News Column

UK MORNING BRIEFING: CSR Soars On Bid Report; Xaar Falls On Outlook

August 28, 2014

Tom Waite



LONDON (Alliance News) - FTSE 250 stocks are dominating attention at the open Thursday, with shares mostly lower in early trade.



With news out from 15 of the London mid-cap companies, chipmaker CSR is leading FTSE 250 risers on takeover speculation, while inkjet printing technology firmXaar is at the bottom, after lowering its revenue expectations. CSR is up a whopping 26%, while Xaar is down a similarly arresting 22%.



Following the Kantar Worldpanel grocery market share report published on Wednesday, Deutsche Bank has cut Tesco to Hold from Buy, while raising Morrisons to Hold from Sell. Morrisons was one of the top performing FTSE 100 stocks on Wednesday, after the survey showed the supermarket chain steadying its loss of market share.



Meanwhile, traders say Morgan Stanley has cut BP to Underweight from Equal-Weight.



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 6,817.11

FTSE 250: down 0.2% at 15,992.04

AIM ALL-SHARE: flat at 779.14

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Hang Seng: down 0.8% at 24,712.64

Nikkei 225: closed down 0.5% at 15,459.86

DJIA: closed up 0.1% at 17,122.01

S&P 500: closed marginally higher at 2,000.12

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GBP-USD: up at USD1.6589

EUR-USD: up at USD1.3208



GOLD: up at USD1,289.04 per ounce

OIL (Brent): flat at USD102.56 a barrel



(changes since end of previous GMT day)

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ECONOMICS AND GENERAL

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Thursday's Key Economic Events still to come

(all times British Summer Time)



09:00 EU M3 Money Supply

09:00 Italy Retail Sales

10:00 EU Consumer and Industrial Confidence, Economic Sentiment

10:00 Italy Business Confidence

11:00 UK CBI Distributive Trades Survey

11:00 Ireland Retail Sales

11:00 Italy Wage Inflation

13:00 Germany Consumer Price Index

13:30 US Personal Consumption Expenditures

13:30 US Gross Domestic Product Preliminary

13:30 US Jobless Claims

13:30 Canada Current Account

15:00 US Pending Home Sales

15:30 US EIA Natural Gas Storage

16:00 US Kansas Fed manufacturing activity

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The unemployment rate in Germany decreased in July, data from the statistical office Destatis showed. The jobless rate came in at adjusted 4.9% in July following the revised 5% rate in June. In the corresponding month of last year, the unemployment rate was at 5.3%. The number of unemployed people fell to 2.09 million from 2.12 million in June.

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French unemployment reached a new record in July as the economy stagnated again in the second quarter. Registered unemployment increased by 0.8% to a record 3.424 million in July, the labor ministry reported late Wednesday. From a year earlier, unemployment rose by 4.3%. The stalled economy and high unemployment made it difficult for the French President Francois Hollande to convince his own allies about reforms on cards.

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EU leaders will have a second attempt on Saturday at filling the bloc's top jobs for the next five years, but they are faced with a politically complex puzzle that is further bogged down by a dearth of female candidates. The leadership change follows European elections in May. Successors are most urgently needed for EU foreign policy chief Catherine Ashton, whose term ends on October 31, and for EU President Herman Van Rompuy.

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Ukraine proposed a road map Wednesday to solve the bloody conflict in the country's east, while the US and Kiev said there was evidence the Russian military was moving toward south-eastern Ukraine. New reports of unabated fighting came from the city of Novoazovsk, more than 100 kilometres south of Donetsk, near the Russian border. Kiev accused Moscow of opening a new front from Russian territory. Local media reported that Novoazovsk was being shelled by Russian-made Grad missiles.

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Six Libyan ministers resigned Wednesday, accusing the interim government of taking sides in the country's inter-militia fighting, the official Libyan News Agency LANA reported. The ministers of industry, education, planning, labour, water resources and injured people's affairs resigned from the interim government headed by Abdullah al-Thinni, according to the report.

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An indefinite ceasefire to end seven weeks of fighting between Israel and Palestinian militant groups in the Gaza Strip was holding Wednesday, with Hamas declaring "victory" and the Israeli cabinet divided on the deal. Egypt, which brokered the deal, has said that indirect talks between the two sides would resume within a month.

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A WHO epidemiologist infected with Ebola in Sierra Leone was evacuated to Germany, the Nigerian government ordered schools to remain closed to curb the spread of the outbreak and a leading aid group warned Wednesday that the global response to Ebola was chaotic. Ebola management centres were "overwhelmed" in Liberia, while the virus continued to spread rapidly, said medical aid organization Medecins Sans Frontieres.

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The German army has sent six soldiers to northern Iraq to coordinate German civilian and military aid packages. The non-combat unit started its mission at the general consulate in Erbil on Wednesday, the army said. The German government has said it will provide arms to Kurdish forces fighting Islamic militants in the region, although Chancellor Angela Merkel has repeatedly said no combat troops would be sent to Iraq.

