UK TOP NEWS SUMMARY: UK Economic Pace Picks Up, Still In Contraction

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

Alliance News 3 July, 2020 | 11:07AM
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(Alliance News) - The following is a summary of top news stories Friday.

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COMPANIES

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Land Securities Group said following the reopening of most of its properties after the easing of lockdown measures, it has continued to make progress on the collection of rent. All of LandSec's office properties have remained open, and following the easing of restrictions on non-essential retail in the UK in mid-June, all shopping centres, outlets and retail parks have now open. By the end of June, 79% of the the real estate investment trust's retail units were trading, while 16 out of 18 leisure parks were open. Accor-managed hotels remain closed, but will go through a phased reopening over the next three months. Looking ahead, LandSec said it intends to reinstate dividend payments following the announcement of its interim results on November 10. As at June 30 the group's adjusted net debt was GBP3.92 billion compared to GBP3.93 billion at the end of March.

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Rio Tinto's Oyu Tolgoi mine in Mongolia is expected to see a 21 to 29 month delay for first production, which will increase the development capital needed for the project by between USD1.3 billion to USD1.8 billion from the original USD5.3 billion. The updated mine design is the result of the review announced by Rio Tinto in July 2019 when enhanced geotechnical and geological information obtained from drilling and mapping at depth suggested there may be "some stability risks" associated with the original mine design. Rio Tinto's ownership share is 33.5% of Hugo Dummett North and 29.5% of Hugo Dummett North Extension - both at Oyu Tolgoi in Mongolia. The probable ore reserves for Hugo Dummett North have been revised down to 400 million tonnes from 447 million at the end of 2019, while the North Extension seen its reserves revised upwards to 40 million tonnes from 32 million tonnes.

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Ryanair Holdings said its Irish pilots have accepted a four-year agreement including a 20% pay cut restored over four years, while its UK and Ireland cabin crew have accepted a 10% cut. The agreement also includes "productivity improvements on rosters" as well as "flexible working patterns and annual leave" with the aim of minimising job losses for Irish pilots. Budget airline Ryanair, which has its headquarters in Swords near Dublin said the deal gives the company "a framework to flex its operation" while the Covid-19 pandemic remains ongoing as well as offering "a pathway to recovery" once normality returns. BALPA and Ryanair UK agreed a similar deal earlier in the week that also included a 20% pay cut and improvements to productivity. Alongside this, Ryanair also signed agreements with the Forsa union concerning Irish based cabin crew and the UNITE union for its UK cabin crew including pay reductions of up to 10%. These cuts are also to be fully restored over four years with the agreement also including productivity improvements.

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Online trading platform CMC Markets said its "entire business has continued to perform very well" in its first quarter. Client trading activity remains around double that of the same period the year before, CMC added, with client income retention "materially" higher than the 82% reported in the first half of the previous financial year. Stockbroking net trading revenue also continues to benefit from the market conditions, the company added. As a result, net operating income for the first quarter of financial 2021 is in excess of that reported for the first half of financial 2020 of GBP102.3 million. "The board is confident that, even in the event that more normalised client trading activity returns, with the strong underlying performance of the business, 2021 net operating income will exceed the upper end of current market consensus," CMC added.

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SoftBank and an Abu Dhabi sovereign wealth fund are in talks to back a UK government-led bid for collapsed satellite firm OneWeb, Sky News reported. Sky News said Japanese tech investor SoftBank and Mubadala, an investment arm of the Gulf state, have been holding talks with government officials about contributing hundreds of millions of pounds to a newly comprised shareholders group. The UK-led bidding team consists currently only of the government and existing OneWeb shareholder Bharti Enterprises, Sky News said, according to a person "close to the situation". Rival bidders for OneWeb are thought to include Telesat, a Canadian company. London-headquartered OneWeb filed for bankruptcy in March in the US, where most of its operations are located, after failing to secure new funding. It has 74 satellites and already counted Softbank as an investor.

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MARKETS

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Stock trading was lacklustre on Friday with markets in the US closed. Momentum in Asia overnight failed to flow through to Europe, where stocks were mostly lower, as Covid-19 cases in the US continue to grow, despite improvement in service sector activity across Europe and Asia.

Financial markets in the US are shut Friday for the Independence Day holiday.

