UK MIDDAY BRIEFING: FTSE 100 Heads For Sixth Daily Gain

LONDON (Alliance News) - The FTSE 100 looks set to post its sixth consecutive daily rise Friday, as it nears its 2014 high amid a continuing rally in stock markets around the world, largely driven by the recovery of the world's largest economy.

The focus in London Friday has been on individual stocks, as the markets shrugged off UK retail sales figures that missed analysts' forecasts.

Pharma giant GlaxoSmithKline is among the leading gainers after it said Incruse, a treatment for chronic obstructive pulmonary disease, has been recommended for marketing authorisation by the European Medicines Agency's committee for Medical Products for Human Use, a key step in getting approval for the drug.

Glaxo is being outperformed by The Royal Bank of Scotland Group after the Financial Times quoted people familiar with the bank's plans saying it is preparing a dramatic retrenchment that would see it become a much smaller UK retail and commercial bank, including a reduction in staff numbers of at least 30,000 in coming years.

Shore Capital said that if the move proves correct, it is likely to result in a, "smaller but more efficient, higher return and less risky bank."

Royal Dutch Shell, meanwhile, now has a binding agreement to sell its Australia downstream businesses, excluding Aviation, to Dutch-owned oil trader Vitol for USD2.6 billion. The deal is expected to close in 2014. The oil major's asset disposal programme continues apace - it has also sold assets in the North Sea and its Australian Wheatstone liquid natural gas project so far this year.

On the FTSE 250, IP Group has jumped after it said portfolio company Xeros Ltd intends intends to float on AIM to raise funds to bring its patented polymer bead cleaning system to the laundry market.

Millennium & Copthorne Hotels Group is also doing well after it reported higher revenues and profits for 2013. The improvement was solely due to a one-off profit boost from its Glyndebourne property development in Singapore at the end of the fourth quarter, and it said its room refurbishment programme would continue to weigh on its results this year, but its stock is one of the best performing on the index Friday.

On AIM, the Real Good Food Company has seen more than a quarter of its value wiped out after the baker and sugar producers said it is in a pricing dispute with Associated British Foods' British Sugar unit, a major supplier to Real Good Food Co's Napier Brown non-refining sugar distribution business.

Real Good Food, which has complained to the Office of Fair Trading that British Sugar is charging too much and abusing its dominant position in the UK sugar market, says the dispute is unlikely to be resolved quickly and will weigh on its results this year and next. ABF declined to comment.

In economic news, the Office for National Statistics said British retail sales declined more than expected in January due to a notable decrease in food store sales. According to its latest figures, retail sales, including automotive fuel, fell 1.5% month-on-month in January, the first decline in three months. Economists were expecting sales to fall 1% after posting a 2.5% rise in December.

Sales excluding automotive fuel, also decreased by 1.5% in January versus the 2.7% increase a month ago. Sales were forecast to drop 1.2%. Food store sales slipped 3.4% from December, while non-food store sales gained 0.4% in January.

The ONS also reported that the UK's budget surplus declined unexpectedly in January from the same period of last year. Public sector net borrowing excluding temporary effects of financial interventions was -GBP4.7 billion in January compared to -GBP6 billion last year. The surplus was expected to rise to GBP8 billion. The January figure excludes a GBP3.8 billion asset purchase facility transfer.

G20 finance and central bank chiefs will meet in Sydney this weekend, and Australia's economics minister Joe Hockey has said multinationals that shift revenue around the world to pare their tax bill will be in the firing line. "Where you earn the money you pay the tax," Hockey said.

In recent days, Hockey has also said Australia would join the UK in opposing a push for more regulation and a tax on transactions at the meeting, while he also urged the world's biggest economies to put economic growth ahead of deficit reduction and set ambitious national targets for output and jobs.

In political news, there is confusion over whether a deal has actually been agreed to end the crisis in Ukraine.

A deal between President Viktor Yanukovych and opposition leaders has not been reached, a top European diplomat said Friday, moments after the president had announced that an agreement had been finalized. The president had said an agreement to end three months of anti-government protests and unrest would see the formation of an interim government, constitutional amendments and an early presidential election.

Elsewhere, China has urged the US to cancel a meeting between US President Barack Obama and the Dalai Lama at the White House, saying it would cause "serious damage" to ties between the two countries and amount to interference in China's domestic affairs, Foreign Ministry spokeswoman Hua Chunying said. Caitlin Hayden, spokeswoman for the National Security Council, said the US recognizes Tibet to be part of China, but is "concerned about continuing tensions and the deteriorating human rights situation in Tibetan areas of China."

Iran is complying with obligations under an interim agreement with six world powers by curbing its nuclear activities and allowing more intrusive inspections, The International Atomic Energy Agency said in its second positive assessment. The UN nuclear watchdog issued its report hours after Iran and the six nations agreed to an intensive schedule of talks to reach a comprehensive agreement and resolve the standoff over Tehran's nuclear programme.

