LONDON MARKET COMMENT: Stocks Up But BHP Billiton Spin-Off Disappoints

LONDON (Alliance News) - London stock indices are trading higher mid-morning Monday, while miner BHP Billiton leads the FTSE 100 fallers after its spin-off South32 was priced at the lower end of market expectations.

The FTSE 100 trades up 0.3% at 6,983.17, the FTSE 250 is up 0.2% at 18,046.95, and the AIM All-Share index is up 0.1% at 763.06.

In Europe, shares also are higher with the CAC 40 in Paris trading up 0.1%, while the DAX 30 in Frankfurt is up 0.8%.

BHP Billiton is the worst blue-chip performer, down 4.1% after spin-off South32's share price came in below estimates. South32, which also is listed on the Australian Securities Exchange and the Johannesburg Stock Exchange, currently trades up 2.9% at 107.00 pence. Societe Generale analyst Alain William valued South32 at an equity value of 120.00 pence per share.

"The spin-off's Australian début at the lower end of market expectations (AUD11.3 billion vs. AUD7-15 billion range) will likely just go to emphasise the volatility and uncertainty surrounding commodities in light of global growth expectations," says Mike van Dulken, head of research at Accendo Markets.

Babcock International Group is up 1.9% after it reported strong growth in pretax profit for its last financial year as revenue was buoyed by major new contract wins and acquisitions.

The engineering support services company focused on infrastructure and big projects reported a pretax profit of GBP313.1 million for the year to end-March, up from GBP218.8 million a year earlier as its own revenue rose to GBP4.00 billion from GBP3.32 billion. Revenue including its share of joint venture and associates' revenue rose to GBP4.50 billion, from GBP3.55 billion.

Its closely-watched pretax profit, which also includes profit from joint ventures and associates but excludes exceptional items and amortisation of acquired intangibles rose to GBP417.7 million from GBP316.1 million.

Gold miners also are helping to prop up London's main indices as the price of gold rose to its highest price in three months. The precious metal currently trades at USD1,230.46 an ounce, having hit a high of USD1,232.41 in earlier trade.

Fresnillo is the best performer in the FTSE 100, trading up 3.7%, while Randgold Resources trades up 1.8%. In the FTSE 250, Acacia Mining is up 1.8% and Centamin is up 1.4%.

Leading the midcap gainers however, is Aveva Group, up 12%. The engineering software company is understood to be an acquisition target for a slew of US and European suitors, The Sunday Times reported. Senior City sources told the newspaper that Aveva is likely to be targeted by French energy group Schneider Electric SA, US conglomerate General Electric Co, and US-based manufacturer Emerson Electric Co.

Bwin.Party Digital Entertainment, up 10% also continues to be subject of merger and acquisition activity. 888 Holdings confirmed press reports over the weekend that it was intending to gatecrash GVC Holdings' reverse takeover offer for Bwin, saying it has submitted a cash and shares takeover bid for the company.

888 said it thinks there is "significant industrial logic" in combining its business with that of Bwin and has submitted a proposal to acquire the entire issued and to be issued share capital of the company for an undisclosed amount in cash and 888 shares.

888 shares trade down 3.5%, while GVC trades up 1.0%.

Inmarsat is down 2.9% after it said it is suspending its guidance of a 8 to 12% compound annual growth rate in revenue from wholesale mobile satellite services over 2014 to 2016, as the launch of its third Global Xpress satellite I-5 F3 has been delayed by the failure of a related satellite.

Still ahead in the economic calendar, there is German Bundesbank monthly report at 1200 BST, and the US National Association of Home Builders housing market index at 1500 BST.

US stock futures point to a mixed mixed open, with the DJIA pointed up 0.1%, the S&P 500 seen flat, and Nasdaq 100 indicated down 0.1%.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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