LONDON MARKET OPEN: Aviva rises as Italy exit begets capital return

(Alliance News) - Stock prices in London opened lower on Thursday as widening bond yields in the US continued to raise concern about rising inflationary pressure, while Aviva rose as it pressed ahead with transformation plans.

The 10-year US Treasury note yield firmed to 1.48%, having encroached upon 1.5% earlier.

The FTSE 100 index was down 36.35 points, or 0.5%, at 6,639.12. The mid-cap FTSE 250 index was down 110.09 points, or 0.5%, at 21,326.23. The AIM All-Share index was down 0.3% at 1,184.46.

The Cboe UK 100 index was down 0.4% at 662.50. The Cboe 250 was down 0.5% at 19,004.85, but the Cboe Small Companies was up 0.1% at 13,492.82.

In mainland Europe, the CAC 40 in Paris was down 0.3% while the DAX 30 in Frankfurt was down 0.6%.

In the FTSE 100, Aviva was the best performer, up 3.5%, after the insurer said it will sell its remaining Italian life and general insurance businesses for EUR873 million in cash and promised to return the proceeds of its programme of streamlining the company to shareholders.

Aviva will sell its general insurance business in Italy to Germany's Allianz for EUR330 million and life insurance business to French insurance firm CNP Assurances for EUR543 million.

Upon her appointment, Chief Executive Officer Amanda Blanc set out to streamline the business by focusing on markets in the UK, Ireland and Canada.

For 2020, Aviva posted adjusted operating profit of GBP3.16 billion, down 0.6% from GBP3.18 billion in 2019. The insurer declared a 2020 total dividend of 21 pence, up 35% from 15.5p per share in the prior year.

B&M European Value Retail was up 2.5% after the discount retailer said it expects adjusted financial 2021 earnings before interest, tax, depreciation and amortisation in a range of GBP590 million to GBP620 million. It posted adjusted Ebitda of GBP342.3 million in financial 2020.

CRH was up 1.5%. The Irish building materials firm CRH said it delivered a robust performance in a challenging environment due to Covid-19 related disruption in key construction markets of North America and Europe.

For 2020, revenue was USD27.6 billion, down 1.8% from USD28.1 billion in 2019, and profit before tax from continuing operations was USD1.66 billion, down 24% from a restated USD2.18 billion.

CRH raised its annual dividend 25% to 115.0 cents with 93.0 cent final payout and said it plans to resume its share buyback programme with USD0.3 billion by end of June.

At the other end of the large caps, Rio Tinto and BHP were the worst performers, off 6.5% and 4.5% respectively. Shares in the Anglo-Australian miners went ex-dividend meaning new buyers no longer qualify for the latest payout.

Scottish Mortgage Investment Trust, which backs high-profile US tech stocks Tesla and Amazon, was down 4.6% amid a fall in the tech-heavy Nasdaq Composite index, which closed 2.7% lower on Wednesday. Tesla and Amazon ended down 4.8% and 2.9% respectively.

InterContinental Hotels Group was 1.5% lower after JPMorgan downgraded the Holiday Inn and Crowne Plaza chains owner to Underweight from Neutral.

Schroders was 1.1% lower. The wealth manager said it delivered annual strong results, despite challenging market conditions.

For 2020, net income was GBP2.18 billion, up from GBP2.12 billion in 2019, while pretax profit fell to GBP610.5 million from GBP624.6 million. Schroders said it generated net flows of GBP42.5 billion, and assets under management increased 15% to a record high of GBP574.4 billion from GBP500.2 billion in 2019.

The asset manager declared a 2020 total dividend 114.0p per share, unchanged from 2019.

The Japanese Nikkei 225 index closed 2.1% lower on Thursday. In China, the Shanghai Composite ended down 2.1%, while the Hang Seng index in Hong Kong closed down 2.2%.

The pound was quoted at USD1.3962 early Thursday, down from USD1.3988 at the London equities close Wednesday.

The euro was priced at USD1.2050, lower from USD1.2077. Against the yen, the dollar was quoted at JPY107.17, up from JPY106.87.

Brent oil was trading at USD64.70 a barrel Thursday morning, up from USD64.16 late Wednesday.

Members of the OPEC group of oil producers and allies are expected to raise output in a meeting Thursday, in response to a rebound in demand and prices.

While the so-called OPEC+ group is often at loggerheads over how much oil to pump to the market, a sudden plunge in prices triggered by the coronavirus pandemic led members to agree on a dramatic cut in output to underpin prices.

Now that vaccination campaigns are underway and demand from China, the world's largest oil importer, has bounced back to pre-pandemic levels, the success of the meeting on Thursday will hinge on whether heavyweights Russia and Saudi Arabia can agree on a way forward.

Gold was quoted at USD1,716.37 an ounce, down from USD1,722.45.

Thursday's economic calendar has US initial jobless claims at 1330 GMT, after construction PMIs from the eurozone at 0900 GMT and the UK at 0930 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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