News Column

UK MORNING BRIEFING: Smiths Group And Tullow Oil Drag On FTSE 100

May 23, 2014

Tom Waite



LONDON (Alliance News) - UK shares have opened mixed Friday, with mid- and small caps posting small gains while the FTSE 100 has started lower.



Smiths Group and Tullow Oil are depressing the blue-chip index, as Smiths warned about the results of one of its business units, while Tullow Oil found little of note in an exploration well in Ethiopia.



London Stock Exchange leads FTSE 100 gainers after Goldman Sachs raised the stock to Neutral from Sell.



Following its business update on Thursday, Darty has seen its shares upgraded to Buy by both SocGen and Citigroup, from Hold and Neutral, respectively.



Among AIM stocks early Friday, Rockhopper Exploration has agreed to buy Mediterranean Oil & Gas, valuing the firm at GBP29.3 million.



Here is what you need to know at the UK market open:

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MARKETS

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FTSE 100: down 0.2% at 6,807.06

FTSE 250: flat to slightly higher at 15,675.38

AIM ALL-SHARE: up 0.1% at 797.74

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Hang Seng: up 0.1% at 22,972.90

Nikkei 225: closed up 0.9% at 14,462.17

DJIA: closed up 0.1% at 16,543.08

S&P 500: closed up 0.2% at 1,892.49

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GBP-USD: flat at USD1.6867

EUR-USD: down at USD1.3649



GOLD: up at USD1,294.84 per ounce

OIL (Brent): up at USD110.41 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Friday's Key Economic Events still to come

(all times British Summer Time)



09:00 Germany IFO

09:00 Italy Retail Sales

11:00 Italy Trade Balance non-EU

15:00 US New Home Sales

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UK house prices continued to rise in May, as households expect the price of their property to rise at the strongest pace since early 2009, a combined survey by property consultancy Knight Frank and Markit Economics showed. The house price sentiment index climbed to new record high 63.2 in May from 62.7 in the previous month. Any reading above 50 indicates the rising trend of prices. This was the fourteenth consecutive month of increase.

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The UK government is expected to announce on Friday that the Weald Basin in southern England contains billions of barrels of shale oil, delivering a potentially huge boost to an embryonic industry in the UK, the Financial Times reports, without saying where it got the information. The government will unveil the results of a study by the British Geological Survey, the latest in its reports on unconventional oil and gas potential, the FT said, adding that it will focus on the Weald, an area spanning Sussex, Hampshire, Kent and Surrey.

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Thirteen Ukrainian government troops were killed overnight while trying to protect the eastern city of Volnovakha from pro-Russian separatists, interim President Oleksandr Turchynov said. The casualties were believed to be the highest death toll that Ukrainian troops have suffered since the launch of military operations in mid-April against separatists. The soldiers died facing "grenade launchers and heavy automatic weapons," Turchynov said.

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Remarks reportedly made by Britain'sPrince Charles comparing Russian President Vladimir Putin to Adolf Hitler are "outrageous," the Russian embassy in London said Thursday. But British Foreign Office official Sian MacLeod told Russia's deputy ambassador Alexander Kramarenko that "the Foreign Office could not be expected to comment upon reports of private conversations," according to an FCO spokesperson.

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Germany's economic growth rebounded as previously estimated in the first quarter driven by domestic demand, the detailed report from Destatis showed. Gross domestic product grew 0.8% sequentially in the first quarter, up from 0.4% in the fourth quarter. The quarterly rate came in line with the provisional estimate published on May 15. On a calendar-adjusted basis, GDP grew 2.3% year-on-year, faster than the 1.4% rise seen in the fourth quarter. This was the largest increase in over two years.

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Fitch Ratings upgraded sovereign ratings of Greece by one notch as the nation posted a primary surplus amid easing near-term sovereign liquidity risks. The ratings were raised to 'B' from 'B-'. It still remains in junk territory.

