UK MIDDAY BRIEFING: BOE Policy Makers Still Unanimous

LONDON (Alliance News) - Bank of England policymakers unanimously decided to leave the key interest rates and asset purchase programme unchanged at the monetary policy meeting held on June 4 and 5, the minutes of the meeting showed Wednesday.

All nine members of the Monetary Policy Committee voted to retain the record low 0.50% interest rate and quantitative easing at GBP375 billion.

The case for raising the bank rate gradually and cautiously was reinforced by uncertainty over its likely impact on the economy, the minutes said.

The pound jumped against the dollar to a session high of USD1.7002, as the minutes noted surprise amongst the MPC members at market expectations of a late timing for the first UK interest rate rise, given the possibility that the improving economy may use up slack faster than expected. However, sterling has now lost those gains.

"The relatively low probability attached to a Bank Rate increase this year implied by some financial market prices was somewhat surprising," the minutes read. Market prices have been suggesting a 15% chance of a rate rise before the end of the year.

The attention now turns to the results of the latest Federal Reserve policy meeting, due after the European markets close Wednesday.

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FTSE 100: up 0.4% at 6,790.60
FTSE 250: up 0.2% at 15,611.95
AIM ALL-SHARE: up 0.03% at 786.04
GBP-USD: down at 1.6944
EUR-USD: up at 1.3565
GOLD: flat at USD1,271.15 an ounce
OIL (Brent): up at USD113.53 a barrel
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Other Top UK Corporate News
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Royal Dutch Shell and state-owned China National Offshore Oil Corporation said they'd signed a new strategic alliance agreement, which largely reaffirms a previous alliance deal the companies had but also commits them to exploring cooperation opportunities in areas from oil exploration to refining. In a joint statement, the companies said they'd committed to exploring potential cooperation opportunities in so-called upstream, midstream and downstream operations.
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Serco Group's new chief executive, Rupert Soames, made his first move to stamp his strategy on the struggling company by taking closer control of the company's operations in the Middle East and Asia-Pacific, and saying it won't be bidding for a UK rail franchise with its current partner on that franchise. In a statement, Serco said it would be restructuring its Africa, Middle East, Asia and Australasia operations as the current chief executive of the division, David Campbell, retires. Campbell had already extended his service beyond his planned retirement date, but will now retire at the end of 2014 after more than 20 years at Serco.
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Housebuilding company Berkeley Group Holdings reported a 40% increase in profit for its recent full year, boosted by its residential business which completed 30% more homes than at the peak of the market in 2007. The FTSE 250 company, which is made up of four autonomous companies: St George, St James, Berkeley and St Edward, posted pretax profit of GBP380.0 million for the year ended April 30, up from GBP270.7 million a year earlier, as revenue rose to GBP1.62 billion from GBP1.37 billion. Berkeley said it will pay a further interim dividend of 90 pence per share compared with an interim dividend of 59 pence per share a year earlier. At the half year to October 31, 2013 the firm paid an interim dividend of 90 pence, up from 15 pence in the previous year.
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Premier Foods warned that sales of its so-called power brands are expected to have fallen in the second quarter of the year, and will no longer meet the growth expectations set for the full year, but the company said it is retaining its overall profit expectations for 2014 because it will offset the shortfall with cost control. In a statement, the owner of brands including Ambrosia custard, Bisto gravy granules, Sharwood's sauces and Mr Kipling cakes said it no longer expects sales of its power brands to grow 2% to 3% in 2014 due to "subdued" grocery markets. It didn't give a new forecast. It also said it will create a joint venture called Knighton Foods with Specialty Powders Holdings Ltd, to manufacture powdered beverages and desserts.
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Property website Zoopla Property Group and ventilation products supplier Volution Group got off to contrasting starts in early dealings after their initial public offerings, with Zoopla rising well above its 220 pence IPO price and Volution dropping slightly below its 150 pence starting price. The IPOs valued Zoopla at just over GBP900 million, and Volution at GBP300.0 million. Zoopla didn't issue any new shares, as its current shareholders took advantage of the current recovery in the UK housing market and a stronger IPO market to sell some of their existing stakes. Daily Mail and General Trust is retaining at least a 31% stake in the business, Countrywide will hold a 4.1% stake, and LSL Property Services, which is returning its proceeds to its shareholders, will hold a 2.6% stake. Volution raised GBP100 million in its IPO, using GBP72 million to repay debt and the rest for general purposes.
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AIM MOVERS
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Amphion Innovations is up after its pretax loss narrowed in 2013 as administrative cost cutting more than offset a revenue decline. Connemara Mining Company is up 6.9% after it reported a wider loss for 2013, but said there will be gold drilling later this year and it had got interest from potential investors who want to "redirect strategy into new resource areas." Corero Network Security is another gainer after it won its largest ever contract for its product that protects networks and devices from so-called denial-of-service attacks. Corero said the order with an unnamed US financial services company is worth USD500,000. ReNeuron Group is doing well, even though it posted a widened loss in the year to end-March due to higher research and development costs. It expressed confidence in its future as it continued to develop its stem-cell therapies towards commercialisation. London Capital Group Holdings is down after it said late Tuesday that it plans to raise up to GBP17.5 million through a proposed refinancing as part of its plan to return to growth. Sound Oil is also down after it completed the due diligence and signing of investment agreements in relation to GBP14 million of institutional funding it announced in April. The company had expected to complete this process in July. Aurasian Minerals is another faller after it said it will make a provision against the GBP500,000 carrying value of its investment in the Manus Island joint venture after partner Newcrest Mining Ltd decided to withdraw from the venture from July 16. Aurasian said the impact of the Newcrest decision, the transfer of the tenements, and "the mechanics of closure" will be discussed at a joint venture meeting to be held on July 31. GW Pharmaceuticals is down after it plans to sell 1.7 million American depositary shares in a public offering on NASDAQ. The price of the offering has not yet been decided.
