UK MORNING BRIEFING: Chinese Inflation Slows To Five-Year Low

LONDON (Alliance News) - UK shares have opened mixed Tuesday after a second disappointing reading of the Chinese economy in as many days raised expectations for further stimulus of the world's second biggest economy. Chinese inflation was reported to have slowed to a five-year low in January, a day after the report of a 20% year-on-year fall in imports that month.

Here is what you need to know at the UK market open:
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MARKETS
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FTSE 100: down 0.1% at 6,827.58
FTSE 250: up 0.3% at 16,622.23
AIM ALL-SHARE: flat at 699.51
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Hang Seng: closed flat at 24,528.10
Nikkei 225: closed down 0.3% at 17,652.68
DJIA: closed down 0.5% at 17,729.21
S&P 500: closed down 0.4% at 2,046.74
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GBP-USD: up at USD1.5244
EUR-USD: slightly up at USD1.1327

GOLD: up at USD1,243.42 per ounce
OIL (Brent): down at USD57.68 a barrel

(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in GMT)

09:00 Italy Industrial Output
09:30 UK Industrial Production
13:20 US Fed's Lacker speech
13:55 US Redbook index
14:00 US NFIB Business Optimism Index
15:00 US IBD/TIPP Economic Optimism
15:00 US JOLTS Job Openings
15:00 UK NIESR GDP Estimate
15:00 US Wholesale Inventories
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Like-for-like sales in the UK added just 0.2% year-on-year in January, the British Retail Consortium said. That was well shy of forecasts for an increase of 0.5% following the 0.4% decline in December. Overall retail sales climbed 1.6% on year in January, accelerating from the 1.0% growth in December.
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Chinese inflation slowed to a five-year low in January on easing food inflation, giving space for the central bank to adjust monetary policy to support weakening economic growth. Inflation eased more-than-expected to 0.8% in January from 1.5% in December, the National Bureau of Statistics said. This was the lowest since November 2009. The annual rate was seen at 1%.
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US President Barack Obama and German Chancellor Angela Merkel vowed to pressure Moscow to end its incursion in Ukraine as heavy fighting rages in the eastern part of the country. Fresh off a round of shuttle diplomacy between Kiev and Moscow, Merkel updated Obama on diplomatic efforts as Obama weighs sending weapons to Ukraine if talks fail. Calls are mounting in Washington for providing weapons to Kiev. Germany opposes arms shipments out of concern for inflaming the situation with Russia. Obama told reporters he had not yet made a decision about sending weapons but was weighing "all options" in the face of Russian aggression. Merkel emphasized the importance of repeated diplomatic efforts even as she acknowledged they might not be successful. "When you have a situation now where every night you see people dying, you see civilian casualties, you see the dire conditions under which people live, it is incumbent upon us as politicians, we owe it to the people to explore every avenue until somebody gives in," she said.
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EU leaders are likely to spend their first summit of the year putting out fires, with fresh instability plaguing Ukraine and new economic turmoil roiling Greece. The informal summit on Thursday comes amid renewed fighting in Ukraine, but also a new push for a peace plan between the country's government and pro-Russian separatists, initiated by German Chancellor Angela Merkel and French President Francois Hollande. To encourage the process, EU foreign ministers decided on Monday to delay the implementation of their latest round of sanctions against Ukrainian separatists and their supporters in Russia.
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The conviction for sodomy of Malaysia's Anwar Ibrahim was upheld by the country's highest court Tuesday, paving the way for the opposition leader to be sent to jail. Federal Court Chief Justice Arifin Zakaria, who read the decision for over two hours, said the appeals court was right in finding the complainant Saiful Bukhari Azlan as a credible witness, and to have ruled the DNA evidence in the case was not degraded.
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BROKER RATING CHANGES
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BARCLAYS RAISES ITV TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 250 (225) PENCE
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TRADERS: CITIGROUP RAISES MICRO FOCUS TO 'BUY' ('NEUTRAL')
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COMPANIES - FTSE 100
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Babcock International Group said it expects to meet its expectations for the full year to the end of March on the back of a strong performance from its existing business and from the acquisition of helicopter group Avincis. The FTSE 100-listed support services company said it entered the fourth quarter of its financial year, starting January 1, with its order book at around GBP20 billion and a bid pipeline of around GBP13 billion. Its order book provides 70% revenue visibility for its 2015-16 financial year, it said.
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Travel firm TUI said it reduced its underlying operating loss in the first quarter by 15%, partly supported by a 5.4% increase in revenue. The enlarged group, recently formed out of a merger between UK-based TUI Travel PLC and its German parent TUI AG, said it is confident of delivering full-year underlying operating profit growth of between 10% and 15% at constant currency rates.
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Mondi said it expects its underlying operating profit for 2014 to be higher than the year before and said it expects to book after-tax charges below what it booked last year. The FTSE 100-listed paper and packaging company said it expects its underlying operating profit for the year to December 31 to be higher than the EUR699 million posted in 2013, though it did not provide guidance on how much higher it expects it to be.
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COMPANIES - FTSE 250
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Millennium & Copthorne Hotels reported a 36% drop in its pretax profit for 2014, after last year's profit and revenue was boosted by the sale of the Glyndebourne development the year before, although the group's underlying business continued to be driven by higher room rates, occupancy and hotel acquisitions. The FTSE 250-listed hotels operator reported a pretax profit of GBP188 million for 2014, compared with a GBP295 million profit in 2013, as revenue fell by more than 22% to GBP826 million, down from GBP1.06 billion the year before. The group sold 147 condominiums in the Glyndebourne development in Singapore back in December 2013, which boosted both revenue and profit during that year.
