News Column

UK MORNING BRIEFING: Catlin Leads FTSE 350 Amid Nervous Market

August 8, 2014

Tom Waite



LONDON (Alliance News) - Renewed concerns about the conflict in Iraq have added to the geopolitical risks depressing equities markets, leaving UK shares broadly lower at the open Friday.



Insurer Catlin Group has provided one bright spot for the market, topping the FTSE 350 after saying its first-half pretax profit more than doubled, boosted by a significant jump in its net investment return as well as an improved underwriting performance. Shares are up 3.5%.



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

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MARKETS

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FTSE 100: down 0.6% at 6,557.85

FTSE 250: down 0.9% at 15,109.75

AIM ALL-SHARE: down 0.3% at 747.95

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Hang Seng: up 0.2% at 24,436.17

Nikkei 225: closed down 3% at 14,778.37

DJIA: closed down 0.5% at 16,368.27

S&P 500: closed down 0.6% at 1,909.57

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GBP-USD: down at USD1.6814

EUR-USD: up at USD1.3395



GOLD: up at USD1,318.35 per ounce

OIL (Brent): up at USD106.56 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)



09:30 UK Trade Balance

13:30 Canada Unemployment Rate

13:30 US Nonfarm Productivity and Unit Labor Costs preliminary

15:00 US Wholesale Inventories

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US President Barack Obama late Thursday authorized airstrikes against Islamist militants that have taken over swathes of territory in Iraq and Syria, and said it could act to prevent a possible "act of genocide" against displaced minority communities. Further advances by the Islamic State (IS) group could threaten the city of Erbil, where there are US interests, Obama said. "I have therefore authorized targeted airstrikes" at the request of the Iraqi government, Obama said. The president stressed that no US ground troops would be involved in the operation.

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Russian Prime Minister Dmitry Medvedev announced Thursday that his government has decided to ban the imports of a wide range of agricultural and food products from the US and the EU in response to western sanctions imposed on Russia over its involvement in the conflict in Ukraine. Medvedev was quoted as saying on state television that the "full embargo" would cover the import of beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products from the EU, US, Australia, Canada and Norway.

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Several rockets were fired on Friday morning from the Gaza Strip into southern Israel after a 72-hour ceasefire between Israel and the Palestinians ended at 8 am local time while Hamas said it wasn'T continuing indirect talks with Israel. Israeli Radio reported that sirens were heard in several southern towns after rockets were fired from the coastal enclave into Israel. No damage or harm was caused, the report quoted Israeli army sources as saying. There was no immediate Israeli return of fire.

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Job placements in the UK increased sharply in July, the Report on Jobs showed. Permanent job placements increased at the fastest rate in five months, and demand for temporary employees expanded at its biggest pace in seven months. The report is produced by Markit on behalf of the Recruitment & Employment Confederation and KPMG. In July, job vacancies continued to rise, especially in the private sector. Pubic sector vacancies also maintained a solid increase during the month.

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China posted a merchandise trade surplus of USD47.3 billion in July, the Customs Office said. That significantly topped forecasts for a surplus of USD26.0 billion following the USD31.56 billion surplus in June. Exports surged an annual 15%, also shattering expectations for a gain of 7.5% following the 7.2% increase in the previous month. Imports slid 1.6% on year versus forecasts for an increase of 3.0%. That follows the 5.5% spike a month earlier.

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Japan posted a current account deficit of JPY399.1 billion in June, the Ministry of Finance said - sliding into the red after four straight months of surplus. The headline figure missed forecasts for a shortfall of JPY325.7 billion, following the JPY522.8 billion surplus in May. The trade balance reflected a deficit of JPY537.1 billion, which beat expectations for a shortfall of JPY592.8 billion following the JPY675.9 billion deficit in the previous month. Exports were up 4.4% on year to JPY6.115 trillion, while imports spiked 14% to JPY6.652 trillion.

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The Bank of Japan kept its monetary policy unchanged at its August meeting, the central bank announced in a statement following the conclusion of its monetary policy meeting. The Bank decided to retain its policy of expanding monetary base at an annual rate of JPY60-70 trillion. The Bank also left its asset purchase policy unchanged. "Japan's economy has continued to recover moderately as a trend, though the subsequent decline in demand following the front-loaded increase prior to the consumption hike has been observed," the bank said. Japan's economy is expected to continue its moderate recovery trend, the BoJ said. The year-over-year rate of increase in the CPI is likely to be around 1.25% for some time.

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Overall bank lending in Japan was up 2.3% on year in July, the Bank of Japan said - coming in at JPY414.670 trillion. That was shy of expectations for 2.5% growth, which would have been unchanged from the June reading.

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The Appellate Body of the World Trade Organization (WTO) ruled Thursday that China's export duties and quotas imposed on rare earths, as well as tungsten and molybdenum, are incompatible with China'sWTO obligations. Backing the claims of the EU and its co-complainants, the US and Japan, the WTO panel found China's export duties and quotas were not justified for reasons of environmental protection or conservation policy. The ruling clarified the sovereign right of a country over its natural resources does not allow it to control international markets or the global distribution of raw materials.

