LONDON (Alliance News) - Stocks in the UK have opened Tuesday mixed following a long weekend break, but shares in Alliance Trust moved decisively higher after RIT Capital confirmed a "very preliminary" interest in the company.
The Financial Times had reported over the weekend that RIT, the FTSE 250 investment trust chaired by Jacob Rothschild, had approached Alliance Trust about a tie-up. A deal would create a company with a value by market capitalisation of more than GBP5.0 billion.
"The possibility of combining the two companies for the benefit of both sets of shareholders is at a very preliminary stage of consideration," RIT said in a statement.
Under takeover rules, RIT must announce a firm intention to make an offer for Alliance Trust by 1700 BST on June 27 or walk away.
Alliance Trust was the biggest gainer in the FTSE 250, up 3.7% after the news. RIT traded down 1.5%.
The FTSE 100 index was up 0.2%, or 15.05 points, at 6,285.84. The FTSE 250 was up 0.1% at 17,242.92, and the AIM All-Share was down 0.1% at 735.10.
European stocks were modestly lower, with the CAC 40 in Paris down 0.1% and the DAX 30 in Frankfurt posting slim losses.
In Asia on Tuesday, the Japanese Nikkei 225 index closed up 1.0% and the Shanghai Composite ended up 3.3%. The Hang Seng continues up 1.3%.
IG Group shares traded up 1.8% after the online trading company said it now expects its full-year earnings to be slightly ahead of previous expectations.
In a trading update for the final quarter of the financial year ending Tuesday, IG said it performed "well" during what turned out to be a "relatively quiet" fourth quarter of the year in financial markets. All key operating and financial metrics remained strong, IG said.
"As outlined in the third-quarter trading update, this continued robust performance has resulted in higher variable operating costs in the last part of the year, including an increase in online marketing spend, where the payback remains compelling. This cost increase was more than offset by the ongoing strength in trading revenue, meaning the company now expects full-year earnings to be slightly ahead of expectations," IG said in a statement.
St Modwen Properties said it has experienced "a good start to the year", as its portfolio benefited from strong investment activity made at the end of 2015.
The FTSE 250-listed group, which focuses on regenerating brownfield sites and building residential developments, said in the six months to May 31, its annualised rent roll grew to GBP60.0 million, having been GBP58.4 million at its year-end on November 30. This "now covers the operating costs of the business which further underlines our strong financial base," the company said.
St Modwen Properties said it continued to add new opportunities to its commercial development pipeline in the period, with the pipeline now standing at 1.7 million square feet and comprising of "a variety of uses". The stock traded up 0.3% in early trade Tuesday.
In the economic calendar, German unemployment is at 0855 BST. Unemployment and inflation numbers from the eurozone are at 1000 BST. The consensus forecast according to FXStreet for the preliminary reading of eurozone consumer price index for May is a 0.1% year-on-year decline, slowing from a 0.2% decline seen in April.
The focus in the afternoon will be on US personal consumption expenditure at 1330 BST, the Fed's preferred measure of inflation. Consumer confidence is later at 1500 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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Alliance Trust (ATST)
IG (IGG)
RIT Capital Partners (RCP)