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TOP NEWS SUMMARY: UK Manufacturing Drops After Brexit Stockpiling Ends

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

Alliance News 3 June, 2019 | 11:12AM
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LONDON (Alliance News) - The following is a summary of top news stories Monday.
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COMPANIES
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Kier Group said adjusted operating profit for financial 2019 will be lower than previously expected due to mounting volume pressures on three of its divisions continued. The FTSE 250 construction company said it has continued to experience volume pressures within its Highways, Utilities and Housing Maintenance businesses. In addition, despite double-digit order book growth, the Buildings business unit's revenue growth for 2019 will be lower than previously forecast, the company said. This will impact the Kier's financial results for the year ending June 30, with revenue expected "broadly in line" with financial 2018 and underlying operating profit around GBP25 million lower than previously guided. A year ago, Kier's revenue amounted to GBP4.5 billion while adjusted profit from operations was GBP160 million. Furthermore, Kier said it is likely to report a net debt position as at June 30 that "would have an adverse impact on 2019 average month-end net debt position".
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KCOM Group said it had withdrawn its recommendation of an offer from a pension fund-backed by Humber Bidco, in preference of an offer from MEIF 6 Fibre. The new offer price for the telecommunications firm is 108 pence per share in cash, 11 pence above Humber's 97.00p per share offer. The new offer's total value is worth GBP563 million. MEIF 6 is a wholly-owned indirect subsidiary of Macquarie European Infrastructure 6 SCSp, an investment fund managed by Macquarie Infrastructure & Real Assets Europe. KCOM said it had evaluated the MEIF 6 proposal and considered it to "represent a superior offer for KCOM's shareholders" versus the offer from USS. As such, KCOM's directors have withdrawn their recommendation of USS offer and will unanimously recommend the offer from MEIF 6.
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AstraZeneca announced encouraging results from phase three trials of its cancer drugs Lynparza and Imfinzi. The drug maker presented three-year overall survival data from its Polo trial of Lynparza in pancreatic cancer and from its Pacific trial of Imfinzi in stage-three non-small cell lung cancer. More than twice as many patients taking Lynparza had no disease progression at one year - 34% with Lynparza versus 15% on placebo. After two years, 22% of patients with Lynparza had no progression compared to 15% on placebo. For Imfinzi, data showed 57% of lung cancer patients who had not had disease progression following concurrent chemoradiation therapy, and who were taking the drug, were alive at three years compared to 44% with the placebo following concurrent chemoradiation therapy.
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Glencore reported the retirement of its oil unit boss Alex Beard. Beard, who will retire as the head of its Oil Marketing division at June-end, will be replaced by Alex Sanna, a senior executive in the Oil Products division. In May, Glencore said long-standing head of Agriculture unit Chris Mahoney will retire in September but will remain involved in the business as a non-executive director. Mahoney, who will step down after 17 years in the role, will be replaced by division insider and regional boss David Mattiske.
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MARKETS
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London shares were lower as global trade tensions continue to weigh on equity markets, as US President Donald Trump begins his state visit to the UK. Kier Group was the worst midcap performer, down 42%. The pound was up against the dollar despite disappointing UK manufacturing PMI data, as the greenback lost group across the board. Wall Street was pointed to a lower open.
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FTSE 100: down 0.5% at 7,124.35
FTSE 250: down 0.9% at 18,795.25
AIM ALL-SHARE: down 0.9% at 951.20

GBP: firm at USD1.2640 (USD1.2616)
EUR: up at USD1.1173 (USD1.1145)