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US Secretary of State John Kerry arrived in Afghanistan Thursday for an unannounced visit as he seeks to end a feud between two presidential candidates about the winner of recent elections. Kerry's last visit came in mid July, when he spent dozens of hours brokering an agreement between the two candidates on an audit of the ballots. Kerry is to meet with presidential candidates Ashraf Ghani Ahmadzai - who was declared the winner of June 14 run-off with 56% of the vote - and Abdullah Abdullah, who has challenged the results as fraudulent.

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Argentina filed a plea with the International Court of Justice (ICJ) on Thursday seeking relief in a long-running dispute over debt repayment. The issue is decisions made by US courts relating to the restructuring of the Argentine sovereign debt, the ICJ court said. "(Argentina) contends that the US of America has committed violations of Argentine sovereignty and immunities and other related violations as a result of judicial decisions adopted by US tribunals concerning the restructuring of the Argentine public debt," the ICJ said.

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Liberia's army Thursday set up checkpoints on major roads as part of the efforts to combat the Ebola epidemic that has ravaged communities across the nation. The soldiers were deployed with the aim of restricting citizens' movements in order to help contain the spread of the disease that has killed 282 people in Liberia, one of four West Africa nations grappling with the deadliest Ebola outbreak on record.

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The defence in the murder trial of South African Olympic sprinter Oscar Pistorius is set to make its closing arguments Friday, a day after the prosecution called the athlete a "deceitful witness." Defence advocate Barry Roux will present his plea, aiming to disprove the arguments made Thursday by state prosecutor Gerrie Nel. The 27-year-old athlete has been on trial since March 3, charged with the premeditated murder of his girlfriend Reeva Steenkamp, 29, on Valentine's Day last year.

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BROKER RATING CHANGES

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HSBC RAISES COMPASS GROUP TO 'NEUTRAL' ('UNDERWEIGHT') - TARGET 960 (850) PENCE

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BERENBERG CUTS MEGGITT TO 'HOLD' ('BUY') - TARGET 510 (600) PENCE

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COMPANIES - FTSE 100

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TUI Travel PLC said it continues to see strong trading in the UK and Germany, and stronger demand for its all-inclusive package holidays and bookings taken online, all of which drove an increase in its operating profit in the third quarter of its financial year. The owner of Thomson and First Choice, made an underlying operating profit of GBP112 million in the three months to June 30, up from GBP76 million a year earlier, helped by a GBP23 million boost from a later timing of Easter in 2014.

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The trial of a British investigator and his wife linked to GlaxoSmithKline PLC started in China in a case considered key in the ongoing bribery investigation into the British drugmaker, the Financial Times reports on Friday. Peter Humphrey and his wife, Yu Yingzeng, were detained over a year ago due to work they carried out for Glaxo, and are facing charges of illegally obtaining private information on Chinese citizens. The accusations carry a maximum sentence of three years in jail, the FT says. The newspaper also reports that Philip Hampton is leading the race to succeed Christopher Gent as the chairman of Glaxo.

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BP PLC has recalled its entire trucking fleet in Australia after an accident involving one of its fuel tankers resulted in the deaths of three people, the Wall Street Journal reports. A trailer attached to a BP fuel tanker became dislodged on Thursday while on a road near Wodonga in Victoria state. The trailer crossed onto the wrong side of the road and collided with two oncoming cars, killing two people and a child. BP said it will conduct an internal investigation into the cause of the accident and has recalled 42 trucks either owned or contracted by the company.

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COMPANIES - FTSE 250

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Oil and gas explorer and producer Afren PLC said it had decided to temporarily suspend operations at the Barda Rash filed in the Kurdistan region of Iraq due to the heightened security tensions in the area, although it doesn't expect the move to have a significant impact on its cashflow. In a statement, the company said it is implementing a phased withdrawal of non-essential field personnel from the Barda Rash field, although its other operations in Kurdistan are unaffected. The news is the latest recent setback for the company. Its shares have plummeted since it suspended its chief executive and chief operating officer on July 31, pending an investigation into alleged evidence of unauthorised payments that were potentially for the benefit of the executives.

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Catlin Group Ltd said its first-half pretax profit more than doubled, boosted by a significant jump in its net investment return as well as an improved underwriting performance. In a statement, the property/casualty insurer and reinsurer said it made a USD318.0 million pretax profit in the six months ended June 30, compared with USD145.0 million in the corresponding period last year. Catlin said that gross premiums written increased by USD361.0 million to USD3.66 billion, modestly inflated by foreign-exchange movements and an increase in the value of multiyear contracts written during the period in the London and Bermuda underwriting hubs. Catlin increased its interim dividend by 0.5 pence to 10.5p per share.

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House builder Bellway PLC said it's continuing to complete and sell more houses at higher average prices and its forward order book is also up, as the strong recovery in the UK housing market continues. In a trading update, the company said housing completions rose to 6,851 in the year to end-July, from 5,652 the previous year, and average selling prices were up to GBP213,000, from GBP193,025. Its forward order book is up to GBP924.3 million, from GBP679.5 million at the end of fiscal 2013, which the company said is a record. That represents 4,363 plots, up from 3,525.