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BROKER RATING CHANGES

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DEUTSCHE BANK CUTS TESCO TO 'HOLD' ('BUY') - PRICE TARGET 280 (313) PENCE

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DEUTSCHE BANK RAISES MORRISON TO 'HOLD' ('SELL') - TARGET 190 PENCE

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TRADERS: MORGAN STANLEY CUTS BP TO 'UNDERWEIGHT' ('EQUAL-WEIGHT')

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GOLDMAN CUTS SPORTS DIRECT PRICE TARGET TO 975 (1100) PENCE - 'BUY'

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HSBC CUTS SEGRO PLC TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 409 (400) PENCE

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TRADERS: BARCLAYS INITIATES PROVIDENT FINANCIAL WITH 'EQUAL WEIGHT'

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TRADERS: BARCLAYS INITIATES PARAGON GROUP WITH 'OVERWEIGHT'

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TRADERS: BARCLAYS INITIATES CLOSE BROTHERS WITH 'OVERWEIGHT'

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COMPANIES - FTSE 100

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Tullow Oil PLC said exploration and appraisal drilling on two blocks onshore in Kenya had extended the potential size of the areas and reinforced its belief that the basin in which the blocks sit holds "very considerable" potential. The company said the Etom-1 exploration well it drilled in Block 13T was the most northerly drilled so far, and extended the proven oil basin significantly northwards after it hit about 10 metres of net oil pay.

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COMPANIES - FTSE 250

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Chipmaker CSR is exploring a possible sale after receiving takeover offers from various rival semiconductor manufacturers, the Financial Times reports, citing people familiar with the matter.

The company has hired bankers to sound out offers and assess the merits of a sale, the FT said, which quoted the people familiar with the matter saying the business could fetch as much as USD3 billion, a hefty premium to its current share price.

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Inkjet printing technology company Xaar lost a quarter of its value early Thursday, after it 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, 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. Still, it raised its interim dividend to 3.0 pence, from 2.5 pence, and said it expects to pay a total dividend of 9 pence for 2014, which would be a 12.5% increase over 2013. 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.

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SOCO International said trading in its first-half was in line with its expectations, despite reporting pretax profit and revenue falls, as it reiterated its production guidance for the full-year and announced a GBP73 million cash return to shareholders. The oil and gas exploration and production company said pretax profit declined to USD174.7 million in its first-half, down from USD228.7 million last year. In its results for the six months to June 30, SOCO said revenue also fell, coming in at USD246.4 million from the USD324.0 million recorded last year. SOCO proposed a 22 pence per share cash return to shareholders, structured as a B and C share issuance.

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Engineering investment group Melrose Industries reported an increase in profit for the first half, despite a mixed performance across the business. Melrose, which specialises in buying underperforming engineering companies and turning them around, posted pretax profit of GBP69.6 million for the six months ended June 30, up from GBP64.1 million a year earlier, even though revenue fell to GBP780.9 million from GBP875.3 million. On the back of its performance the company increased its interim dividend to 2.8 pence from 2.75 pence a year earlier.

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Hays, the recruitment company, reported 12% growth in full year operating profit, and said it is ahead of schedule as it looks to broadly double operating profit by 2018. In a statement, Hays said operating profit increased to GBP140.3 million in the year ended June 30, compared with GBP125.5 million last year. Net fees - the difference between revenue and remuneration of temporary workers and other recruitment agencies - crept up to GBP724.9 million from GBP719.0 million, as increases in Continental Europe & Rest of World and the UK & Ireland more than offset a fall in Asia Pacific. However, revenue itself fell to GBP3.68 billion from GBP3.70 billion. Pretax profit increased to GBP132.3 million pretax profit from GBP118.5 million. Hays increased its full year dividend per share to 2.63 pence from 2.50p.

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Healthcare company BTG said Chinese regulators have approved the registration of the DC Bead liver cancer treatment it will distribute through Chinese partner SciClone Pharmaceuticals Inc. In a statement, the companies said the China Food and Drug Administration has approved the registration of DC Bead for the embolisation of malignant hypervascularised tumours.

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DCC To Acquire Esso SAF's Unmanned, Motorway Retail Petrol Stations; Says Deal Worth EUR106M Plus Stock In Tank At Acquisition Date

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F&C Commercial Property H1 Pretax Profit GBP94.4M Vs GBP26.8M; H1 NAV Total Return 12.2%

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IP Group Fair Value Investment Portfolio GBP319.6M From GBP285.9M In H1

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Unite Group H1 Pretax Profit GBP44.6M Vs GBP37.5M; H1 EPRA NAV Per Share 402P Vs 382P In Dec; Increases Interim Dividend To 2.2P Vs 1.6P

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Playtech H1 Pretax Profit EUR76.9M Vs EUR414.8M; Interim Dividend EUR8.9c Vs EUR7.8c; Confident Of Exceeding Market Expectations For FY

