shoreham Airshow near Brighton. There were no reports of casualties among the air show's audience.
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British Foreign Minister Philip Hammond on Sunday reopened his country's embassy in Tehran, four years after it was stormed by protesters angry at Britain's backing of sanctions against Iran over its nuclear programme. Hammond is the first British foreign minister to visit Iran since 2003. The visit comes after Iran and a group of world powers agreed to a deal last month to end a dispute over Iran's nuclear programme.
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German Chancellor Angela Merkel is to host the French and Ukrainian leaders in Berlin on Monday amid a recent upsurge in violence in eastern Ukraine and moves by Europe to review sanctions imposed on Moscow for its role in the conflict. The key focus of the talks between Merkel, Ukrainian President Petro Poroshenko and French President Francois Hollande is likely to be concerns that the fragile ceasefire deal hammered out in Minsk in February has collapsed in light of recent fighting between government forces and pro-Russian separatists in Ukraine's east.
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The leading index for Japan, which measures the future economic activity, rose less than initially estimated in June, final figures from the Cabinet Office showed. The leading index was revised downward to 106.5 in June from the preliminary estimate of 107.2. In May, the score was 106.0. The latest reading was the highest since March 2014, when it marked the same 106.5.
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Talks aimed at defusing tensions between the Koreas went into a third day Monday, following recent exchanges of artillery fire and threats of war. There were no obvious signs of progress in the talks, the South Korean news agency Yonhap reported. Kim Kwan Jin, South Korea's national security adviser, and Hwang Pyong So, the North Korean military's highest political officer, are meeting at the border village of Panmunjom, South Korean presidential spokesman Min Kyung Wook said. Hwang is considered a close confidante of the country's leader, Kim Jong Un.
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BROKER RATING CHANGES
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TRADERS: NUMIS RAISES JOHN WOOD GROUP TO 'BUY' ('HOLD')
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TRADERS: JEFFERIES CUTS UNITE GROUP TO 'UNDERPERFORM' ('BUY')
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TRADERS: JEFFERIES CUTS BRITISH LAND TO 'UNDERPERFORM' ('BUY')
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TRADERS: JEFFERIES CUTS HAMMERSON TO 'UNDERPERFORM' ('HOLD')
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TRADERS: JEFFERIES CUTS INTU PROPERTIES TO 'UNDERPERFORM' ('HOLD')
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TRADERS: JEFFERIES CUTS LAND SECURITIES TO 'HOLD' ('BUY')
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TRADERS: LIBERUM CUTS BREWIN DOLPHIN HLDGS TO 'HOLD' ('BUY')
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N+1 Upgrades N Brown To Buy From Hold, Price Target 355p
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COMPANIES - FTSE 100
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Anglo American said it has reached a deal to sell its interest in two copper mines to a consortium for up to USD500 million. The subsidiary, Anglo American Norte, holds the Mantoverde and Mantos Blancos copper mines located in northern Chile, and the miner has agreed to sell them to an investor consortium led by Audley Capital Advisors, with Orion Mine Finance as the principal co-investor, for an up-front cash consideration of USD300 million, with potential upside to up to USD500 million, it said.
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The UK government has sold off another 1% stake in Lloyds Banking Group, a further step in returning the bank to full private ownership. Stock-exchange documents confirmed that the UK government now owns 12.97% of the bank, down from 13.99% previously. In a statement, the Treasury said it has now raised GBP14.5 billion from reducing its stake in Lloyds from its peak of 43% after bailing it out for GBP20.5 billion during the financial crisis of 2007-09.
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Meggitt said it has won a USD25 million contract from Public Works Government Services Canada on behalf of the country's Department of National Defence. Under the three-year deal, the aerospace and engineering company said it will provide in-service support to the Canadian Armed Forces on the Meggitt Small Arms Trainer and Indirect Fire Trainer.
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Distribution and outsourcing company Bunzl said its pretax profit rose in the first half on the back of better revenue and said it has made four more acquisitions. The company, which distributes items such as plastic bags, latex gloves, safety goggles and cleaning supplies to retail and food industry clients, said its pretax profit for the six months to the end of June was up to GBP147.1 million from GBP132.3 million a year earlier, an 11% rise, on the back of a 7% rise in revenue to GBP3.14 billion from GBP2.94 billion. The group said it will pay an interim dividend of 11.75 pence per share, up from 11.00 pence per share a year earlier. Bunzl also said it has acquired Meier Verpackungen in Austria, Steiner Industries in Chicago, Cater Plus in Adelaide, and Delta Hospitality in Brisbane.