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Top Economics And General
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Fighters of the radical Islamic State in Iraq and the Levant have taken control of Iraq's largest oil refinery - in Baiji, 200 kilometres north of Baghdad - officials say. Fierce clashes were reported at the refinery, with jihadist fighters shelling parts of the facility and hitting a storage tank. Smoke could be seen from 50 kilometres away, local sources and witnesses said. The Iraqi air force hit positions held by the Sunni militants in response, the All Iraq News agency said. Baiji has been the scene of intermittent fighting since ISIL launched its blitz against Iraqi government forces last week, seizing the northern city of Mosul and a string of towns stretching south towards Baghdad.
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About 60 foreigners - including 15 Turks and citizens of Pakistan, Nepal and Turkmenistan - have been kidnapped by the Islamic State of Iraq and the Levant in northern Iraq, Turkey's Anadolu news agency reported. The agency cited a person who escaped the hijacking. The source said that about 40 people managed to evade capture.
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Members of the Bank of Japan's monetary policy board said that the nation's economy is likely to continue its moderate recovery, minutes from the central bank's meeting on May 20 and 21 revealed. The board also cautioned that there remained some downside risks to recovery, including developments in emerging markets and commodity-exporting countries. The monetary easing that is in place appears to be having the intended results, the board said, as inflation expectations appear to be rising.
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A unilateral ceasefire by the Ukrainian government in its conflict with pro-Russian separatists in the country's east will be very short and designed to allow insurgents to lay down their arms, President Petro Poroshenko said. Poroshenko told journalists in Kiev that the insurgents would have to disarm and that order had to be reinstated in the regions "in a very short time," according to the Interfax Ukraine news agency. "Immediately afterwards, we must receive support for the peace plan from all sides," he said.
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The arrest of a key suspect in the deadly 2012 attack on a US consulate in Benghazi, Libya, shows US resolve to "do whatever it takes to see that justice is done when people harm Americans," President Barack Obama said Tuesday. Ahmed Abu Khatallah, believed to be one of the key ringleaders of the attack in which four Americans including the US ambassador were killed, was captured Sunday near Benghazi by US special forces and agents of the Federal Bureau of Investigation, US authorities announced. "He is in US custody in a secure location outside of Libya," said Rear Admiral John Kirby, Pentagon spokesman. "There were no civilian casualties related to this operation, and all US personnel involved in the operation have safely departed Libya."
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US drones killed six militants in Pakistan's tribal region where the country's army was engaged in a ground offensive against groups linked with al-Qaeda, officials said. Unmanned aircraft fired missiles targeting two militant hideouts in the Darga Mandi area of the North Waziristan tribal district near the Afghan border, security officials said. "At least six militants were killed in both attacks," the official said, requesting anonymity. "Their identities are not known yet."
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Fourteen Nigerian football fans were killed when a suicide bomber attacked a World Cup viewing centre in northern Yobe State, police said Wednesday. The attack, in which 26 were wounded, took place Tuesday evening in the town of Damaturu, during the Brazil-Mexico match. "A loud explosion was heard immediately after the night prayer. It happened at Jamilu Cross viewing centre," resident Alhaji Ishiaku Yakub told dpa. Police have implemented tight security measures in many northern towns to prevent attacks during the World Cup. In Adamawa State, also in the north, the government decided to close all public viewing centres.
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Afternoon Watchlist (all times British Summer Time)
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15:30 US EIA Crude Oil Stocks change
18:45 US Former Fed's Bernanke speech
19:00 US Fed Interest Rate Decision
19:00 US FOMC Economic Projections
19:30 US Fed's Monetary Policy Statement and press conference

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Thursday's Key UK Corporate Events
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Charles Stanley Full Year Results
Norcros Full Year Results
Darty Full Year Results
Micro Focus International Full Year Results
Infinis Energy Full Year Results
Liontrust Asset Management Full Year Results
Go-Ahead Group Trading Statement

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Thursday's Key Economic Events (all times British Summer Time)
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All Day EU Eurogroup meeting
09:30 UK Retail Sales
11:00 UK CBI Industrial Trends Survey - Orders
13:30 US Jobless Claims
15:00 US Philadelphia Fed Manufacturing Survey
15:30 US EIA Natural Gas Storage change
20:00 US American Petroleum Institute Monthly Report

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