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FTSE 100: down 50.63 points, or 0.8% at 6,189.73

FTSE 250: down 0.1% at 17,350.34

AIM ALL-SHARE: up 0.2% at 894.01

GBP: soft at USD1.2447 (USD1.2465)

EUR: soft at USD1.1227 (USD1.1236)

GOLD: down at USD1,774.70 per ounce (USD1,775.75)

OIL (Brent): firm at USD42.60 a barrel (USD42.30)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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The UK's private sector saw a sharp improvement in business conditions in June, according to the results of a survey by IHS Markit released on Friday, though activity continued to contract. The composite purchasing managers' index - which is a weighted average of the UK manufacturing output index and the UK services business activity index - improved to 47.7 in June from 30.0 in May. The index hit a record-low of 12.9 in April. June's reading is the highest in four months but still remains below the no-change mark of 50. The flash figure for June was 47.6. Manufacturing production - 50.7 in June - once again fared better than service sector output - 47.1 - IHS Markit said, with the latter hit by a sustained drag from business closures across vast swathes of the consumer services and leisure activity. "June data continued to signal a turnaround in business conditions across the UK service sector," IHS Markit said.

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The eurozone's private sector saw a sharp improvement in conditions in June, according to IHS Markit, though activity continued to contract. The composite output index for June surged to 48.5 points from May's 31.9, hitting its best level in four months and exceeding the flash reading of 47.5 by a full point. However, with the reading remaining below the no-change mark of 50, the latest data indicate business conditions in the eurozone remain tough. France was the top performing country in terms of composite purchasing managers' index while Ireland was the worst. All those covered, though, recorded four-month highs in June.

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Dutch Prime Minister Mark Rutte is ruling out any concessions in the "difficult" negotiation over the EU's post-coronavirus recovery fund. In a Friday interview with Sette, a weekly linked to Italian daily Corriere della Sera, Rutte said talks "will be difficult, but a compromise is possible." Yet, when the interviewer told him the Netherlands had to be prepared to make concessions, he replied: "That is your interpretation. And that's fine. But it is not our position." "Our position is that aid must come in the form of loans and not grants," Rutte said, also stressing that countries receiving aid must in return improve their "competitiveness and resilience." "Italy and Spain must answer the question: 'what can we do to be able to tackle on our own the next crisis?'" the Dutch premier said. The European Commission has made a proposal for a EUR750 billion recovery fund, including EUR500 billion in grants and EUR250 billion in loans.

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The US posted a record 53,000 new coronavirus cases as the deadly pandemic accelerated across the Americas, but its slowdown in Europe led Britain to announce Friday the first exemptions to its quarantine rules. With Europe looking to turn the page on the biggest public health crisis in modern history, travellers arriving into Britain from Germany, France, Spain and Italy will no longer be required to self-isolate starting July 10. The US soared past 50,000 new infections Thursday for the second time in two days, casting a grim pall over its upcoming Independence Day celebrations. Now the epicentre of the pandemic, the US has recorded nearly 129,000 deaths out of more than 2.7 million cases. It's expected to record its three millionth infection next week. Florida, which now has more than 169,000 cases, is a key focus of public health experts who worry about a surge in southern and western US states. In Texas, where more than 2,500 people have died, Governor Greg Abbott ordered people in counties with 20 or more cases to wear masks and banned gatherings of more than 10.

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China's services sector grew at its quickest pace in over a decade as Covid-19 lockdown measures continued to ease, IHS Markit said. Caixin's seasonally adjusted headline business activity index came in at 58.4 in June, not only comfortably above the 50.0 no-change mark but also surging from 55.0 in May. IHS Markit noted it was the fastest rate of expansion since April 2010, with new order jumping at the fastest pace since August 2010. The composite PMI - compiled using the services and also manufacturing data from earlier in the week - rose to 55.7 in June from 54.5 in May, the fastest rate of growth since November 2010.

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Japan's services sector reached a four-month high in June but numbers on Friday showed it remained in decline. The Jibun Bank services purchasing managers' index jumped to 45.0 in June from 26.5 in May, helped by the state of emergency due to Covid-19 being lifted. It was still below the 50.0 marker which separates growth from decline and IHS Markit noted that "conditions remained fragile amid low customer numbers and operating rates" amid Covid-19.

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