LONDON MARKET MIDDAY: Ladbrokes Gains On Light Merger Remedies

LONDON (Alliance News) - Stocks in London were rebounding midday Friday from the losses seen on Thursday, with resource stocks firmly in the green in the FTSE 100 and bookmaker Ladbrokes the best mid-cap performer after regulators outlined the necessary remedies on its proposed merger with rival Gala Coral.

The UK Competition & Markets Authority said Ladbrokes may have to dispose of around 350 to 400 shops ahead of its merger with Gala Coral, although this only equates to just under 10% of the combined estate of the merging bookies.

The news sent shares in Ladbrokes up 9.5% at midday, with the market perhaps expecting the CMA's review into the merger to result in a worse outcome.

Ladbrokes and Gala Coral are the second and third-largest bookmakers in the UK by number of shops, behind William Hill, shares in which were up 1.5%. Ladbrokes operates 2,231 betting shops in Great Britain, while Gala Coral operates around 1,850 betting shops in the UK.

The FTSE 100 was up 1.3%, or 79.60 points, at 6,132.95. The FTSE 250 was up 0.9% at 16,880.46 and the AIM All-Share was up 0.4% at 725.33.

"Traders are looking to unwind many of their positions as we close out the week, with the notable trends that have dominated the markets this week coming under pressure," said IG market analyst Joshua Mahony. "Hesitancy within the recent US dollar strength and a reversal of yesterday's stock market weakness sees markets likely to finish the week at less extreme levels."

The dollar strengthened against other currencies after the Fed minutes, released on Wednesday, suggested that a US rate hike in June is a firm possibility. On Thursday, New York Fed President William Dudley added to the hawkish picture as he said the Fed is likely to raise rates in the summer if the economy meets the bank's expectations. Dudley said "June is definitely a live meeting".

On Wednesday, the pound hit a low of USD1.4401. However, sterling has recovered since, quoted at USD1.4564 at midday, marginally lower than the level of USD1.4583 at the London stock market close Thursday.

The greenback's rally on Wednesday hit gold and oil prices, consequently dragging London-listed resource stocks on Thursday. However, these were the ones trading much higher Friday midday, leading the blue-chip index's rebound.

Miners Anglo American, up 4.9%, Antofagasta, up 2.9% and Rio Tinto, up 2.6%, were among the best FTSE 100 performers, while oil major Royal Dutch Shell's 'A' shares were up 1.6% and BP was adding 1.2%.

Gold hit its lowest level in nearly a month on Thursday, at USD1,243.96 an ounce. At the London close on Thursday, the precious metal was at USD1,251.18 an ounce. It has recovered marginally since, quoted at USD1.256.08 an ounce Friday midday.

Brent oil also was recovering some ground Friday, standing at USD48.88 a barrel at midday, having fallen USD47.73 a barrel at the close Thursday following a strong run.

Meanwhile, shares in Babcock International Group were up 0.8%. The defence support services company said Ascent Flight Training, the FTSE 100-listed company's joint venture with US defence contractor Lockheed Martin, will deliver the rotary wing element of the UK Military Flying Training System on behalf of the UK's MoD.

The contract will include the delivery of Airbus H315 and H145 training aircraft and the installation of new infrastructure and ground-based equipment, Babcock said.

Elsewhere in the FTSE 250, financial services company Close Brothers Group was up 4.0%, after saying it delivered an improved performance in the third quarter, with good trading for all three of its divisions. The firm, which runs banking, securities and asset management operations, said its banking arm has continued to see good demand for its specialist lending services.

Spectris was the worst mid-cap performer, down 6.1%. N+1 Singer said the group released a "subdued" update for the first four months of 2016, with the broker highlighting a "challenging start to the year" for the company, with a decline in like-for-like sales.

Spectris, which makes precision measurement instruments for industrial markets, said acquisitions boosted sales in the first four months, as it continues to restructure to better align spending plans with sales growth. The company reported sales for the first four months of 2016 grew 2.0%. However, N+1 highlighted that Spectris said like-for-like sales declined 4.0% in the period.

"The 4% like-for-like sales decline in the first four months of the year is below the 2% decline we have assumed in our forecasts," said N+1 analyst Jo Reedman.

In Europe, the CAC 40 in Paris was up 1.0% and the DAX 30 in Frankfurt was adding 0.8%.

In Asia on Friday, the Japanese Nikkei 225 index ended up 0.5%. In China, the Shanghai Composite rose 0.7%, while the Hang Seng index in Hong Kong added 0.8%.

Stocks in New York were called for a positive open, with both the Dow 30 and the S&P 500 seen up 0.2% and the Nasdaq 100 pointed up 0.3%.

British industrial order books improved in May, the Industrial Trends Survey from the Confederation of British Industry showed. The order book balance rose unexpectedly to -8% in May from -11% in April. It was forecast to fall to -13%.

Germany's producer prices continued to drop in April, figures from Destatis revealed Friday. Producer prices declined 3.1% in April from last year, the same pace of decrease as seen in March but slightly faster than the 3% fall forecast by economists.

German producer prices have been falling since August 2013. The 3.1% decrease was the biggest since January 2010 when prices slid 3.5%.

Still in the economic calendar, the Baker Hughes US oil rig count is due at 1800 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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