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Drugmaker AstraZeneca and Peregrine Pharmaceuticals said they have entered into a cancer immunotherapy clinical trial collaboration. The collaboration will evaluate Peregrine's investigational phosphatidylserine signaling pathway inhibitor, bavituximab, in combination with AstraZeneca's investigational anti-PD-L1 immune checkpoint inhibitor, durvalumab. The planned Phase I/Ib trial will evaluate the safety and efficacy of bavituximab in combination with durvalumab in multiple solid tumours.
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Engineer GKN is undertaking a review of its farming and mining equipment business and could end up selling the division, The Sunday Times reported. The engineer, which makes components for cars and planes, is understood to have started an informal review of its GBP780 million land systems business, the newspaper said. The division makes parts such as wheels and chassis for tractors and excavators but has been hit as demand for heavy equipment continues to fall, particularly in the US.
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COMPANIES - FTSE 250
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Construction and infrastructure company Balfour Beatty said its joint venture with Morgan Sindall Group and BAM Nuttall has been awarded a GBP416 million deal to construct part of the Thames Tideway Tunnel on behalf of developer Bazalgette Tunnel. Balfour said the equal joint venture between the three, known as BMB, was named preferred bidder on the contract in February and will handle the building of the six-kilometre 'West' section of the 25 kilometre tunnel. Mobilisation work for the project will start in September, with completion of the project scheduled for 2022. Separately, International Public Partnerships, the infrastructure investor, said it has committed to invest up to GBP210.0 million in the Thames Tideway Tunnel project via the Amber Consortium.
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AIM-listed gaming company GVC Holdings said it has made a fully-funded proposal to acquire larger online gaming company Bwin.Party Digital Entertainment, the latest attempt by the company to derail Bwin.Party's planned takeover by 888 Holdings. GVC said it has made a bid of 25 pence per share in cash and 0.231 GVC shares for every Bwin.Party share, a deal which values the FTSE 250 company at around 124 pence per share, or around GBP1.02 billion in total. Bwin.Party shares ended Friday at 114.30p and are trading down 3.2% to 110.70p early Monday.
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Amlin reported that profit in the first half was hit by a change to its accounting for the seasonality of catastrophe reinsurance earned premium, with the effects to unwind in the remainder of 2015. The specialty insurer and reinsurer said it made a GBP143.3 million pretax profit in the six months to the end of June, down from GBP148.5 million in the corresponding period the prior year. Amlin increased its interim dividend by 3.7% to 8.4 pence per share. Responding to speculation of a takeover offer for the company, Chief Executive Charles Philipps told journalists: "We are not for sale. We are not running a sale process."
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COMPANIES - LONDON MAIN MARKET AND AIM
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South32 said its pretax profit fell in the financial year to the end of June and said it will seek to cut its costs substantially over the next three years. The company, which was spun-off from mining giant BHP Billiton earlier this year, said its pro-forma pretax profit for the year to the end of June was USD28.0 million, down from USD64 million a year earlier, as pro-forma revenue fell to USD7.74 billion from USD8.34 billion a year earlier.
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San Leon Energy said it has been approached about a potential takeover offer for the company. The Irish oil and gas company with assets in Europa and North Africa confirmed press speculation about a potential offer, but said there is no guarantee a deal will be completed. No details about the approach were released. Irish newspaper the Daily Business Post had reported on Sunday that San Leon was "being targeted for takeover".
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Punch Taverns said it has agreed a deal to sell 158 non-core pubs to retail sector-focused real estate investment trust NewRiver Retail for GBP53.5 million. Punch said the deal was in line with its plan to sell its non-core estate at a rate of around 200 pubs per year. The deal works out at an average of GBP340,000 per pub, ahead of book value and significantly higher than the average proceeds the company has received for previous non-core disposals.
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UTV Media confirmed it is holding talks on the potential sale of its television assets. In a short statement, Belfast-based UTV said the talks are "ongoing" and there is no certainty they will lead to a transaction being agreed. The Guardian newspaper reported over the weekend that ITV, the FTSE 100-listed broadcaster, is in talks to buy the company.
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COMPANIES - INTERNATIONAL
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Netflix and SoftBank Group are considering a content partnership for the video streaming service set to start in Japan on September 2, according to Bloomberg report. The report said that SoftBank will also sell Netflix subscriptions in the country through its retail shops. The service will range from JPY650 to JPY1,450 per month and will come with one month of free viewing.
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Monday's Scheduled AGMs/EGMs

Collagen Solutions
Northern Bear
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite

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