News Column

UK MORNING BRIEFING: Supermarket Shares Slump On Tesco Profit Warning

August 29, 2014

Tom Waite



LONDON (Alliance News) - UK supermarkets are weighing on the FTSE 350 Friday, following a profit warning by Tesco. However, overall, shares are flat to higher, led by Bwin.Party Digital Entertainment.



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 6,828.74

FTSE 250: marginally up at 15,916.19

AIM ALL-SHARE: marginally up at 779.21

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Hang Seng: up 0.2% at 24,784.22

Nikkei 225: closed down 0.2% at 15,424.59

DJIA: closed down 0.3% at 17,079.57

S&P 500: closed down 0.2% at 1,996.74

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GBP-USD: up at USD1.6597

EUR-USD: down at USD1.3171



GOLD: down at USD1,288.78 per ounce

OIL (Brent): up at USD102.93 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 Italy Unemployment

09:30 UK Total Business Investment Preliminary

10:00 Italy Consumer Price Index Preliminary

10:00 EU Consumer Price Index Preliminary

10:00 EU Unemployment Rate

11:00 Italy Gross Domestic Product

13:30 US Personal Income and Spending

13:30 Canada Gross Domestic Product

13:30 Canada Raw Material and Industrial Product Price indices

14:45 US Chicago Purchasing Managers' Index 56 52.6

14:55 US Reuters/Michigan Consumer Sentiment Index

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The average asking price for a house in the UK was up 0.1% on month in August, property tracking website Hometrack said - unchanged from the pace in July. On a yearly basis, house prices climbed 5.5% - slowing from 5.8% in the previous month. In the London region, only 10.9% of sellers reported higher prices.

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An index measuring consumer confidence in the UK climbed back into positive territory in August with a score of +1, GfK said. That beat expectations for a score of -1 following the -2 reading in July. The August reading matched the nine-year high mark in June.

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Western leaders are to mull further steps against Russia in the coming days including sanctions, after satellite images backed up NATO's allegation that Russian combat forces are engaging in military operations in Ukraine. Ukraine's "alarming" situation will be the focus of an informal meeting of EU foreign ministers Friday in Milan, said Italian Foreign Minister Federica Mogherini, whose country holds the rotating EU presidency. NATO estimated that more than 1,000 Russian solders were fighting among pro-Russian separatists, while insurgents conceded the number to be up to 4,000.

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Ukrainian President Petro Poroshenko is to travel in September to Washington, where US President Barack Obama says he will express "unwavering" support and partnerhip with Ukraine during a White House meeting. Obama made the announcement in brief remarks to the press about the situations in Iraq and Syria and in Ukraine.

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US President Barack Obama has not yet devised a strategy for going after Islamic State militants inside Syria and remains focused on protecting US interests in Iraq. US military advisors are developing options for Obama to consider that focus "primarily on making sure that ISIL is not overrunning Iraq," he said Thursday, noting that a long-term solution will "require us to stabilize Syria in some fashion." "We don't have a strategy yet," he said, noting it would be premature to consult with Congress on potential action before a plan is in place.

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German retail sales declined unexpectedly in July from June, provisional data showed. The retail turnover declined by real 1.4% month-on-month in July, reversing the 1% increase in June, Destatis said. Economists had forecast a 0.1% rise for July. However, on a yearly basis, retail sales growth accelerated to 0.7% in July from 0.1% in June. Nonetheless, the rate of growth was weaker than the 1.5% rise forecast by economists.

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FRANCE JULY PPI DOWN 0.6% ON YEAR, CONSENSUS +0.4%; DOWN 0.3% ON MONTH, CONSENSUS 0%

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Core consumer prices in Japan were up 3.3% on year in July, the Ministry of Internal Affairs and Communications said - matching forecasts and unchanged from June. Overall consumer prices were up 3.4% on year - also in line with expectations and easing from 3.6%.

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The unemployment rate in Japan was a seasonally adjusted 3.8% in July, the Ministry of Internal Affairs and Communications said. That missed expectations for 3.7%, which would have been unchanged from the June reading.

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Industrial production in Japan added 0.2% on month in July, the Ministry of Economy, Trade and Industry said. That was well shy of forecasts for a gain of 1.0% following the 3.4% decline in June. On a yearly basis, industrial production fell 0.9% - also missing expectations for a fall of 0.1% following the 3.1% jump in the previous month.

