TOP NEWS SUMMARY: UK Retail Sales Growth Accelerates In August

LONDON (Alliance News) – The following is a summary of top news stories Wednesday.
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COMPANIES
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The UK Takeover Panel launched a consultation on a planned tightening of the UK Takeover Code, which will see foreign buyers setting out their plans for UK companies. In particular, bidders will need to reveal their intentions in regards to a UK firm’s research and development functions, its planned headquarters, and the balance of skills and functions of the offeree company’s employees and management.
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Kingfisher said interim profit decreased due to “business disruption” and transformation costs. The DIY retailer said revenue increased in the six months to the end of July by 4.5% to GBP6.00 billion from GBP5.75 billion, but pretax profit including exceptional items decreased 5.9% to GBP402 million from GBP427 million. On an underlying basis, pretax profit was up 0.9% to GBP440 million from GBP436 million year-on-year. Kingfisher declared an interim dividend of 3.33 pence, up 2.5% from the 3.25p paid a year earlier. “We are on track to achieve our 2017/2018 strategic milestones and our 2020/2021 targets remain unchanged. However, we have experienced some business disruption reflecting the significant increase in transformation activity,” the company said.
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Diageo reaffirmed its expectations of mid-single top line growth and margin improvement over the three years up to 2019, with expectations for its current year unchanged. In a statement ahead of the alcoholic drinks giant’s annual general meeting Chief Executive Ivan Menezes said the group’s business has set itself up to deliver in line with expectations with improved marketing, innovation and commercial execution. However, organic sales growth in the first half of its current year are to be affected by the later timing of the Chinese New Year and the highway ban in India. Diageo will increase investment behind its US Spirits and Scotch products, and as a result expects expansion in its organic operating margin to be weighted towards the second half of the year. Overall, the company’s expectations for its current year ending June 30, 2018, remain unchanged.
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Babcock International Group said trading in its current financial year so far was in line with its expectations, and kept its outlook for the year unchanged. Revenue visibility has also “continued to improve”, the company said. 89% of revenue was in place for the financial year ending March 2018. For the financial year ended March 2019, 57% of revenue is in place. “The order book and bid pipeline of opportunities have remained stable,” the company explained, “and continue to provide confidence in our ability to grow revenue as expected over the medium term.” Babcock noted it had been awarded a number of contracts since the start of the financial year in April. The company said it continues to maintain a healthy financial position, adding that growth for the rest of the financial year was in line with its expectations.
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GlaxoSmithKline and Innoviva reported positive headline results from a phase III study of Trelegy Ellipta in chronic obstructive pulmonary disease. Trelegy Ellipta is a US FDA-approved once-daily single inhaler triple therapy, comprising of a combination of fluticasone furoate, umeclidinium and vilanterol. It has been approved for long-term maintenance treatment of patients with COPD who are receiving treatment with Breo – a combination treatment of fluticasone furoate and vilanterol – who require additional brochodilation, or who are receiving both Breo and Incruse – umeclidinium. The study of 10,355 patients met its primary endpoint, demonstrating “statistically significant” reductions in the annual rate of on-treatment moderate and or severe exacerbations when compared with two once-daily dual therapies from Glaxo’s existing portfolio.
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Shire and Japanese partner Shionogi & Co reported positive results from a phase III clinical trial of Intuniv in adults with attention deficit hyperactivity disorder. The study met its primary endpoint, demonstrating that a once-daily dose of Intuniv was superior to a placebo in terms of the change from baseline on a clinically administered ADHD rating scale. Intuniv also demonstrated nominal significance over placebo at the end of treatment on the clinically important secondary efficacy analysis of the clinical global impression improvement scale, which suggests more patients achieved a “marked clinical improvement in global functioning”, Shire said.
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BTG said a memorandum opinion has been issued ruling against it in a legal dispute with Wellstat Therapeutics Corp by the Court of Chancery of Delaware. The court found that BTG breached the distribution agreement signed with US-based Wellstat Therapeutics Corp over the commercialisation of the capecitabine toxicity antidote Vistogard, and that Wellstat is entitled to USD55.8 million in damages, including interest and costs. BTG first acquired US commercial rights to market, sell and distribute Wellstat’s product in the US for up to 10 years in 2011, while Wellstat kept responsibility for continuing development, regulatory filings and product manufacture. BTG said it was “surprised and disappointed” by the ruling and is currently considering options, including appealing the ruling and the level of damages.
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MARKETS
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London shares were mixed with DIY retailer Kingfisher and distiller Diageo topping and tailing the FTSE 100 index. The pound spiked to an intraday high of USD1.3608 after data showed UK retail sales surged in August. Wall Street was pointed to a flat open ahead of the key US interest rate decision from the Federal Reserve after the London market close. It is widely anticipated the US central bank will announce the unwinding of its large balance sheet on Wednesday, with disposals to begin in October.
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FTSE 100: flat at 7,277.68
FTSE 250: up 0.1% at 19,562.54
AIM ALL-SHARE: down 0.1% at 993.67

