News Column

UK MORNING BRIEFING: Imperial Tobacco Confirms US Asset Talks

July 11, 2014

Tom Waite



LONDON (Alliance News) - UK shares have opened mostly higher Friday, as the market looks to take back some of its heavy losses this week.



Imperial TobaccoGroup PLC is among the FTSE 100 leaders, up 2.9%, after it confirmed it is in talks with US tobacco firms Reynolds American Inc and Lorillard Inc to potentially buy some of their assets.



JPMorgan has raised Royal Dutch Shell To Overweight from Neutral. On Thursday afternoon, Nomura had raised the oil major to Buy from Neutral. Shell A and B shares are up 0.9%.



Among AIM stocks, Alba Mineral Resources shares have more than doubled at the open after saying it has agreed to buy a 5% interest in Horse Hill Developments Ltd for GBP300,000.



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

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MARKETS

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FTSE 100: up 0.3% at 6,689.98

FTSE 250: up 0.4% at 15,508.61

AIM ALL-SHARE: down 0.1% at 770.76

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Hang Seng: down 0.1% at 23,213.54

Nikkei 225: closed down 0.3% at 15,164.04

DJIA: closed down 0.4% at 16,915.07

S&P 500: closed down 0.4% at 1,964.68

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GBP-USD: flat at USD1.7129

EUR-USD: flat at USD1.3606



GOLD: up at USD1,336.50 per ounce

OIL (Brent): down at USD108.16 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)



10:00 UK CB Leading Economic Index

13:30 Canada Unemployment Rate

19:00 US Monthly Budget Statement

19:45 US Fed's Lockhart speech

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German inflation accelerated as estimated in June, while wholesale prices declined for the twelfth consecutive month, reports from Destatis showed. Inflation, based on harmonized consumer prices, rose to 1% in June on a yearly basis, final data from revealed. The rate came in line with flash estimate published on June 27 and follows a 0.6% rise in May. Month-on-month, the harmonized consumer price index gained 0.4% in June, unchanged from the preliminary estimate. At the same time, consumer price inflation increased to 1% in June from 0.9% in May. On a monthly basis, consumer prices gained 0.3%, reversing the 0.1% fall seen in May. CPI figures also matched preliminary estimate.

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Another report showed that German wholesale prices fell 0.8% year-on-year in June, after easing 0.9% a month ago. This was the twelfth consecutive fall in wholesale prices. On a monthly basis, prices slid 0.1% each in June and May.

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FRANCE MAY CURRENT ACCT DEFICIT EUR3.1 BLN VS EUR2.3 BLN APRIL

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Shares in Portugal's largest private bank Banco Espirito Santo plunged Thursday before trading was halted as its parent company said it had missed some debt payments. The bank's largest shareholder ESFG (Espirito Santo Financial Group) asked that the share sales be suspended. Espirito Santo International is the biggest shareholder of Espirito Santo Financial Group, which in turn owns 25% of BES. There is also power struggle within the bank's founding family over who should succeed longtime bank head Ricardo Salgado. Shareholders are to select a new bank head on July 31. The turmoil within the bank has created concerns in Portugal's capital markets and government bonds remain under stress.

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The International Monetary Fund welcomed positive developments in Spain's labor market but called for additional reforms to improve the condition. High unemployment remains a pressing challenge, the executive board of IMF said late Thursday. The lender noted that unemployment, at 26%, remains unacceptably high, with the majority of the unemployed without a job for at least a year.

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The US offered Thursday to mediate in escalating hostilities between missile-firing Gaza Strip militants Israel and the Israeli military, which has been waging an air offensive this week in the Palestinian enclave. The death toll in the Gaza Strip reached 88 with no sign of a halt in the rocket barrage from Palestinian militants and retaliatory airstrikes by Israel, which activated 20,000 military reservists ahead of a possible ground offensive. Telephoning late Thursday with Israeli Prime Minister Benjamin Netanyahu, US President Barack Obama warned against "further escalation and emphasized the need for all sides to do everything they can to protect the lives of civilians and restore calm," the White House said in a statement.

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US Secretary of State John Kerry and foreign ministers from other world powers were to meet this weekend in Vienna to gauge whether Iran is serious about clinching a wide-ranging nuclear deal, the US State Department said Thursday. With a July 20 deadline looming in the nuclear talks with Iran, Western diplomats have said there is still disagreement on key issues: how big of a nuclear programme Iran will be allowed to keep, and how fast sanctions will be lifted in return.

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Typhoon Neoguri weakened to an extratropical depression Friday after moving through eastern Japan, weather authorities said. Five people reportedly died in the typhoon that made landfall on the main southern island of Kyushu on Thursday. The Japan Meteorological Agency maintained warnings of floods, mudslides and high waves in wide areas of the country, as more heavy rains were expected to pound northern Japan later in the day.

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BROKER RATING CHANGES

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JPMORGAN RAISES SHELL (B) TO 'OVERWEIGHT' ('NEUTRAL') - PRICE TARGET 2700 (2325) PENCE

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JPMORGAN RAISES SHELL (A) TO 'OVERWEIGHT' ('NEUTRAL') - PRICE TARGET 2700 (2325) PENCE

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JPMORGAN RAISES REGUS PLC TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 181 (174) PENCE

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JPMORGAN CUTS MORGAN ADVANCED MATERIALS TO 'NEUTRAL' ('OVERW.') -TARGET 325 (350) P.