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Recep Tayyip Erdogan was sworn in Thursday as president of Turkey, in a move seen as consolidating his power after 11 years as prime minister. Earlier this month, Erdogan, 60, won Turkey's first-ever direct presidential election.

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Pakistan's powerful military stepped in Thursday to mediate between Prime Minister Nawaz Sharif and the opponents leading protests to unseat him, easing pressure on the embattled premier but raising questions about his authority in future. Tens of thousands of protesters led by former cricketing star Imran Khan and Pakistani-Canadian cleric Tahirul Qadri have been camping for two weeks outside the parliament in the capital Islamabad demanding Sharif's resignation.

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BROKER RATING CHANGES

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TRADERS: NOMURA CUTS ADMIRAL GROUP TO 'NEUTRAL' ('BUY')

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LIBERUM CUTS MAN GROUP TO 'HOLD' ('BUY') - TARGET 120 (119) PENCE

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CITIGROUP CUTS AFREN TO 'NEUTRAL' ('BUY') - TARGET 120 (212) PENCE

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TRADERS: NUMIS CUTS RESTAURANT GROUP TO 'ADD' ('BUY')

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TRADERS: CANACCORD CUTS HUNTING TO 'HOLD' ('BUY')

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TRADERS: NOMURA RAISES DIRECT LINE TO 'BUY' ('NEUTRAL')

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UBS RAISES KAZAKHMYS TO 'BUY' ('NEUTRAL') - TARGET 370 (350) PENCE

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JPMORGAN INITIATES SPIRE HEALTHCARE WITH 'OVERWEIGHT' - TARGET PRICE 336 PENCE

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COMPANIES - FTSE 100

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Tesco brought forward the start date for its new chief executive and tasked him with conducting a review of the whole group, after it slashed its interim dividend, cut its capital expenditure plans and said it expects trading profit to be significantly lower than last year. In a trading update, Tesco said trading conditions remain challenging and its ongoing investments in its customer offer - which includes big price cuts - have weighed on its expected performance. It said it was uncertain about how fast the benefits of the investments it is making would flow through in the second half of its financial year. It said it now expects its trading profit in the current financial year that ends in February 2015 to be between GBP2.4 billion and GBP2.5 billion, and trading profit for the first half ending August 23 to be about GBP1.1 billion.

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European oil giant Royal Dutch Shell has submitted a revised plan to the US government to drill in the Arctic Ocean, off the coast of Alaska, the Financial Times said Thursday. Shell has submitted its exploration plan to the Bureau of Ocean Energy Management, which controls offshore drilling rights. The company is keeping its option open to drill in the area next summer, although it has not decided to do so. The submitted plan includes environmental and safety aspects.

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A new US ruling means that HSBC Holdings and Nomura Holdings Inc have been unable to block mortgage-related claims on the basis that they were brought too late, which clears the way for a trial of HSBC over residential mortgage-backed securities sold to Fannie Mae and Freddie Mac, Bloomberg reported Thursday.

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Barclays PLC has committed USD275 million in financing to Detroit to exit from its bankruptcy after it gets court approval for its debt reduction plans at a trial beginning next week. Detroit filed the biggest municipal bankruptcy in US history last year. It now seeks court approval to cut over USD7 billion of its USD18 billion obligations to certain creditors, including retired city workers and bondholders. Financing from Barclays will be used to pay off USD120 million it borrowed for reorganisation, and to pay some creditors and revitalise the city.

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COMPANIES - FTSE 250

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US semiconductor producer Microchip Technology Inc confirmed it has held preliminary discussions with FTSE 250 chipmaker CSR PLC over a potential acquisition. Microchip noted that it has worked with CSR on business initiatives in the past, such as a Bluetooth module initiative. The Arizona-based company said that discussions with CSR are at "a very preliminary stage", and said there can be no certainty that an offer will be made. On Thursday, CSR said it had rejected a bid from Microchip Technology as its proposed price was too low, and said it was considering its options.

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De La Rue appointed Martin Sutherland as its new chief executive, saying he will join the board and become an executive director no later than October 13. The currency and security documents company said Sutherland will join from his position as managing director of BAE Systems Applied Intelligence, the business and technology consulting arm of defence group BAE Systems PLC. Following Sutherland's start at the company, De La Rue Chairman Philip Rogerson will revert to his role as non-executive chairman and Colin Child, who took up the position of chief operating officer on a temporary basis in February, will revert to his position as finance director. Sutherland replaces Tim Cobbold, who left De La Rue in February to take the helm at marketing, media and events company UBM PLC.

