FTSE CLOSE: Markets make modest gains while Glencore is biggest faller
17.15 (close): Commodities giant Glencore was the biggest faller on London's leading shares index today after being forced to raise its offer for Xstrata to keep hopes of a £56 billion mega-merger alive.
Glencore fell 4 per cent after it upped its bid to 3.05 shares for every Xstrata share, 9 per cent higher than its previous offer of 2.8 shares, after some of its target's biggest investors threatened to vote down the deal.
The wider FTSE 100 Index made modest gains, adding 17.5 points to 5794.8, following yesterday's 2 per cent surge in the wake of the European Central Bank's move to offer unlimited funds to lower debt-ridden countries' borrowing costs.
Bond-buying plan: ECB chief Mario Draghi yesterday said the bank will buy the debt of troubled eurozone countries such as Spain to bring down their borrowing costs and prevent a chaotic break-up of the euro
And the announcement continued to lift European markets, with Germany's Dax and France's Cac-40 up 0.7 per cent and 0.3 per cent respectively.
Wall Street's Dow Jones Industrial Average was broadly flat as the London market closed after figures showed the US economy created a lower-than-expected 96,000 jobs in August.
However, the weaker figures only served to fuel hopes that the US
Federal Reserve would signal another dose of quantitative easing next
week to boost the recovery.
The pound was up at 1.60 against the dollar, which was hit by the money
printing speculation. But sterling was down at 1.25 against the euro
after the single currency continued to be boosted by the ECB's latest
Back in London, Xstrata saw its shares rise 4 per cent, or 35p to 1014p, after Glencore launched a last-gasp effort to salvage the mega-merger.
One of Xstrata's biggest shareholders, Qatar's sovereign wealth fund, had threatened to vote against the deal but at the last minute Glencore cancelled a shareholder meeting which was due to finalise the offer and came back with an improved bid.
Its new proposal will also see Ivan Glasenberg remain as chief executive, whereas he had previously planned to let Xstrata's Mick Davis take the helm.Glencore shares were down 14.3p at 378.1p.
Other miners, as well as bankers, continued to take heart from ECB boss
Mario Draghi's plans to buy bonds to take the pressure off struggling
nations such as Spain and Italy, giving them more breathing space to
repair their finances.
Evraz was top of the London market, adding 15 per cent or 33.7p to 260.4p, while Barclays jumped 13.4p to 206.4p.
Sentiment in the UK was also boosted after official figures revealed the
strongest monthly rise in manufacturing output for 10 years.
Manufacturing output grew by 3.2 per cent in July, the Office for National
Statistics (ONS) said, while the wider index of production grew by 2.9 per cent.
In a quiet day for corporate news, staffing business SThree saw its
shares lift 9% after it reported a rise in third quarter gross profits
as strong demand for sectors such as energy and pharmaceuticals helped
offset the squeeze in the banking sector.
Shares were up 24p at 295.5p.
The biggest Footsie risers were Evraz up 33.7p at 260.4p, Kazakhmys
ahead 58.5p at 657.5p, Eurasian Natural Resources up 27.8p at 338.7p,
and Anglo American ahead 132p at 1972.5p.
The biggest Footsie fallers were Glencore International down 14.3p at 378.1p, Diageo off 62.5p or 1702p, Imperial Tobacco down 82p at 2262p, and SAB Miller off 79p at 2762.5p.
15.00: Commodities giant Glencore remained at the bottom of
London's leading shares index today after it raised its offer for
Xstrata to keep hopes of a £56billion mega-merger alive.
Glencore fell 5 per cent after it
upped its bid to 3.05 shares for every Xstrata share, 9 per cent higher
than its previous offer of 2.8 shares, which met opposition from
its shares rise 6 per cent or 60p to 1038p in the wake of Glencore's
higher bid. Glencore shares were down 21.3p at 371.1p and were still
trading despite its request for them to be suspended.
The wider FTSE 100 index made modest gains, adding 10.5 points to 5788.9, following yesterday's 2 per cent surge in the wake of the European Central Bank's move to offer unlimited funds to lower debt-ridden countries' borrowing costs.
Wall Street's Dow Jones was broadly
flat - up 1.94 to 13,294 - after figures showed the U.S. economy created
a lower-than-expected 96,000 jobs in August.
Meanwhile, sentiment was also boosted
after official figures revealed the strongest monthly rise in
manufacturing output for 10 years.
Manufacturing output grew by 3.2 per cent in July, the Office for
National Statistics (ONS) said, while the wider index of production grew
by 2.9 per cent - its fastest rate for 25 years.
