TOP NEWS SUMMARY: UK Supermarkets and German Banks Call Off Mergers

LONDON (Alliance News) - The following is a summary of top news stories ...

Alliance News 25 April, 2019 | 11:31AM
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LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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J Sainsbury has abandoned its planned merger with Asda Group, following the UK regulator's decision to block the move. The UK Competition & Markets Authority has blocked the move after deciding it would increase prices in stores, online, and at petrol stations. There would be a "substantial" lessening of competition were the two to merge, the CMA said Thursday, confirming its previously stated preliminary opinion. It said UK shoppers would be affected everywhere, not just where Sainsbury's and Asda stores overlap. In its own statement, FTSE 100 Sainsbury's said it abandoned the deal in agreement with Asda's owner Walmart, adding bitterly: "The CMA is today effectively taking GBP1 billion out of customers' pockets."
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Frankfurt-based Deutsche Bank and Commerzbank called off their proposed merger. Deutsche Bank said that, after "careful analysis", it decided the proposed merger "would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements" needed for such a large integration. Deutsche Bank added that it will continue to "review all alternatives to improve long-term profitability and shareholder returns". The propsed merger had been under scrutiny in recent weeks with Deutsche Bank's supervisory board advising against the plan. Deutsche major shareholders - the Emirate of Qatar, asset manager Blackrock and Chinese conglomerate HNA - also had voiced their concerns, according to German daily Frankfurter Allgemeine Zeitung.
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Ross McEwan is to step down as chief executive of Royal Bank of Scotland Group once a replacement has been found, the UK state-backed lender said. McEwan has given 12 months' notice of his departure, and he will also stay until "an orderly handover" has taken place. McEwan became CEO of RBS in October 2013, having previously been head of the company's UK Retail unit. Before that, he led Commonwealth Bank of Australia's retail banking business.
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Barclays reported a slip in first quarter profit due to a "challenging income environment" for the Corporate & Investment Bank, but was able to post a positive rate of return. The lender reported pretax profit for the three months ended March of GBP1.48 billion compared to a GBP236 million loss a year before. However, excluding litigation and conduct costs, Barclays' pretax profit decreased 11% to GBP1.54 billion from GBP1.73 billion a year ago. The bank attributed this drop to a "challenging income environment" for its Corporate & Investment Bank, and an increase in impairments on "the non-recurrence of a favourable US macroeconomic forecast update" compared to the first quarter of 2018. Barclays' credit impairment charges increased 56% to GBP448 million from GBP288 million the year before. The bank noted a 6% appreciation of the US dollar against sterling benefited profit in the quarter.
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Swiss investment bank UBS reported a sharp drop in first quarter income due to "challenging market conditions". In the three months to March 31, UBS recorded net interest income of USD1.12 billion, 22% lower than the USD1.44 billion reported in the corresponding period a year earlier. The lender's pretax profit decreased by 26% year-on-year to USD1.55 billion from USD2.10 billion. UBS said the profit decrease reflected a decrease in operating income, partly offset by lower operating expenses - which decreased 6.6% to USD5.67 billion. The bank's expenses decreased due to lower personnel expenses.
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Anglo American said first quarter production fell, primarily due to weakness in coal output, though emphasised output guidance for the full-year remains on track after a ramp-up towards the end of the period. "Production is 6% lower in the quarter, with two planned longwall moves at Metallurgical Coal accounting for 80% of the reduction," Anglo American Chief Executive Officer Mark Cutifani said. For the three months ended March, metallurgical coal output fell 25% to 4.2 million tonnes from 5.5 million tonnes a year prior. This was due to two longwall moves being undertaken in the first quarter of 2019 compared to just one a year before. Thermal coal, however, fell a more modest 2% to 6.6 million tonnes.
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Taylor Wimpey said the market for new-build housing in the UK has remained stable in the first four months of 2019 and its sales are ahead of expectations. However, the homebuilder warned that its full-year margins will be hurt by rising build-costs inflation. Taylor Wimpey expects its cost inflation for 2019 to be about 5% after experiencing higher than expected inflation in the early part of the year. Taylor Wimpey said the underlying conditions driving UK housing demand "remained robust" - citing "continued good accessibility" to mortgages and low interest rates for customers, combined with high employment levels. The company said its sales have continued to be "encouraging" through the spring season with average private sales per outlet per week for the year to date up 1.0%, ahead of the company's expectations.
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MARKETS
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London shares were lower with Sainsbury's the worst blue-chip performer and housebuilders down after Taylor Wimpey's trading update. Wall Street was pointed to a mixed open with Post-it note maker 3M and cable television provider Comcast set to report earnings before the market open in New York. Carmaker Ford Motor, coffeehouse chain Starbucks, and online retailer Amazon will report after the market close.
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FTSE 100: down 0.3% at 7,448.00
FTSE 250: down 0.3% at 19,926.81
AIM ALL-SHARE: down 0.1% at 962.11

GBP: down at USD1.2877 (USD1.2945)
EUR: down at USD1.1130 (USD1.1191)

GOLD: flat at USD1,276.75 per ounce (USD1,275.45)
OIL (Brent): up at USD75.48 a barrel (USD74.48)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Pressure is mounting on Theresa May to name a date to quit as UK prime minister, after an influential committee of backbenchers demanded "clarity" over what she will do if her EU withdrawal deal fails. The chair of the 1922 Committee, Graham Brady, said on Wednesday it would be "a surprising response" if May suggested she might stay on as late as December this year. The threat of an imminent challenge to May's position as Conservative leader was lifted as the committee's executive decided not to change party rules which protect her from a no-confidence vote until December. But it took two lengthy meetings before the executive rejected proposals to allow a vote as early as June, reportedly by a narrow margin of nine votes to seven.
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The Bank of England is likely to keep rates on hold in 2019 amid persisting Brexit uncertainty, the National Institute of Economic & Social Research said on Thursday as it nudged down its UK growth forecasts. The world economy is forecast to continue expanding, though at a slower pace than seen in the past few years as global growth pulls back from a cyclical peak. The NIESR cut its UK gross domestic product growth forecast for 2019 to 1.4% from the 1.5% seen in February, while the prediction for 2020 GDP growth was cut by 0.1 of a percentage point, to 1.6% from 1.7%. The think tank forecasts UK economic growth will accelerate to 1.9% in 2021, and remain at this rate in both 2022 and 2023. In 2018, the UK economy grew 1.4%.
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The Bank of Japan trimmed its economic growth forecast for the current financial year amid economic slowdowns overseas, it said. The central bank expects the world's third-largest economy to expand at an annualized rate of 0.8% in the year ending March 2020, downgraded from January estimates of a 0.9% growth, according to a statement released after a two-day monetary policy meeting. The economy is expected to expand 0.9% for the next financial year, also revised down from a 1% growth projected in January, the bank said.
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North Korean leader Kim Jong Un met Russian President Vladimir Putin for the first time on Thursday, as the future of once-hyped negotiations between Pyongyang and Washington appears uncertain. Kim thanked his host for "the splendid time" following their meeting in the Far Eastern Russian city of Vladivostok, according to Russian news agency TASS. "I hope that our negotiations will continue in the same way, as fruitful and constructive," he was quoted as saying. The visit comes as North Korea seeks allies after the failure of a summit between US President Donald Trump and Kim in Hanoi in February. Washington wants Pyongyang to give up its nuclear weapons while North Korea is seeking the lifting of international sanctions which have stifled its economy. Putin said the conflict on the Korean Peninsula came up in the meeting on Thursday as well as "the history of...interstate relations" and bilateral ties, in comments broadcast on Russian television.
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