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LONDON MARKET MIDDAY: Prudential And Miners Gain As FTSE 100 Climbs

LONDON (Alliance News) - Stocks in London were climbing higher at midday Wednesday, attempting ...

Alliance News 14 March, 2018 | 12:03PM
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LONDON (Alliance News) - Stocks in London were climbing higher at midday Wednesday, attempting to reverse Tuesday's losses.

London's blue-chip index was helped by gains made by Prudential on news of its demerger and mining stocks, which rose on strong data from China and upgrades from Goldman Sachs. Bolstering the FTSE 250 were gains for Dignity and Hikma Pharmaceuticals.

The FTSE 100 index was up 0.4%, or 25.89 points, at 7,164.67 Wednesday midday. The FTSE 250 index was up 0.3% at 19,915.01, while the AIM All-Share index up 1.0% at 1,053.78.

The BATS UK 100 index was up 0.4% at 12,151.91. The BATS 250 was up 0.3% at 18,132.45, and the BATS Small Companies flat at 12,297.35.

In mainland Europe, the CAC 40 stock index in Paris and the DAX 30 in Frankfurt were both up 0.4% on Wednesday at midday, having both started the session lower.

Stocks in the US were called for a higher open on Wednesday. The Dow Jones Industrial Average was seen up 0.4%, the S&P 500 up 0.3% and the Nasdaq Composite called up 0.5%.

David Madden, market analyst at CMC Markets, said: "The mood is cautiously optimistic, with some traders still tetchy about the departure of Rex Tillerson as US secretary of state."

US President Donald Trump on Tuesday announced in a post on Twitter that he intends to replace Secretary of State Rex Tillerson with current CIA Director Mike Pompeo.

A statement from Under Secretary of State for Public Diplomacy & Public Affairs Steve Goldstein suggested that Tillerson was blindsided by the news. Goldstein was also later fired.

"The Secretary had every intention of staying, because of the critical progress made in national security," Goldstein said. "The Secretary did not speak to the president and is unaware of the reason."

Focus will be on the retail sector in the US on Wednesday afternoon, with retail sales due at 1230 GMT, along with the producer price index at the same time.

Released in Europe on Wednesday, Eurostat said industrial production in the eurozone declined for the first time in four months in January.

Industrial production decreased 1% month-on-month in January, higher than the forecast of 0.4% drop, in contrast to December's 0.4% rise. This marked the first fall since last September. All components except capital and non-durable consumer goods declined in January.

On a yearly basis, industrial production growth rate slowed more-than-expected to 2.7% in January from 5.3% a month ago. The rate was seen at 4.7%.

At a conference organized by the Institute for Monetary and Financial Stability, in Frankfurt, European Central Bank President Mario Draghi said the bank still needs to see further evidence that inflation dynamics are moving in the right direction.

The monetary policy will remain patient, persistent and prudent to guarantee the return of inflation to the target, he said.

In Germany on Wednesday, Angela Merkel was elected to her fourth term as German chancellor by the Bundestag, the lower house of parliament.

The euro was quoted at USD1.2373 at midday, compared to USD1.2393 at the European market close on Tuesday.

In London at midday, the FTSE 100 was receiving support as insurance and financial services provider Prudential gained, along with mining stocks.

Prudential was up 5.7% at midday, the best blue-chip performer, after unveiling a demerger of its UK & European unit M&G Prudential.

The demerger will split the business into Prudential PLC - which will cover Asia, Africa and the US - from UK & Europe-focused M&G.

On completion of the demerger, shareholders will hold interests in both Prudential PLC and M&G Prudential. In line with the demerger strategy, Prudential said, M&G Prudential has agreed the sale of GBP12.0 billion of its shareholder annuity portfolio to Rothesay Life.

Following the demerger, Prudential PLC will remain headquartered in the UK and retain its premium listing on the London Stock Exchange, its primary listing in Hong Kong, and other listings in Singapore and New York.

M&G Prudential also will be headquartered in the UK and also will take a premium listing on the London Stock Exchange.

Miners were also higher on Wednesday, benefiting from strong data from China and a positive research note from Goldman Sachs.

Goldman raised the European Metals & Mining sector to Attractive from Neutral, while upgrading BHP Billiton and Antofagasta both to Neutral from Sell. Anglo American was added to the broker's Conviction Buy list.

Antofagasta was the second best large-cap performer at midday, up 2.9%, while Anglo American was up 2.5%, and BHP Billiton up 1.7%.

At the other end of the index was grocer Wm Morrison Supermarkets, down 3.5% despite proposing a special dividend for 2017.

Morrisons proposed a special dividend to shareholders of 4.00 pence per share on top of a final dividend of 4.43p, bringing its total payout for the year to 10.09p, up 86% year-on-year.

This special return, the company said, reflects progress made so far and expectations for continued growth. On a reported basis, pretax profit increased 17% year-on-year to GBP380.0 million, and underlying pretax profit rose 11% to GBP374.0 million.

"The announcement of a special dividend likely helped to attract a few buyers early this morning, however, without a commitment to further special dividends, and capping a more than 10% rally from February's lows, many shareholders are deciding to take profits and run," said Accendo Markets analyst Henry Croft.

Dignity was the standout performer in the FTSE 250, up 15% at midday after it noted a "step change" in simple funerals after its January price reductions.

Pretax profit for the 52 weeks to December 29 was flat at GBP71.2 million, though on an underlying basis it increased by 3% to GBP77.8 million. Dignity's revenue rose by 3% to GBP3224.0 million, while deaths during the period were flat at 590,000.

Initial analysis, Dignity said, of the mix of funerals in the first seven weeks since the price of the simple funeral was reduced indicates a "step change in simple funerals conducted has occurred, as expected".

Hikma Pharmaceuticals was in second place, up 8.8% despite the company swinging to a pretax loss for 2017.

Hikma sunk to a USD738 million pretax loss for 2017 from a profit of USD210 million the year prior, as revenue edged down to USD1.94 billion from USD1.95 billion the year before.

Profit performance was hurt by USD1.07 billion in exceptional costs for 2017, up from just USD149 million the year prior. This was chiefly due to impairments associated with Hikma's 2016 West-Ward Columbus acquisition due to difficult US generic drug market conditions.

"We delivered a solid performance in 2017 at a challenging time for our industry, demonstrating the benefit of our diversified business model," Hikma Executive Chairman Said Darwazah said.

On London's junior AIM, investment management firm Burford Capital jumped 28% as it reported a significant rise in profit for 2017, as total income more than doubled.

Burford's pretax profit for 2017 soared to USD264.7 million from the USD100.3 million recorded in 2016, with total income likewise more than doubling to USD341.2 million from USD163.4 million. Investment income jumped to USD318.2 million from USD140.2 million, a rise of 108%.

Burford is paying a final dividend of 7.95 US cents. This takes its total payout to shareholders for the year to 11 cents, up 20% year-on-year.

By Lucy Heming;

Copyright 2018 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar
Dignity PLC 1,001.00 GBX 5.87 -
Antofagasta PLC 967.60 GBX 0.79
Burford Capital Ltd 1,416.00 GBX 2.91 -
Morrison (Wm) Supermarkets PLC 211.00 GBX -0.19
Hikma Pharmaceuticals PLC 1,121.50 GBX 1.49
Anglo American PLC 1,769.40 GBX 0.15 -
BHP Billiton PLC 1,443.20 GBX 0.39 -
Prudential PLC 1,913.50 GBX -1.54
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