News Column

MARKET COMMENT: UK Shares Decline As Draghi Boost Wears Off

August 28, 2014

LONDON (Alliance News) - UK stocks have declined Thursday as the boost provided by the doveish comments from European Central Bank President Mario Draghi at the end of last week wear off.

At mid-morning on Thursday, the FTSE 100 was trading down 0.2% at 6,815.17, the FTSE 250 was trading down 0.7% at 15,910.13, and the AIM All-Share was trading down 0.1% at 778.56.

In Europe, the CAC 40 was trading down 0.5% and the DAX, hit by German unemployment figures, was down 0.7%.

German unemployment data released Thursday morning further highlighted the turn downwards that the German economy has taken over the past few months. The results showed that unemployment rose by 1,000 missing economists' expectation of a 5,000 decrease. Unemployment levels remained at 6.7%, meeting the consensus.

The DAX fell sharply shortly after the news was released, but has recovered somewhat ahead of the release of the German consumer price index at 1300 BST.

In UK stock news, the Financial Times reports that CSR is exploring a possible sale, after receiving takeover offers from various rival semiconductor manufacturers. The company has hired bankers to sound out offers and assess the merits of a sale, the newspaper said, quoting people familiar with the matter and saying the business could fetch as much as USD3 billion, a hefty premium to its current market cap of GBP1.2 billion, or about USD2.0 billion.

Following the FT report, CSR has said it has rejected a takeover approach from US-based semiconductor manufacturer Microchip Technology Inc because the proposed price was too low, but it is considering its options for the company. The company's stock leads the FTSE 250, up 26%.

Xaar's shares have slumped by 21% and is the leading faller of the FTSE 250 index. The company has lowered its revenue expectations for the full year due to softening demand in the Chinese ceramic tile decoration market, and it posted a lower pretax profit for the first half of the year. Demand for ceramic tile decoration has weakened in the third quarter due to slowing construction activity in China, Xaar said, and the the company lowered its full-year revenue expectations to GBP115 million to GBP125 million, from a forecast of about GBP130 million it gave in July.

Xaar posted a pretax profit of GBP15.3 million for the six months to June 30, down from GBP23.4 million a year earlier, as revenue declined to GBP60.4 million from GBP70.2 million.

In the FTSE 100, Wm Morrisons Supermarket continues to make gains following the Kantar Worldpanel grocery market share report published on Wednesday. The company has Thursday had its stock rating raised to Hold from Sell by Deutsche Bank, with a price target of 190 pence. The stock is up 1.3% at 186.84p Thursday morning.

By Neil Thakrar;

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Source: Alliance News

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