LONDON MARKET OPEN: Banking Stocks Lead Fallers Amid Recovery Fears

LONDON (Alliance News) - Shares in London opened lower Monday, led by banking stocks, after an anaemic G20 meeting outcome raised concerns over the recovery in the global economy, while gold miners benefit from a sharp increase in the metal's price.

The FTSE 100 was down 0.6%, or 35.17 points, at 6,060.84 soon after the open.

The FTSE 250 was down 0.4% at 16,495.18, and the AIM All-Share was down 0.1% at 692.02. In Europe, the CAC 40 index in Paris was down 0.8% and the DAX 30 in Frankfurt was falling 0.9%

The G20 meeting of finance ministers said the global economic recovery has continued but remains "uneven", adding the risk of Britain leaving the European Union is among the downside risks causing concern.

Following their meeting in Shanghai, the ministers said the global economic recovery has continued and said the "magnitude" of recent volatility in markets had not reflected "underlying fundamentals" of the global economy. They expect "activity to continue to expand at a moderate pace in most advanced economies, and growth in key emerging market economies remains strong."

However, the G20 ministers said the downside risks threatening recovery have continued, including volatile capital flows, a large drop in commodity prices, escalated geopolitical tensions worldwide, and the "shock" of Britain's potential exit from the EU.

"Rather predictably the G20 communique was an exercise in saying a lot, while doing very little, though the UK did get its wish of a mention that the risks of a 'Brexit' would have on the global economy," said CMC Markets Michael Hewson, who called the outcome of the meeting "disappointing".

Shortly after the open, London-listed banks were leading blue-chip fallers, with Standard Chartered down 3.6% and HSBC Holdings down 2.6%. HSBC was cut to Underperform from Market Perform by Bernstein.

Royal Bank of Scotland Group was down 1.6% at 223 pence. Societe Generale cut the lender's price target to 260p from 330p. Goldman Sachs trimmed its price target on RBS to 380p from 385p, while Nomura cut it to 275p from 300p.

Barclays was down 1.1%. The bank said it is continuing to evaluate the "strategic options" for its shareholding in Barclays Africa Group. The London-listed banking group said it will update the market on its plans for Barclays Africa Group on Tuesday, when Barclays is due to report annual results for 2015.

The bank's update comes after the Financial Times reported on Friday that Barclays has decided to exit its African operations. Barclays has a 62.3% stake in Barclays Africa.

Broadcaster ITV was downgraded to Neutral from Buy by Goldman Sachs, sending its shares down 1.2%, while at the other end of the blue-chip index, fellow television broadcaster Sky was up 1.1%, after being upgraded by Goldman to Buy from Neutral

Also in the green, gold miners Randgold Resources and Fresnillo were up 2.2% and 1.2%, respectively, amid a higher gold price. The metal was quoted at USD1,230.10 an ounce Monday after the open, above its level at the close on Friday, at USD1,216.65.

Intu Properties was up 0.9% after Merrill Lynch upgraded the shopping centres owner to Buy from Neutral, according to traders.

Distribution and outsourcing company Bunzl said its pretax profit and revenue grew in 2015, mainly through the acquisitions it has made, and as it reported yet more bolt-on deals.

The FTSE 100-listed group said pretax profit rose 7.0% to GBP322.7 million from GBP299.8 million in 2014, as revenue increased 5.0% to GBP6.49 billion from GBP6.16 billion and operating margin improved 10 basis points to 7.0%. Bunzl will pay a final dividend of 26.25 pence, taking its total dividend up to 38.0p per share, a 7.0% rise year-on-year.

The revenue growth was driven primarily by acquisitions, the company said, as organic growth for the company remained broadly flat. The company made 22 acquisitions for a total of GBP327.0 million over the course of the year, including Brazil's Dental Sorria, a dental supplies business it announced the acquisition of on Monday but bought in December.

In addition to Dental Sorria, Bunzl announced another two acquisitions on Monday, of Earthwise Bag, a reusable bags supplier based in California, and Bursa Pazari Insaat Sanayi ve Ticaret, a Turkish food packaging company company. No financial details were disclosed on the new acquisitions.

Shares in Bunzl were up 0.1%.

In the FTSE 250, Wm Morrison Supermarkets was at the top of the mid-cap index, up 5.0%. The group said it has entered a new supply agreement with US online retail giant Amazon.com and has agreed new terms in principle with online grocery delivery company Ocado Group.

Morrisons said it has struck a new supply agreement with Amazon, through which its products will be made available to Amazon Prime and Amazon Pantry, Amazon's food service, customers. Morrisons will provide a wholesale supply services to Amazon, allowing customers of Amazon to access a wide range of Morrisons ambient, fresh and frozen products.

Amazon Pantry currently provides only packaged food.

In addition, Morrisons has been in talks with Ocado to grow its Morrisons.com online grocery business and the pair have now reached an agreement in principle under which Morrisons will take space at Ocado's new Customer Fulfilment Centre in Erith and Ocado will deliver a "stock pick" service to Morrisons.

This, Morrisons said, will allow its online service to delivery groceries to customers across the UK. No financial details on the agreement were disclosed, and Morrisons said there is no certainty an agreement can be concluded.

Shares in Ocado Group were at the bottom of the FTSE 250, down 5.5%.

In Asia on Monday, the Japanese Nikkei 225 index closed down 1.0%.

Japan's housing starts increased unexpectedly in January, after falling in the previous month, data from the Ministry of Land, Infrastructure, Transport and Tourism showed. Housing starts rose 0.2% year-over-year in January, confounding economists' expectations for a 0.3% drop. In December, it had fallen 1.3%. The number of annualized housing starts grew to 873,000 in January from 860,000 in the preceding month. It was expected to rise to 862,000.

In China, the Shanghai Composite ended down 2.9%, while the Hang Seng index in Hong Kong closed down 1.3%.

In the economic calendar Monday, UK consumer credit and mortgage approvals are due at 0930 GMT. Eurozone's consumer price index is due at 1000 GMT. In the US, the Chicago purchasing manager's index is due at 1445 GMT, while US pending home sales are due at 1500 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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