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Standard & Poor's Ratings Services upgraded the sovereign ratings of Spain citing improved economic growth and competitiveness. The agency raised Spain's bond ratings to 'BBB/A-2' from 'BBB-/A-3'. The 'stable' outlook suggests that the risks to the ratings remain balanced over the next two years.

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Thailand's ruling junta barred 155 politicians, protest leaders and activists from leaving the country and summoned them to appear in Bangkok. The move came a day after the military staged a coup when its effort to bring rival factions together to hash out a solution to the country's political impasse ended in failure. The country has been under martial law since early Tuesday, and army chief General Prayuth Chan-ocha assumed the powers of the premiership on Friday. The military's National Peace and Order Maintaining Council has summoned 155 politicians and activists to the Army Auditorium in the capital for still undisclosed reasons.

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The UN Security Council on Thursday approved a request by Nigeria to place Boko Haram on its al-Qaeda sanctions list, putting into effect an assets freeze, travel ban and arms embargo against the Islamist group. Samantha Power, US ambassador to the UN, welcomed the decision by the sanctions committee.

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Russia and China vetoed a UN Security Council resolution to refer Syria to the International Criminal Court Thursday with Russia saying it feared that Western powers might have used it as a pretext for an armed intervention in Syria. "The draft resolution rejected today refuels the attempt to use the ICC to further inflame political passions and lay the groundwork in the end for eventual outside military intervention," said Vitaly Churkin, Russian ambassador to the UN. French ambassador Gerard Araud, whose country drafted the resolution, rejected the accusation: "I don't even think it is worth arguing about."

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BROKER RATING CHANGES

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TRADERS: EXANE BNP INITIATES SPORTS DIRECT WITH 'OUTPERFORM'

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TRADERS: CITIGROUP RAISES ROYAL MAIL TO 'NEUTRAL' ('SELL')

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GOLDMAN RAISES LONDON STOCK EXCHANGE TO 'NEUTRAL' ('SELL') - PRICE TARGET 1990 (1700) PENCE

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MORGAN STANLEY REINITIATES TESCO WITH 'EQUAL-WEIGHT' - PRICE TARGET300 PENCE

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HSBC CUTS SHAFTESBURY TO 'UNDERWEIGHT' ('NEUTRAL') - TARGET 650 (662) PENCE

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SOCGEN RAISES DARTY TO 'BUY' ('HOLD') - TARGET 124 PENCE

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TRADERS: CITIGROUP RAISES DARTY TO 'BUY' ('NEUTRAL')

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UBS CUTS POLYMETAL TO 'NEUTRAL' ('BUY') - TARGET 550 (700) PENCE

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TRADERS: JPMORGAN ADDS AB FOODS TO 'ANALYST FOCUS LIST'

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COMPANIES - FTSE 100

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Big shareholders in AstraZeneca PLC have told the UK drugmaker they want the board to reopen takeover talks with Pfizer as early as August, after accepting that a deal is unlikely to be agreed with its US rival before Monday's bid deadline, the Financial Times reports. BlackRock and Schroders are among those that have told AstraZeneca they want the company to take a fresh look at a possible deal after the three-month cooling-off period required under UK takeover rules, the FT says, citing people familiar with BlackRock's thinking and people close to Schroders.

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Standard Life PLC Friday said it has appointed a new chief financial officer, more than a year after Jackie Hunt resigned to join rival Prudential PLC. In a statement, the FTSE 100 long-term savings and investments provider said it has appointed Luke Savage, who has been the director of finance and operations at insurance market Lloyd's of London since 2004, to take on the role. He will join Standard Life on August 18.