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Afren H1 Net Production 33,488bopd; Full-Year Guidance Revised To 32,000-36,000bopd; H1 Pretax Profit From Continuing Ops USD133M, Down 49% From USD260M Year Before; Says Investigation Of CEO And COO So Far Has Not Led To Any Impairment Of Assets

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Exova H1 Pretax Loss GBP38.1M, Widened From GBP10.3M Year Before; Says Medium-Term Outlook Is Positive, Looks To Expand Via Acquisitions, Outsourcing Agreements

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Berendsen H1 Pretax Profit GBP50.6M Vs GBP46.7M; Interim Dividend 9.5p Vs 8.8p; Expects Good Underlying Progress For FY

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Bwin.party H1 Pretax Loss EUR94.0M Vs EUR11.6M Loss; Interim Dividend 1.89 Pence Vs 1.80 Pence; Says Remains Confident About FY Outlook

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Ophir Energy To Buyback Up To USD100M In Shares; Says It May Buyback Up To 59.2M Shares At Maximum Price Of 105% Market

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Computacenter H1 Pretax Profit GBP18.0M Vs Pretax Loss GBP4.4M; Interim Dividend 5.9p Vs 5.2p

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Perform Group H1 Pretax Loss GBP4.2M Vs Pretax Loss GBP2.6M; Says Trading In H2 Has Started Well; On Track For Its FY Expectations

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Restaurant Group H1 Pretax Profit Up 12% To GBP33.7M From GBP30.0M Year Before; Interim Dividend Up 16% To 6.1p From 5.25p; Like-For-Like Sales In 34 Weeks To Aug 24 Up 3.5%; Confident Of Good Progress In 2014

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COMPANIES - LONDON MAIN MARKET AND AIM

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MDM Engineering Says Merger Approval In South Africa Expected Late September

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Asian Plantations Gets 220P Per Share Offer From FELDA Global Ventures; Offer Values Company At GBP102.9M

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Rangers Intl FC Announces Open Offer Of Up To 19.9M New Shares At 20p To Raise GBP3.97M

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Shaft Sinkers H1 Pretax Loss GBP8.6M, Swinging From GBP2.0M Profit Year Before;Revenue Down 53% To GBP41.3M From GBP88.4M; Says Revenue Drop Due South Africa Contracts Ending, Forex, Strikes, Safety Stoppages; Wins 6-Mo Contract Extension From Impala Platinum Worth GBP3.7M

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Sweett Group Trading In Line with Expectations In Financial Year So Far

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Lavendon Group H1 Statutory Pretax Profit GBP10.8M, Up From GBP8.6M Year Before; Interim Dividend 1.40p, Up 22% From 1.15p; Agrees New Debt Facilities Of Around GBP175M

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CPP Group H1 Pretax Loss Narrows To GBP1.1M From GBP11.4M

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British Polythene Industries H1 Pretax Profit GBP14.8M vs GBP14.1M

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Chesnara H1 Pretax Profit GBP27.4M Vs GBP21.8M

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Biofrontera H1 Pretax Loss EUR5.4M, Widened From EUR3.7M Year Before; Says Revenue In 2015 May Fall Short Of Expected EUR5-6M

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Tritax Big Box REIT Buys Wolseley Regional Distribution Centre In North Yorkshire For GBP12.2M

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Stobart Group Confident Of Strong Returns Over Medium-Term; Says Biomass Tonnages, Passenger Numbers Up On Year

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COMPANIES - INTERNATIONAL

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Deutsche Telekom AG is willing to negotiate a sale of its T-Mobile US Inc unit for an offer of USD35 per share or more, Bloomberg reported, quoting a person with knowledge of the matter. T-Mobile is the fourth-largest wireless carrier in the US.

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Private equity giant Blackstone Group LP is mulling the sale of its New York city skyscraper '1095 Avenue of the Americas' in what could be one of the most expensive building sale in the US, according to media reports on Thursday. The building is a 42-story, 1.2 million-square-foot office tower, now known as 3 Bryant Park, is poised on the western side New York's beloved Bryant Park and sits at the corner of 42nd Street and Sixth Avenue.

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Friday's Scheduled AGMs/EGMs



Stagecoach Group

Sweett Group

Essar Energy

Petroneft Resources

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