LONDON MARKET PRE-OPEN: Frasers Confirms Arcadia Emergency Loan Offer

(Alliance News) - Stocks in London are seen starting the new week on the back foot despite some better-than-expected Chinese economic data.

In early UK company news, Frasers Group said it would be interested in any sale process should Philip Green's Arcadia retail empire tumble into administration. Lloyds Banking has picked HSBC's Wealth & Personal Banking head as its next chief executive. WPP intends to take full ownership of its Australian and New Zealand operations.

IG says futures indicate the FTSE 100 index of large-caps to open down 31.08 points, or 0.5%, at 6,336.50 on Monday. The FTSE 100 closed up 4.65 points, or 0.1%, at 6,367.58 on Friday.

In Tokyo on Monday, the Nikkei 225 index closed up 0.8%. In China, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong is down 1.6%.  

China's factory activity grew at its fastest pace in over three years in November, official data showed overnight, as the world's second-largest economy continued its recovery from the coronavirus.

The purchasing managers' index, a key gauge of manufacturing activity in China, has largely rebounded following strict measures to curb the virus early in the year, coming in at 52.1 this month. This was higher than October's reading of 51.4, and remains above the 50-point mark separating growth from contraction. Consensus, according to FXStreet, had penciled in a reading of 51.5.

The latest figures also bring the PMI data back to levels seen in September 2017.

The non-manufacturing PMI came in at 56.4 in November, slightly higher than the month before, signalling further recovery in the services sector.

Axi's Stephen Innes said the Chinese data is "not necessarily a booster of risk given that so much vaccine news is in the market bullish purview."

In early UK company news, Frasers Group confirmed it has provided draft terms to fellow retailer Arcadia Group for a loan of up to GBP50 million.

The Sports Direct and House of Fraser owner is now awaiting a "substantive response".

Philip Green's struggling Arcadia Group, which runs the Topshop, Dorothy Perkins and Burton brands, is on the brink of collapse with around 15,000 jobs at risk.

"Should the company and the Arcadia Group's efforts to agree an emergency funding package fail and the Arcadia Group enter into administration, the company would be interested in participating in any sale process," said Frasers.

Lloyds Banking said it has chosen Charlie Nunn as its next chief executive officer.

Nunn is currently global chief executive for Wealth & Personal Banking at fellow lender HSBC. He joined HSBC in 2011, having also held roles including global chief operating officer of Retail Banking & Wealth Management and head of Wealth Management & Digital.

Incoming Lloyds Chair Robin Budenberg said: "I am excited about Charlie's vision for Lloyds Banking Group, as well as his passion for and commitment to our purpose of helping Britain prosper. Given his career track record, he will bring world class operational, technology and strategic expertise to build on the strengths of the existing management team."

Added outgoing CEO Antonio Horta-Osorio: "Charlie will find a warm welcome at Lloyds Banking Group and a deep commitment from all of our people to deliver on our purpose and to help Britain recover."

Unilever said it has completed the unification of its group legal structure under a single parent company, Unilever PLC.

"From today, and for the first time in its history, Unilever now trades with one market capitalisation, one class of shares and one global pool of liquidity, whilst also maintaining the Group's listings on the Amsterdam, London and New York stock exchanges," the consumer goods giant said.

It stressed that there will be no change to operations, locations, activities, or staffing levels in either the Netherlands or the UK as a result of unification.

WPP said it has submitted a proposal to buy the remaining shares in WPP AUNZ it does not already own.

The London-listed advertising firm holds a 61.5% stake in WPP AUNZ, which is listed on the Australian Securities Exchange.

"The proposed acquisition is in line with WPP's global strategy of simplifying its structure and will move WPP to 100% ownership and control of its Australian and New Zealand operations," WPP said.

WPP is proposing to buy the shares at AUD0.55 each in cash, a premium of 34% to Friday's closing price. The total consideration payable by WPP for the remaining stake would be AUD181 million.

Indivior said it strongly believes Reckitt Benckiser's GBP1.1 billion claim is "without merit".

On Friday, Indivior announced Reckitt Benckiser had submitted a GBP1.07 billion claim against the company. The claim related to an indemnity contained in the demerger agreement entered into between the two companies in November 2014.

Drug maker Indivior spun off from consumer health and hygiene firm Reckitt and listed on the London Stock Exchange in December of that year.

Indivior on Monday said: "Based on the information available to it, Indivior strongly believes that the claim is without merit and that it has strong grounds for defending against the claim should it be served."

If the claim is served, Indivior will "fully and vigorously" defend itself.

Against the yen, the dollar edged down to JPY103.97 versus JPY103.99.

Sterling was quoted at USD1.3354 early Monday, firm against USD1.3331 at the London equities close on Friday. The euro traded at USD1.1966 early Monday, slightly higher than USD1.1957 late Friday.

Crunch talks aimed at securing a post-Brexit trade deal between the EU and UK will resume on Monday in what could be the final week of discussions.

The EU's chief negotiator Michel Barnier and his counterpart David Frost will meet again in London as they seek to hammer out an agreement.

With just a month to go until the end of the transition period, talks remain stuck on fishing rights – described by Dominic Raab as an "outstanding major bone of contention". But the UK foreign secretary said there was "a deal to be done" after the EU showed progress on the so-called level playing field aimed at preventing unfair competition.

Without a deal, the UK will leave the single market and customs union on December 31, and trade under World Trade Organisation terms.

Wall Street ended Friday's half-session in the green, with the Dow Jones Industrial Average adding 0.1%, the S&P 500 0.2% and the Nasdaq Composite 0.9%.

Gold was quoted at USD1,779.31 an ounce early Monday, lower than USD1,786.40 on Friday. Brent oil was trading at USD47.37 a barrel, down from USD48.05 late Friday.

"With no definitive pre OPEC+ meeting guidance to pilot markets, caution is warranted ahead of the meeting's conclusion. The recent oil-price rally may have reduced OPEC's sense of urgency. With signs of disharmony within the group, there is a possibility the OPEC+ meeting will fall short of those expectations," sais Innes at Axi.

The OPEC+ club of oil producers meets this week.

In Monday's economic calendar, there is German inflation at 1300 GMT.

By Lucy Heming; lucyheming@alliancenews.com

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