GBP: firm at USD1.3552 (USD1.3508)
EUR: up at USD1.2014 (USD1.1975)

GOLD: up at USD1,315.72 per ounce (USD1,308.24)
OIL (Brent): firm at USD55.65 a barrel (USD55.27)

(changes since previous London equities close)
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ECONOMICS AND GENERAL
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UK retail sales increased at a faster pace in August, data from the Office for National Statistics showed. Retail sales volume including auto fuel advanced 1% in August from July, the biggest growth in four months and exceeded the expected rate of 0.2% and July’s increase of 0.6%. Excluding auto fuel, retail sales volume climbed 1% in August after rising 0.7% a month ago. Sales were expected to rise slightly by 0.1%. Year-on-year, retail sales volume growth improved to 2.4% from 1.4%. Economists had forecast a 1.2% increase. Sales have increased for the 52nd consecutive month.
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The global economy is set for a further uptick next year, but strong sustainable, and inclusive medium-term growth is not yet secured, the Organisation for Economic Co-operation and Development said in its Interim Economic Outlook. The global economy is forecast to grow 3.5% this year and 3.7% in 2018, with industrial production and trade picking up and further acceleration in the rebound of technology spending. The projection for 2017 was left unchanged, while the outlook for 2018 was revised up from 3.6%. In the US, growth is estimated at 2.1% in 2017 and 2.4% in 2018, supported by stronger consumer spending and business investment. In the UK, the previously identified growth slowdown is expected to continue through 2018, while uncertainty remains over the outcome of negotiations around the decision to leave the EU, the OECD said. The UK is projected to grow 1.6% in 2017 and 1.0% in 2018.
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The threat to UK Prime Minister Theresa May of the potentially damaging resignation of Boris Johnson from the Cabinet appears to have receded, with agreement reportedly reached on the thrust of May’s crunch Brexit speech, set for Friday. The Foreign Secretary has backed away from his previous insistence that the UK should cease payments to the EU after the date of Brexit in 2019, accepting that Britain should “pay our dues” during any transition period, as well as meeting financial demands “where our lawyers say we are on the hook for stuff”. May has called a special meeting of Cabinet at Number 10 on Thursday to discuss her address in Florence the following day.
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UK troops and residents are bracing themselves as the “potentially catastrophic” Hurricane Maria sweeps towards British overseas territories already battered by Irma. As it bears down on the British Virgin Islands, the US National Hurricane Centre has predicted the category five storm could unleash sustained winds of up to 160mph. In its latest warning the centre said preparations against a “life-threatening storm surge and rainfall, flooding and destructive winds” should be “rushed to completion”. The storm, which devastated Dominica on Monday, is following a similar path to Irma, and is expected to reach the British Virgin Islands early on Wednesday.
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British police arrested two more suspects linked to last week’s terrorist attack on the London underground railway. The Metropolitan Police said counter-terrorism officers detained a 48-year-old man and a 30-year-old man in Newport, Wales, following the arrest of a 25-year-old man in the town late Tuesday. Two other suspects from the London area, aged 18 and 21, were arrested earlier after a home-made bomb partially detonated on an underground train at London’s Parsons Green station on Friday. Officers were continuing to search two properties in Newport and two others in outer London on Wednesday, the police said. “This continues to be a fast-moving investigation,” Commander Dean Haydon, head of counter-terrorism for the Metropolitan Police, said in a statement.
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British employers’ confidence in the economy fell to the lowest level since Brexit, the latest JobsOutlook survey by the Recruitment & Employment Confederation showed. A net balance of -7 said the economic conditions are getting worse in September versus -3 in August. Despite falling confidence in the economy as a whole, confidence in hiring and investment decisions remains positive at +10%, the survey revealed.
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French President Emmanuel Macron made his debut as a European heavyweight at the UN General Assembly on Tuesday, providing a sharp contrast to the combative rhetoric of US President Donald Trump with his call for a multilateral approach to world crises. After Trump described the Iran nuclear deal as an “embarrassment” to the US and refused to commit to the international Paris accord on limiting global warming, Macron extolled the virtues of both agreements. Elected in May on a centrist, pro-European platform, Macron warned that pulling out of the Iran nuclear deal, as Trump has threatened to do, would be a “grave error”.
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Germany’s producer prices increased at the fastest pace in three months in August, Destatis reported. Producer prices increased 2.6% year-on-year in August, faster than the 2.3% rise seen in July. This was the fastest growth since May, when prices climbed 2.8%. Prices were forecast to gain 2.5%.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun

Copyright 2017 Alliance News Limited. All Rights Reserved.

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