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COMPANIES - MAIN MARKET AND AIM

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Quintain Estates & Development PLC said it is making good progress on its Wembley Park development, with prices achieved ahead of expectations, and said it has refinancing its banking facilities at extended maturities. The London-focused property firm said off-plan sales were progressing well at North West Village in the Wembley Park development, with sales agreed on 94 of the 110 homes released to date in the Emerald Gardens site. The group said the average selling prices for the homes sold so far is GBP355,000.

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SeaEnergy PLC said its GOSeaEnergy Ship Management Ltd joint venture has this week won two further ship management contracts. The joint venture was created in June as a partnership between the offshore energy services firm's SeaEnergy Ship Management Ltd and Go Offshore (Asia) Pte Ltd, a Singapore-based shipping company. The two new contracts will see the joint venture take over management of the Go Pegasus DP2 anchor handler, owned by Singapore-based Otto Marine Ltd, and the Go Electra DP2 multi-purpose support vessel, owned by RY Offshore Pte Ltd.

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Rame Energy PLC said its engineering-services division has won a further contract with Canada'sBarrick Gold Corp for the immediate design, supply and installation of new wind monitoring equipment at the Punta Colorada wind farm in Chile. According to Rame, the works will include the installation of an 80 metre tall lattice mast, instrumentation, a solar panel, and a data logger with mobile connectivity. It said these will together provide verification data for the wind climate around six of the ten turbines that comprise the existing wind farm developed by Rame at the site. Rame provided no financial details of the new agreement.

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Seeing Machines Ltd said it has agreed a strategic joint venture with a Chilean firm to form Seeing Machines Latin America. Seeing Machines, an operator monitoring and intervention sensing technologies firm, will take a 55% stake in the new company. Seeing Machines will partner with GTD Ingenieria de Sistemas, a road and transport safety systems provider, to provide technology solutions to mining and road-transport customers and to Seeing Machines' newly-partnered Latin American Caterpillar dealers.

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Petroceltic International PLC said it has reached a settlement in the case it brought in July 2013 against Samir Abdelly and Abdelly & Associes International Consulting. Abdelly and Abdelly & Associes had counterclaimed against Petroceltic in the proceedings, but both parties have now withdrawn all claims and counterclaims made. Petroceltic had alleged fraud on the part of Tunisia-based Abdelly & Associes related to advisory services the latter provided to the oil explorer's activities in Algeria and was seeking to recoup payments it made to Abdelly. Abdelly counterclaimed that it was owed millions of euros for advice provided to Petroceltic Isarene, the firm's Algerian business. No financial details of the settlement were provided.

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Aureus Mining PLC said it hasn't had any reported or suspected cases of Ebola anywhere near where it operates, but it has ramped up precautions including controlling access to its operations, undertaking temperature screening and working with local communities to boost education about the disease and providing assistance to local medical facilities. Aureus said it was working with the government of Liberia to help it fight the disease outbreak.

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DriverGroup PLC said it has signed a project-delivery framework agreement with KierGroup PLC, the FTSE 250 construction company. The deal will see the AIM-listed construction and engineering consultancy work with Kier on minimising the development and build-up of disputes and will see the firm advise on managing projects by providing quantity surveying and programming services. Driver provided no financial details of the agreement.

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Japanese consulting firm Nippon Koei Co Ltd said it had made a recommended offer to buy Hyder Consulting PLC for 680 pence a share in cash, or GBP268.1 million, a deal that trumps last month's GBP256.2 million takeover deal from Arcadis NV. UK design and engineering consultancy Hyder Consulting said it was no longer recommending the Arcadis bid, its board instead recommending that shareholders accept the higher offer from Nippon Koei.

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COMPANIES - INTERNATIONAL

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News Corp Thursday reported a weaker-than-expected fourth-quarter profit, hurt by lower advertisement and circulation revenue. Nevertheless, its book publishing and other segments fared well, aiding revenues to surpass Wall Street estimates. With the results, News Corp completes a full year as a separate company after Chairman Rupert Murdoch spun off its entertainment and TV assets into Twenty-First Century Fox. News Corp, which owns the Wall Street Journal and the New York Post, reported fourth-quarter net earnings to stockholders of USD12 million or USD0.02 per share. This compares with a loss of USD1.12 billion or USD1.94 per share last year, when it recorded hefty impairment charges.

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Malaysia Airlines System Bhd was to be delisted in the first stage of a restructuring plan, its majority shareholder, Malaysia's sovereign wealth fund Khazanah Nasional, said. The fund, which already holds 69.37%, was offering other shareholders MYR0.27 per share, a 12.5% premium over Thursday's closing price, in a bid to effectively delist the stock. Trading was suspended Friday.

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German insurer Allianz SE said profit for the second quarter increased over 10% from last year, supported by strong growth in revenues. The insurer said the impact from natural catastrophes was lower than last year, and the underwriting result improved. Net income attributable to shareholders climbed 11% to EUR1.755 billion from last year's EUR1.588 billion.

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Friday's Scheduled AGMs/EGMs



Origo Partners

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