LONDON MARKET OPEN: Stocks Up With Miners And SABMiller On Top

LONDON (Alliance News) - Stocks in London opened higher Wednesday, with some miners benefiting from broker upgrades and SABMiller pushing higher after Anheuser-Busch InBev said it has made a new "highly attractive" offer for the London-listed brewer, having seen two other informal offers rejected.

The FTSE 100 was up 0.3% at 6,341.72 points, the FTSE 250 was up 0.2% at 17,161.10 and the AIM All-Share was up 0.1% at 734.44. In Europe, the French CAC 40 was up 0.4% and the German DAX 30 was up 0.6%.

Belgian-American brewing giant AB InBev said it has made a bid for SABMiller at 4,215 pence per share, valuing the London-listed brewer at GBP68.2 billion overall. AB InBev said it has had two informal offers for SABMiller, of 3,800p and 4,000p, rejected. It said it was "disappointed" SABMiller's board had rejected the two previous approaches "without any meaningful engagement".

SABMiller shares were up 2.7% at 3,707.70p at the open.

AB InBev said the revised proposal should be highly attractive to SABMiller shareholders, representing a 44% premium to SABMiller's share price on September 14, when the talks between the two were first revealed following press reports that the world's two largest brewers could merge.

AB InBev's confidence in the takeover offer was nearly immediately backed by Altria, the US tobacco company and a major shareholder in SABMiller. Altria said in a statement on Wednesday morning that it supports the current takeover bid and has called on the SABMiller board to "engage promptly and constructively with AB InBev" in order to agree terms on a recommended offer.

"We believe this represents a good deal for SABMiller shareholders and ultimately we expect a deal to be agreed although the dance could continue for a while yet," said Shore Capital analyst Phil Carroll.

Mining stocks Anglo American, up 5.2%, Rio Tinto, up 5.2% and BHP Billiton, up 3.9% were the top three performers in the blue-chip index after being upgraded by Morgan Stanley.

The broker lifted BHP Billiton and Rio Tinto to Overweight from Equal-Weight and raised Anglo American to Equal-Weight from Underweight.

Meanwhile, Marks & Spencer Group was down 1.8% after JPMorgan cut to it to Underweight from Neutral.

Shares in Tesco also fell after the supermarket chain said it made a profit in the first half of its financial year, having suffered a loss in what was a very tumultuous time for the business last year, but its sales still fell in a challenging UK grocery market.

The supermarket chain reported a GBP74 million pretax profit in the 26 weeks ended August 29, an improvement on the GBP19 million pretax loss a year before. Revenue, however, fell 1.9% to GBP23.94 billion from GBP24.27 billion.

Tesco said that sales were hit by weak European currencies against strong sterling, but that it is seeing year-on-year growth in the UK in transactions and volumes.

In the FTSE 250, John Wood Group was up 2.9% after it said it has secured a "multi-million dollar" contract from US-based firm Betchel to provide services in Kazakhstan for a project owned by a joint venture between Chevron and Exxon.

Under the deal, the company's US subsidiary, John Wood Mustang, will provide an automation service consisting of detailed engineering, control hardware and remote instrument enclosures for a crude storage capacity project at the Tengiz field in Kazakhstan.

In Asia on Wednesday, the Hang Seng in Hong Kong is up 2.2%, while the Shanghai market is closed until Thursday. The Japanese Nikkei 225 index closed up 0.8%

The Bank of Japan refrained from adding more monetary stimulus on Wednesday, despite fears of looming recession as the slowdown in emerging economies hurts exports and production. The Policy Board of the BoJ governed by Haruhiko Kuroda decided by an 8-1 majority vote to maintain its target of raising the monetary base at an annual pace of about JPY80 trillion.

Meanwhile, the leading index for Japan, which measures the future economic activity, dropped by less than expected to the lowest level in 15 months in August, preliminary figures from the Cabinet Office showed Wednesday. The leading index dropped to 103.5 in August from 105.0 in the previous month. Economists had expected the index to fall to 103.4.

Outside Asia, Germany's industrial production declined unexpectedly in August, data from Destatis revealed Wednesday. Production declined 1.2% month-on-month in August, offsetting the 1.2% rise seen in July. Economists had forecast the growth rate to ease to 0.2%. July's growth was revised up from 0.7%. Excluding energy and construction, production in industry decreased 1.1% in August.

UK manufacturing and industrial production data are set for 0930 BST. UK industrial production is estimated to have risen by 0.3% after a negative 0.4% in July, while manufacturing production is expected to rise 0.3% having declined by 0.8% the previous month.

Also in the economic calendar Wednesday, UK NIESR gross domestic product estimates are due at 1500 BST. In the US, EIA crude oil stocks are expected at 1530 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

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