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Tullow OilSays Shimela-1 Well In Ethiopia Found Only Traces Of Thermogenic Gas; Rig Will Be Moved

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Smiths Group Says Full-Year Outlook For Operating Profit In Line With Expectations, Except For Smiths Detection; Says Smiths Detection Full-Year Operating Profit Expected To Be GBP25M Lower Than Expectations; Says Smiths Detection Hurt By Weaker Demand From Cargo Screening, Transportation; Says Group Underlying Revenue Slightly Weaker In First 9 Mos Than Year Earlier; Says Forex Headwind In Line With Guidance At 5% Hit To Full-Year Earnings

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COMPANIES - FTSE 250

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The UK government said it has awarded the giant new rail franchise covering a swathe of southeast England to the Govia joint venture majority owned by Go-AheadGroup PLC, meaning FirstGroup PLC lost a key franchise and StagecoachGroup PLC failed in its bid to win the deal. The new franchise combines the current Southern franchise, which runs routes between London and the south coast, with the Great Northern Franchise to the north of London, connecting them with the Thameslink franchise that runs north to south across London. The Thameslink route is currently going through a GBP6.5 billion upgrade.

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BTG Says US FDA Has Cleared Its EcoSonic Endovascular System For Treatment Of Pulmonary Embolism

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Balfour Beatty Wins GBP78M Rail Contract In Charlotte, North Carolina

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Bank of Georgia Healthcare Unit Buys Sunstone Medical; Sunstone Medical Owns Tbilisi Hospital With 300 Beds

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Close Brothers Says Outlook Unchanged, Confident Of Strong FY Result; Assets Under Management Up 4% To GBP9.6B In Q3

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Unite Group Completes Oasis Capital JV Assets Sale; Invests GBP26M Into JV With GIC, Taking 50% Stake

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COMPANIES - ALL-SHARE AND AIM

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London-focused property investorsQuintain Estates & Development PLC said it swung to profit in its recent full year, after its results in the previous period were hit by valuation losses. The company, which recently sold its stake in student accommodation scheme iQ for GBP106.4 million, posted pretax profit of GBP4.7 million for the year ended March 31, compared with a GBP49.3 million loss a year earlier. Quintain benefited from a GBP22.4 million revaluation gain on investment properties compared with a GBP23.0 million deficit a year earlier.

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Rockhopper Has Agreed Deal To Buy Mediterranean Oil & Gas; Values Mediterranean Oil & Gas At About GBP29.3M

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Blur Group Raises USD22M In Placing And Open Offer At 75p Per Share; Placing Represents 37% Of Enlarged Capital, Will Use Cash For Investment, Working Capital

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Essenden Like-For-Like Sales In 20 Weeks To May 18 Up 6.1%, Like-For-Like Sales In 1st 2 Weeks Of May Up 4.9%

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Assura Group Fy Pretax Profit GBP24.2M Vs GBP12.9M; Underlying Operating Profit GBP10.9M Vs GBP8.8M; Liberum Raises Assura Group Price Target to 47.1p From 44.4p, Buy

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Atlas MaraTo Buy 77% Stake In Commercial Arm Of Development Bank Of Rwanda

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Men's formalwear retailer Moss BrosGroup PLC said its positive trading momentum from last year has continued into the first 16 weeks of its new financial year, with sales growth in its retail business and online, and improving suit hire sales. Moss Bros said it has traded in line with market expectations so far this year, with its like-for-like "cash profit" in the 16 weeks to May 17 up 6%, driven by strong growth in retail sales, with total sales growth across the business of 5.4% in the period, and like-for-like sales up 6.3%. The group said it remains confident about its medium-term growth prospects.

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MoPoweredGroup PLC, the mobile commerce firm, said is has recently signed several new long-term contracts with fashion retailers, including online women's fashion retailer Shelikes, and multi-channel women's plus-size clothing retailer Roman Originals. The mobile commerce firm, which has been investing in building its client base in the fashion sector by increasing sales and marketing activities, said the new contract wins build on its existing contracts with fashion retail customers including Next PLC, and Supergroup PLC.

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Friday's Scheduled AGMs/EGMs



IS Solutions

Robert Walters

HSBC Holdings

Moss Bros

Informa

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Source: Alliance News


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