Italy's prime ministerial designate, Matteo Renzi, is due to present his government team on Friday, a day earlier than expected. The outgoing mayor of Florence and leader of the centre-left Democratic Party, has been negotiating a coalition pact with the New Centre Right party of Angelino Alfano and smaller centrist and leftists groupings.

Libyans have voted to elect members of an assembly that will draft a new constitution, which many hope will avert violence between rival militas and armed factions. Turnout was reported to be low. Many Libyans are disillusioned with politics three years after the outbreak of the revolt that ended with the caputre and killing of Moamer Gaddafi.

A draft UN Security Council resolution on humanitarian aid access in war-torn Syria has been finalized and will be put to vote Saturday morning. The draft backed by Western and Arab states calls for ending violence against civilians, allowing humanitarian aid into Syria and also makes provision for the use of force in the case of non-compliance. The text calls for lifting the siege of several areas, including Old City Homs, Aleppo and Damascus, to allow civilians to leave and get access to food and medical help.

UN Secretary General Ban Ki-moon presented a six-point action plan to the UN Security Council, saying immediate measures are needed to stop violence in the Central African Republic. The secretary general appealed for 3,000 additional troops, increased funding, political support to establish a functioning government in the country and assistance to get the peace process underway.

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FTSE 100: Up 0.2% at 6,827.14
FTSE 250: Up 0.3% at 16,410.52
AIM ALL-SHARE: Down 0.1% at 881.62
GBP-USD: 1.6670
EUR-USD: 1.3709
GOLD: USD1,322.50 an ounce
OIL (Brent): USD110.06 a barrel

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KEY UK CORPORATE NEWS:

FTSE 100: Legal & General has expanded its investment management arm in the world's largest economy by buying Atlanta-based Global Index Advisors Inc for up to USD50.4 million. The British insurer had wanted to expand its international investment management operations to help drive growth, and the Global Index deal, its first acquisition in the US, means its US investment management unit now has proforma assets of over USD50 billion. It said the acquisition will give it scale in the USD6 trillion US defined contribution market. It will pay USD30.75 million initially, a further USD1.5 million over the two years following completion, and up to USD18.15 million more over the three years following completion, subject to the performance of Global Index and its ability to grow assets. Rolls-Royce Holdings has won a USD182.7 million extension on its contract to provide support for the US Air Force's C-130J transport plane fleet. The British company looks after the AE 2100 engines on the planes. Tullow Oil said the operator of the Langlitinden prospect in Norway, in which it has a 15% stake, had failed to find any oil. The well on the site will be plugged and abandoned. HSBC Holdings has appointed former US SEC Commissioner Kathleen Casey as a Director with effect from March 1. BT Group has told Ofcom that it will raise prices for wholesale line rental and metallic path facility rentals to cover the three months when it is free of the regulator's charge controls. It said will hike prices to the top end of the range that Ofcom has proposed for the new charge controls regime.

FTSE 250: Informa pledged to deliver further growth in adjusted earnings per share in 2014, as it reported improved revenue and pretax profit for 2013 in the first set of results under new Chief Executive Stephen Carter. The new CEO said a key objective for Informa in 2014 will be managing the transition in leadership as smoothly and effectively as possible. He set out two major challenges for Informa: addressing the shift in technology happening in Informa's market, and returning the company's Business Intelligence division to growth.

AIM: Churchill Mining shares have jumped after the thermal coal producer said it expects to receive a ruling on its international arbitration claim against the Republic of Indonesia on February 24. Shares in Planet Payment have also risen after it applied for 21,892 new shares to be admitted to trading to cover the exercise of warrants. Pentagon Protection is doing well after it said it swung to a pretax profit as revenue more than doubled in its last financial year. At the other end of the market, Airea shares have plummeted after pretax profit and revenues fell during the half-year, as it continues restructuring plans amid ongoing "hostile market conditions."

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AFTERNOON WATCHLIST: US Existing Home Sales, Fed's Bullard Speech, Finance Ministers and Central Banks Arrive For G20 Meeting

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Monday's Key UK Corporate Events

HSBC Full Year Results
Associated British Foods Trading Statement
XP Power Full Year Results
Bovis Homes Full Year Results
Bunzl Full Year Results
Hiscox Full Year Results
Dialight Preliminary Results

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Monday's Key Economic Events

01:30 China House Price Index
09:00 Germany IFO - Expectations
10:00 EU Consumer Price Index
13:30 US Chicago Fed National Activity Index
13:58 US Markit Services PMI Preliminary
15:30 US Dallas Fed Manufacturing Business Index

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By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance

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