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Catlin Group reported a 13% rise in pretax profit as improved investment return more than offset a fall in the specialist insurer's net underwriting contribution. The group's annual results stand to be its last as a public company, having retained a listing on the London Stock Exchange since 2004, in the wake of a GBP2.79 billion takeover bid by XL Group PLC last month. In a statement, the specialist insurer said it made a USD488 million pretax profit in 2014, compared with USD432 million in the prior year.
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Bellway posted robust housing sales and forward sales for the first half and said it is confident on its full-year prospects. The FTSE 250-listed housebuilder said its housing completions in the first half of its financial year to the end of January rose to 3,754 from 3,245 in the comparable period a year earlier. Its average selling price in the period was up around 3% to GBP219,000 from GBP212,071 last year, with the average selling price of private homes up by around 7% to GBP240,000. The group said that though the pricing environment is still strong, there has been a moderation of price growth, particularly in and around London.
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James Fisher & Sons said it has acquired the National Hyperbaric Centre in Aberdeen for up to GBP4.5 million. The consideration on the deal will include GBP3.5 million in cash upfront, plus a GBP1 million earn-out based on specific future contracts undertaken post the completion of the deal and prior to March 2016. National Hyperbaric Centre operates hyperbaric testing chambers used for testing equipment in the subsea industry.
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Ultra Electronics Holdings said it has won a GBP18 million contract with the UK Ministry of Defence to supply sonobuoys for the Royal Navy's Merlin maritime patrol helicopter. A sonobuoy is a small expendable sonar system that is dropped from aircraft of ships for underwater acoustic research.
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ICAP said it remains cautious due to challenging conditions in its global broking division, which has been forced to narrow its focus due to the new operating backdrop in the wake of the financial crisis. ICAP said revenue in global broking declined by 8% during its third quarter to the end of December at both constant currency and on a reported basis. Excluding businesses that were exited, the decline was less pronounced, at 4%, ICAP said.
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Halma said it expects adjusted pretax profit for its financial year to March 28 to be in line with market expectations, as it continues to see organic constant currency revenue growth in all of its regions. Halma adjusts its pretax profit for amortisation, acquisition costs and profit on the disposal of operations. The technology company said it believes the current market forecasts for its adjusted pretax profit are in the range of GBP145.6 million to GBP156.5 million, with a consensus of GBP150.7 million.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Wireless software and equipment company Anite said it performed above its expectations in the third quarter, underpinning its full-year expectations. The company said the third quarter to the end of January is normally quiet for the company, but said it had seen the strong trends in the first half of its financial year continued into the quarter. As a result, overall trading in the third quarter was ahead of its expectations, meaning it has maintained its guidance for the full-year.
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Model railway and Scalextric race car set maker Hornby said its expects earnings for the full year to be in line with its expectations, with sales rising a steady 5% in the third quarter, and said it is reviewing its funding options and considering its market listing in order to make further investments in the business.
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Rangers International Football Club said it will no longer be able to hold its upcoming extraordinary general meeting in the original venue after the hotel hosting it said it would not be able to do so without a disruption to its guests. The football club said it is seeking an alternative venue in London.
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COMPANIES - INTERNATIONAL
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Swiss lender UBS posted higher net profit attributable to shareholders of CHF963 million, compared with last year's CHF917 million. According to the company, the recent quarter's result included a net tax benefit of CHF493 million. On an adjusted basis, profit before tax amounted to CHF648 million, with all of the company's business units being profitable. Quarterly net interest income advanced to CHF1.87 billion from CHF1.55 billion a year before.
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French tire maker Michelin said operating income before non-recurring items in 2014 was EUR2.170 billion, up EUR81 million at constant scope of consolidation and exchange rates.
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The uniting of the two largest cable TV operators in the US is still in a regulatory limbo, even after a year of Comcast and Time Warner Cable agreeing to a merger, according to a report in the New York Times. The US Federal Communications Commission has delayed its own deadline to review the planned mega-media merger, which would consolidate an already-concentrated industry. US President Barack Obama's call for the FCC to issue rules to protect net neutrality in mid-November has complicated the issue.
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Microsoft and Samsung Electronics agreed to settle their long-fought Android royalty payment dispute that ended up in the courts in August. However, further details on the terms of the settlement is not available. Providing an update on the Samsung-Microsoft dispute, Samsung wrote on its official blog, "Samsung and Microsoft are pleased to announce that they have ended their contract dispute in US court as well as the ICC arbitration. Terms of the agreement are confidential."
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Qualcomm's troubles in China seem to have come to an end, with the chip maker agreeing to pay a fine of USD975 million to settle anti-monopoly charges over its licensing practices in the key Asian country. A probe started in November 2013 by China's National Development and Reform Commission found that Qualcomm violated the country's anti-monopoly law. The probe had been a sore point for Qualcomm, hurting its ability to collect licensing revenue as some Chinese handset makers withheld royalty payments or paid less.
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Tuesday's Scheduled AGMs/EGMs

RWS Holdings
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite

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