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Stock Spirits Swings To H1 EUR19.5M Pretax Profit From EUR9.3M Pretax Loss; Maiden Interim Dividend EUR0.0125 Per Share

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Ophir Energy Appoints Bill Higgs As COO, Effective September 10; Says Appointment Is Part Of Restructuring Across All Levels

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Hunting H1: Pretax Profit Up 15% To USD69.1M Vs USD60.0M; Interim Dividend Up 5.2% To 8.1 US Cents Vs 7.7 US Cents

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International Public Partnerships H1 Pretax Profit GBP37.2M Vs GBP30.6M

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COMPANIES - LONDON MAIN MARKET AND AIM

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Camellia H1 Pretax Loss GBP6.9M Vs GBP11.9M Pretax Profit; Interim Dividend Flat At 34p

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DRS Data Reiterates FY Profit Warning, Set To Reduce Costs

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Marshalls H1 Pretax Profit GBP14.0M Vs GBP8.0M; Increases Interim Dividend To 2.0P Vs 1.75P

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AA CEO Chris Jansen Will Stand Down; Bob Mackenzie Will Lead As Executive Chairman; CFO Andy Boland Will Also Be Leaving

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Gulf Keystone Petroleum Continues To Target 40,000bopd Shaikan Production By Year End; Says Iraq Security Situation Could Push Production Goal To Q1 2015; Says Shaikan Production Currently 20-25,000bopd; H1 Pretax Loss USD28.1M, Widened From USD25.9M Year Before

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STV Group H1 Pretax Profit GBP8.4M Vs GBP6.2M; Interim Dividend 2.0p Vs Nil

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IFG Group To Dispose Of Its Irish Pension And Advisory Business; Sells Division To Willis Ireland, Part Of Willis Group Holdings; Says Deal Worth Maximum Of EUR13.5M; IFG Group H1 Pretax Profit From Continuing Ops GBP2.2M, Down From Re-Presented GBP3.0M; Interim Dividend Maintained At 1.65 Cents Per Share

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Petropavlovsk H1 Pretax Profit USD8.3M Vs USD615.4M Loss; H1 Gold Production 306,400 Oz Vs 294,700 Oz; Keeps FY Gold Production Target Of 625,000 Oz

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PPHE Hotel Group H1 Pretax Profit EUR19.2M Vs EUR9.3M; Raises Interim Dividend To 9.0p Vs 6.0p

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Independent News & Media H1 Pretax Loss EUR200,000 Vs Pretax Loss EUR8.9M

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Lamprell H1 Pretax Profit USD46.5M Vs USD12.3M; Order Book Rebuilt And Now Extending Out To Q2 2017

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Arrow Global Remains On Track To Meet Its Full Year Expectations

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Office2Office H1 Pretax Profit GBP86,000 Vs GBP1.2M; Revenue GBP114.6M Vs GBP119.2M

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Paddy Power H1 Pretax Profit EUR61.6M Vs EUR77.0M; Interim Dividend EUR50.0c Vs EUR45.0c; Says H2 Has Started Well; Expects Mid-Teen Percentage EPS Growth For FY; Expects EUR11M Headwind From Product Fees, Taxes, Currency

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Irish Continental H1 Pretax Profit Down 18% To EUR2.7M; Revenue EUR130.7M Vs EUR120.9M; Interim Dividend 3.465c Vs 3.3c

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COMPANIES - INTERNATIONAL

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US District Judge Lucy Koh Wednesday rejected Apple Inc's attempt for a permanent injunction against Samsung Electronics Co Ltd from selling products that infringe on the US technology giant's certain patents. Earlier this year, Apple won a USD120 million verdict against Samsung regarding these patents, much less than the USD2.2 billion it had sought, and requested to stop the South Korean company from selling smartphones and tablets that infringe on these patents.

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Australian airline Qantas posted a full-year net loss of AUD2.84 billion in 2013-2014, its worst performance ever. The national airline made an AUD1 million dollar profit over the same period a year ago. Analysts had predicted a maximum loss of up to AUD1 billion for the financial year ending on June 30. Qantas attributed the loss to a restructuring programme costing AUD2 billion, and an AUD2.6 billion write-down of its fleet of Boeing jets.

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South Korean automaker Kia Motors Corp said late Wednesday that it has agreed to build a USD1 billion car assembly plant in Mexico by 2016. The company noted that the plant will enable it to secure local production base to meet global demand for new vehicles. Kia Motors said that it has signed an investment agreement with the Mexico government to build a manufacturing plant in Monterrey, which is located in the northeastern Mexican state of Nuevo LeÓn. Kia Motors, partly owned by Hyundai Motor Co., plans to produce "a range of yet-to-be confirmed compact models at the new plant".

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Thursday's Scheduled AGMs/EGMs



Sagentia Group

Tavistock Investments

Concha

Omega Diagnostics Group

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