LONDON MARKET OPEN: Bunzl Dips After Interims; Gold Miners Shine

(Alliance News) - Stock prices opened broadly lower on Tuesday in London, with miners benefiting from a higher gold price and Bunzl falling despite a slight rise in interim profit.

The FTSE 100 index of large-caps was down 26.81 points, or 0.4%, at 7,068.17.

The FTSE 250 was down just 3.22 points at 19,232.91, and the AIM All-Share was marginally lower at 871.26.

The Cboe UK 100 index was down 0.6% at 11,980.52. The Cboe UK 250 was down 0.3% at 17,108.22, and the Cboe UK Small Companies was up 0.1% at 10,913.41.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were 0.3% and 0.2% lower, respectively.

Continued worries over trade wars - despite conciliatory words on Monday - have helped gold stocks, with the precious metal seen as a safe haven asset.

Gold was at USD1,534.30 an ounce early Tuesday, up from USD1,525.07 late Friday. The price has risen 8.2% this month and 19% over the last three months. The metal reached a six-year high on Monday.

Fresnillo, in the FTSE 100, was 3.2% higher early on, while mid-cap peers Hochschild Mining and Centamin were up 1.9% and 2.5%, respectively.

FTSE 100 distribution firm Bunzl fell 2.1% as it reported a slight rise in profit for the six months to June, while reporting slowing market conditions.

Pretax profit climbed 1.6% to GBP200.5 million, with the adjusted figure climbing 2.7% to GBP264.2 million. Bunzl's revenue rose 4.3% to GBP4.53 million.

Bunzl has increased the interim dividend by 2.0%, to 15.5 pence per share.

"Against the background of slowing macroeconomic and market conditions across the countries and sectors in which we operate, Bunzl has produced a resilient operating performance with high cash conversion and an increased dividend," said Chief Executive Frank van Zanten.

"Looking forward, the group's expectations for 2019 remain unchanged. Despite continuing economic uncertainties, the board believes the combination of our strong competitive position, diversified and resilient businesses and ability to consolidate our fragmented markets will lead to further progress. We have a strong balance sheet and are in active discussions with a number of acquisition targets which we anticipate will result in additional deals during the remainder of the year."

In the FTSE 250, Russian gold miner Polymetal International climbed 2.0% as it reported a 20% rise in revenue for the first half of 2019 to USD946 million, mainly driven by a 22% increase in gold equivalent production. Gold sales climbed 36% year-on-year to 604,000 ounces, with prices flat on a year before.

Polymetal's adjusted earnings before interest, tax, depreciation, and amortisation rose 34% to USD403 million, "mostly driven" by higher output, though net earnings fell 13% to USD153 million due to foreign exchange.

The company has increased the interim dividend by 18% to 20 US cents, and has reiterated 2019 production guidance of 1.55 million ounces of gold equivalent.

Elsewhere, on the Main Market, Bank of Cyprus fell 4.3%. It reported a 3.8% drop in net interest income for the six months to June to EUR204.1 million, though its pretax loss narrowed significantly to EUR15.7 million from EUR55.9 million.

The lender's common equity tier 1 ratio for the half-year was 15.2%, compared to 14.9% at December's end, with gross loans dipping 1% to EUR13.07 billion and customer deposits falling 3% to EUR16.38 billion.

The company has also received European Central Bank approval for the appointment of Panicos Nicolaou as chief executive, effective from the start of September.

US President Donald Trump said Monday US and Chinese trade negotiators would "very shortly" resume talks in what he described as a breakthrough in the two economic superpowers' trade war.

"China called last night..., said let's get back to the table. So we'll be getting back to the table," Trump told reporters at the G7 summit in Biarritz, France.

Trump said Chinese officials had made two "very, very good calls" and that "they want to make a deal".

The president's tone was in marked contrast to the steady hardening of positions in the number one and two economies. Just on Friday, Trump sharply raised tariffs on all Chinese imports after Beijing hiked its own levies.

In the US on Monday, Wall Street ended higher, with the Dow Jones Industrial Average closing up 1.1%, the S&P 500 also up 1.1%, and the Nasdaq Composite 1.3% higher.

The Japanese Nikkei 225 index ended 1.0% higher Tuesday. In China, the Shanghai Composite closed up 1.4%, while the Hang Seng index in Hong Kong is down 0.3% in late trade.

In the UK, Jeremy Corbyn has insisted Labour will "do everything necessary" to halt a no-deal Brexit as he meets other senior members of Parliament to try to find a way to challenge UK Prime Minister Boris Johnson over EU withdrawal.

Before discussions on Tuesday with leading Commons figures opposed to breaking EU ties without an agreement in place, Corbyn insisted the country was heading for a crisis under the prime minister.

A no-deal exit from the EU would amount to a "bankers' Brexit" benefiting the rich, Corbyn said.

Johnson acknowledged on Monday reaching a new withdrawal deal with the EU will be a challenge as there was "substantial disagreement" between the two sides, but said he remained committed to trying.

Johnson also clashed with EU officials over whether Britain must pay the so-called divorce bill agreed with the EU in negotiations over the past few years - even in the event of a no-deal Brexit.

The pound was quoted at USD1.2222 on Tuesday, down from USD1.2274 late Friday.

Germany confirmed Tuesday its economy shrank modestly in the second quarter after foreign trade crimped growth from the largest eurozone economy.

Second estimate data from Destatis showed gross domestic product in the second quarter of 2019 shrank 0.1% on the first quarter. This is in contrast to the 0.4% quarter-on-quarter growth reported in the first quarter.

The second quarter figure was in line with the initial GDP estimate given in mid-August.

"The development of foreign trade slowed down economic growth in the second quarter of 2019," Destatis said in a statement.

Still ahead in the economic calendar on Tuesday is US consumer confidence at 1500 BST.