GOLD: up at USD1,314.09 per ounce (USD1,300.10)
OIL (Brent): down at USD61.82 a barrel (USD63.32)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Uncertainty over Brexit has continued to hurt the UK's manufacturing sector, the IHS Markit-CIPS purchasing managers' index showed. The manufacturing PMI reading was 49.4 for May, down "sharply" from 53.1 in April. A figure over 50 represents growth and below 50 contraction. This is the first time the figure has fallen below the neutral 50 mark since July 2016, the month after the Brexit referendum, with UK manufacturers reporting "increased difficulties" in getting clients to commit to new contract. This, IHS said, reflects a high level of inventories due to recent stockpiling ahead of the original date for Brexit in late March. Manufacturers reported lower demand from Asia and Europe, with EU demand sliding as "clients divert supply chains away from the UK", Markit said. Despite the poor PMI reading, manufacturers in the UK remain optimistic, IHS said. Some 49% expect output to be higher in 12 months' time, with just 7% seeing things being worse.
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Manufacturing in the eurozone continued to contract in May, IHS Markit said, meaning no growth has been recorded since January. The manufacturing purchasing managers' index reading for the eurozone was 47.7 in May, down slightly from 47.9 in April and remaining below the no-change mark of 50. The weakness, IHS said, was centred on the intermediate and investment goods sectors, with the consumer goods category showing "modest" growth. Consumer goods have now expanded continuously for five-and-a-half years. Germany's PMI performance was the weakest among eurozone countries reported, IHS Markit said, falling to 44.3 from 44.4, meaning it is at one of its lowest points since the middle of 2012.
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Chinese manufacturing expanded slightly in May for the third straight month, according to the Caixin China General Manufacturing Index. Caixin reported its purchasing manager's index stood at 50.2 in May, the same as April. A figure over 50 indicates expansion. It said that manufacturers had seen an increase in new orders despite the fact that China is the midst of a trade war with the US. Caixin's figures were significantly lower than those released by the National Bureau of Statistics, which reported China's May PMI on Sunday as contracting by 0.1 point to 53.3.
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China is prepared to hold dialogue with the US on the escalating trade war, but will fight if needed, its top defence official said. "On the trade friction started by the US: if the US wants to talk, we will keep the door open," Chinese Defence Minister Wei Fenghe said during a three-day international security dialogue in Singapore. "If they want to fight, we will fight to the end."
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A top White House official has said US President Donald Trump is "deadly serious" about slapping tariffs on imports from Mexico. But he acknowledged there are no concrete benchmarks being set to assess whether Mexico was stemming the flow of migrants enough to satisfy the administration. Acting White House chief of staff Mick Mulvaney told Fox News Sunday: "We intentionally left the declaration sort of ad hoc. "So, there's no specific target, there's no specific percent, but things have to get better. They have to get dramatically better and they have to get better quickly."
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The US decision to end preferential trade treatment for India next week has prompted New Delhi to assert that it will "always uphold its national interest" in trade matters. Trump on Friday announced that India would lose its trade privileges with the US and no longer be classified as a beneficiary developing country. "I have determined that India has not assured the US that India will provide equitable and reasonable access to its markets," Trump said in a statement. "Accordingly, it is appropriate to terminate India's designation as a beneficiary developing country effective June 5, 2019."
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The US is ready to talk to Iran "with no preconditions," Secretary of State Mike Pompeo said on Sunday. "We are prepared to engage a conversation with no preconditions," Pompeo told a press conference in Switzerland. However, he reiterated that Washington's goal is to "fundamentally reverse the malign activity of this Islamic Republic." Iranian Foreign Minister Mohammad Javad Zarif said his country is "not very likely" to talk with the US. "Talking is the continuation of the process of pressure. This may work in a real estate market, it does not work in dealing with Iran," Zarif told US broadcaster ABC.
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Trump launched a trademark Twitter broadside at London Mayor Sadiq Khan as he touched down in the UK for a state visit that will see him meeting the Queen and other senior royals, as well as Theresa May in her final days as prime minister. The US president and the first lady were greeted by Foreign Secretary Jeremy Hunt and US ambassador to the UK Woody Johnson at Stansted Airport on Monday morning as they began their three-day trip. Trump arrived in Britain having already created a considerable degree of political turbulence with comments on the Tory leadership race, Brexit and the Duchess of Sussex. Speaking to reporters just before he left the US, he praised Boris Johnson and Nigel Farage, talked up the prospect of a Brexit trade deal, and rebuked Khan, who on Sunday described the president as "just one of the most egregious examples of a growing global threat" and compared the language he has used to that of the "fascists of the 20th century".
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The future of German Chancellor Angela Merkel's coalition government appeared shaky, after the leader of its junior partner unexpectedly announced her resignation following poor results in last month's European elections. Andrea Nahles has said she would formally resign as leader of the Social Democrats on Monday, after party feedback showed she no longer had "the support necessary for me to carry out my offices." Her departure could lead to early elections if the SPD decides to make an early exit from the government formed after 2017 polls.
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