LONDON MARKET OPEN: Glencore Leads Miners Up As It Tackles Finances

Mon, 07th Sep 2015 07:34

LONDON (Alliance News) - UK shares opened higher Monday, with miners leading blue-chip gainers after Glencore detailed dramatic plans to improve its financial position.

The FTSE 100 was up 1.1% at 6,118.06, the FTSE 250 was up 0.7% at 16,921.95 and the AIM All-Share was up 0.2% at 734.30. In Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both up 1.2%.

Miners were amongst the best performers, with Glencore, up 11%, Antofagasta, up 6.3%, Anglo American, up 3.1%, BHP Billiton, up 2.7% and Rio Tinto, up 2.0%, to the FTSE 100. In the FTSE 250, Kaz Minerals was up 5% and Vedanta Resources was up 3.8%.

Glencore outlined early Monday plans to improve its financial position, including a USD2.5 billion capital raising plan and multiple capital preservation and debt reduction measures it will take, worth up to a combined USD10.2 billion in cost savings.

The multi-commodities miner and trading company, which is the worst performing stock in the FTSE 100 this year, said the USD2.5 billion fully-committed equity issue will be used to cut its debt pile and to increase its financial strength.

Outside of miners, CRH was up 1.2%. The Irish building materials company said it has appointed Senan Murphy as its group finance director, effective from January 4, 2016. The FTSE 100 company said Murphy will take over from Maeve Carton, who will move to the role of group transformation director.

Murphy joins from Bank of Ireland Group, where is currently chief operating officer. He has worked for Ulster Bank, Airtricity and General Electric in the past.

Associate British Foods was one of the two stocks trading down in the FTSE 100, after saying its expectations remain unchanged for a decline in adjusted operating profit in its current financial year.

The group, which owns discount fashion retailer Primark and British Sugar and which operates an agriculture and consumer goods arm, said that a rise in operating profit at constant currency in grocery, agriculture, ingredients and retail will be offset by a decline in the sugar business, which along with changes in foreign exchange rates will lead to an overall fall in adjusted operating profit for the full year. The company's financial year ends on September 12.

The other blue-chip trading lower was insurer Admiral Group, down 0.5%.

Shares in Tesco were flat after the supermarket chain said it has struck a deal to sell its Homeplus business in South Korea to a consortium led by private equity group MBK Partners for GBP4.24 billion.

London shares were shrugging off another negative session for Chinese stock markets, which re-opened in full after Shanghai resumed trading on Monday. The Shanghai Composite was down 2.6%, while the Hang Seng in Hong Kong was down 0.3%.

China's economy last year expanded less than the government previously announced, data published by the National Bureau of Statistics showed. Gross domestic product grew 7.3% in 2014 instead of 7.4%. GDP totaled CNY63.6 trillion, which was down by CNY32.4 billion from the initial estimate.

The revision to the service sector was the major reason for downgrading overall growth. Annual growth in the service sector was trimmed to 7.8% from 8.1%.

The meeting of the G20 finance ministers and central bank governors that concluded in Ankara on Saturday expressed concern that global growth falls short of their expectations. The participants pledged to take decisive action to keep the economic recovery on track.

In a statement released at the end of the meeting, they said, "we are confident the global economic recovery will gain speed. We will continue to monitor developments, assess spillovers and address emerging risks as needed to foster confidence and financial stability," avoiding a direct reference to China.

Meanwhile, the Japanese Nikkei 225 index closed up 0.4% on Monday.

Wall Street ended down on Friday, after a mixed US labour report that left analysts none the wiser whether the US Federal Reserve will raise US interest rates this month or later in the year. The DJIA closed down 1.7%, the S&P 500 down 1.5% and the Nasdaq Composite down 1.1%.

In the economic calendar, eurozone's Sentix investor confidence is due at 0930 BST.

By Daniel Ruiz; danielruiz@alliancenews.com