Other miners, as well as bankers, continued to take heart from ECB boss Mario Draghi's plans to buy bonds.
Evraz was top of the London market,
adding 13 per cent or 28.8p to 255.5p, while Lloyds Banking Group was
ahead 0.7p at 36.9p, Royal Bank of Scotland advanced 8.8p to 242.3p and
Barclays jumped 10.9p to 204.2p.
Staffing business SThree saw its
shares rise 7 per cent after it reported a rise in third quarter gross
profits amid strong demand for sectors such as energy & resources
and pharmaceuticals & biotechnology. Shares were up 18p at 290p.
And supermarket chain Morrisons surrendered some of yesterday's gains when investors had been impressed with plans to cut back on new store space and launch a new online wine venture. Shares fell 1.7p to 291p.
10:30: The Footsie is up 11.44 points, or 0.20 per cent, at 5788.78.
Aside from the miners, risk-sensitive
banks were also strong performers as the ECB bond-buying moves boosted a
sector heavily exposed to euro zone debt.
Barclays was a top performing British bank, up 3.9 percent as Deutsche Bank raised its rating on the stock.
more clarity on Barclays' leadership and the terms under which the ECB
will support Italian and Spanish sovereign bond markets, and the extreme
valuation highlighted above, we are upgrading Barclays to Buy,’
Deutsche Bank said in a note.
Meanwhile, shares in Entertainment One, the company
behind Peppa Pig and a darling of the stock market, leapt more than 8
per cent in early trading today. More about this here.
The FTSE 100 opened modestly higher and is now up 19.74 points, or 0.34
per cent, at 5,797.08, consolidating the previous session's sharp rally
sparked by the ECB's bond-buying programme, as investors bet U.S.
monthly payrolls data will show an improvement.
UK blue chip index soared 119.48 points, or 2.1 per cent higher
yesterday to close at 5,777.34 after investors gave an initial thumbs up
to ECB chief Mario Draghi's bond-buying plans, while strong U.S. data
also helped lift sentiment.
U.S. employers are expected to have increased payrolls by 125,000 workers last month, according to a Reuters survey of economists, although data showed earlier this week that U.S. private employers added a better-than-expected 201,000 jobs in August, triggering hopes of forecast-beating figures in today's figures.
Firm miners led the blue chips higher, tracking stronger copper prices on hopes for a demand boost as the ECB's bond buying programme shores up the euro zone debt crisis.
Also boosting sentiment today, China gave the green light for 60 infrastructure projects this week worth more than 1 trillion yuan, or 2.1 percent of China's economy, while data showed German exports unexpectedly edged up in July and imports rose even more, a sign that Europe's largest economy remains relatively resilient to the euro zone crisis.
British output data for July will be
released today, with growth of 1.5 per cent seen month-on-month for
industrial output, after a 2.5 per cent fall in June, and a rise of 2.0
per cent expected month-on-month in manufacturing output, after a 2.9
decline in the previous month.
British wholesale inflation data will also be released today, with PPI
input prices seen rising 1.7 per cent month-on-month in August, after a
1.3 per cent increase in July, and PPI output prices forecast to rise
0.2 per cent after being flat in the previous month.
Stocks to watch today include:
Glencore, Xstrata - Commodity trader Glencore's $34billion bid for miner Xstrata stands on the brink of collapse today, with only hours to go before a shareholder vote and little sign of a resolution to the impasse that has pitted the trader against rival investor Qatar.
Lloyds Banking Group - The chief executive of Britain's biggest retail bank has joined calls for a radical change within the industry, saying it must make a break with the culture of the past in order to restore the trust of customers, Antonio Horta-Osorio said in a speech at the CBI Scotland Annual Dinner in Glasgow yesterday.
BP - Executives at the British oil firm wanted to concentrate blame for the Deepwater Horizon oil spill disaster on ‘blue collar rig workers’ in order to save themselves, U.S. government lawyers wrote in a court document that until Thursday was partially redacted.
Man Group - The world's second-largest hedge fund has hired former Pimco international bond chief Sudesh Mariappa as a senior portfolio manager to help lead a major push into fixed-income trading, the Financial Times reported today.
Sthree - The staffing firm said in an interim management statement that group gross profit rose 6 per cent year-on-year and said it is committed to maintaining its strong track record in terms of its dividend.
Cobham - The defence contractor said its Obiggs Inerting unit has won a contract for supplying U.S. army Apache helicopters worth $15million.
Interserve - The group said it is preferred bidder for an NHS contract with a potential value of up to £300million pounds over seven years.
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