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JPMORGAN RAISES PAYPOINT TO 'NEUTRAL' ('UNDERW.') - TARGET 1193 (1281) PENCE

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SOCGEN CUTS DAIRY CREST GROUP TO 'SELL' ('HOLD') - TARGET 440 (480) PENCE

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JPMORGAN CUTS PROMETHEAN PLC TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 33 (42) PENCE

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TRADERS: JPMORGAN RAISES WINCANTON TO 'OVERWEIGHT' ('NEUTRAL')

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GOLDMAN RAISES GREGGS PRICE TARGET TO 515 (495) PENCE - 'NEUTRAL'

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COMPANIES - FTSE 100

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Insurer Friends LifeGroup Ltd said it has sold high-end wealth manager Lombard to funds managed by investment and advisory firm Blackstone for up to GBP356 million, and intends to return GBP261 million of the proceeds to shareholders through a share buyback. The deal means the company is more focused on its main life insurance business, Friends Provident. In a statement, Friends Life said it will get GBP317 million initially for Lombard International Assurance SA and Insurance Development Holdings AG, including GBP254 million in cash up front, about GBP7 million interest equivalent, and a GBP56 million deferred payment in the form of a vendor loan note.

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Experian PLC said its revenue grew 4% in its fiscal first quarter as growth in UK, North America and the rest of the world offset a slowdown in Latin America as customers there took time out to watch the football World Cup. The information services provider, which provides services like credit checking and financial risk analysis, had previously warned that it expected a slowdown in Latin America due to the football World Cup being held in Brazil and also due to a brand strengthening plan it is conducting in its North America consumer services business.

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Imperial Tobacco Group PLC confirmed it is in talks with US tobacco firms Reynolds American Inc and Lorillard Inc to potentially buy some of their assets. Reynolds is nearing a deal to acquire smaller rival Lorillard with the approval of British American Tobacco PLC, which owns 42% of Reynolds, Bloomberg reported Thursday, citing people with knowledge of the matter. A deal may reportedly be announced as early as next week, although the talks could still fall apart, the Financial Times reported.

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COMPANIES - FTSE 250

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Synthomer PLC said it now expects full-year 2014 pretax profit to be broadly in line with 2013, as strong competition in Asia and the strengthening of sterling continues to hamper its performance. The speciality chemical company said strong competition between glove manufacturers had continued in its Asia and Rest of the World segment, which has caused margin pressure in its Nitrile business, further exacerbated by weak pricing of Butadiene and customer de-stocking. As a result, Synthomer said its operating profit in Asia for the first half of the year will be around GBP4 million behind its previous-year result of GBP11.5 million. However, it said it expects demand for nitrile latex to grow and unit margins to firm up in the second half.

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Moneysupermarket.com H1 Revenue Expected At GBP122M, Up 9%; Adjusted EBITDA Also Expected Up 9%, In Line; Says Q2 Trading Growth A Little Stronger Than Q1; June 30 Net Debt GBP21.0M

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Rockhopper Exploration PLC said Premier Oil PLC, which operates the Sea Lion Field in the North Falkland basin, has awarded an engineering and design contract to AMEC PLC. Rockhopper, a oil and gas exploration company which holds a 40% interest in the Sea Lion field, said the award of the Tension Leg Platform Front End Engineering and Design contract to AMEC was made as part of ongoing pre-development activities at the site.

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COMPANIES - MAIN MARKET AND AIM

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Faroe Petroleum PLC said it has found a new oil region during drilling at the Bue prospect in the Norwegian Sea and has increased its resource estimates for the Pil discovery nearby. The oil and gas exploration and development company said the Bue side-track well 6404/12-3 A was drilled to a depth of 3,656.5 metres below sea level and found an 18 metre hydrocarbon region in reservoir rocks of variable quality. The well was set up to test the reservoir qualities of the Middle and Upper Jurassic regions, and the company said pressure data indicates no link between Bue and its Pil discovery 2.1 kilometres away, meaning the Bue site represents a separate region of oil accumulation.

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Coms PLC said Finance Director Sue Alexander has stepped down, and Chairman Ian Ross has resigned, as it reviews its audit function after it was forced to issue corrections to its full-year results for the year to end-January. In June the cloud-based telephony company issued a correction to its earnings before interest, tax, depreciation and amortisation figure for the year after consulting with its auditors, reducing it to GBP827,348 from the GBP1.5 million it had originally stated. Alexander decided to step down from her role, Coms said, but will remain with the company. It has begun the search for an "experienced public company chief financial officer", it said.

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Kofax FY Revenue Seen USD287.5M To USD290.5M; Operating Profit Seen USD33.5M To USD35.5M; CEO Says Software Revenues Below Guidance

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24/7 Gaming Group Issues 9.6M New Shares Following EUR585,000 Loan Conversion

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Alba Mineral Resources Makes Agreement To Acquire 5% Interest In Horse Hill Developments Ltd For GBP300,000

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Coral Products FY Pretax Loss GBP785,000, Vs GBP350,000 Profit; Revenue GBP17.2M, Down From GBP17.3M; Dividend 0.5p, Unchanged

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Leyshon Resources Shares To Be Suspended On ASX From July 14; Shares Will Continue Trading On AIM

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Friday's Scheduled AGMs/EGMs



Perpetual Income & Growth Investment Trust

Burberry Group

Value & Income Trust

Capital Gearing Trust

Etalon Group Ltd

Beowulf Mining

Coms

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Source: Alliance News


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