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LONDON (Alliance News) - UK shares opened lower Tuesday, with the focus on Bank of England Governor Mark Carney's testimony to Parliament on the financial consequences of the 'Brexit' referendum, whilst Burberry Group shares shot up on the news late Monday of a mystery investor.
The FTSE 100 was down 1.1%, or 68.41 points, at 6.113.99. The FTSE 250 was down 0.6% at 16.725.08 and the AIM All-Share was down 0.1% at 702.89. In Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were down 1.3% and 1.2%, respectively.
Burberry was the top blue-chip performer, up 4.7% after the Financial Times reported late Monday that the luxury good retailer has sought help from its financial advisers to defend itself against a possible takeover bid after a mystery investor built up a 5.0% stake in the company.
A person close to the company said Burberry had unsuccessfully attempted to obtain the identity of the investor from HSBC, which is listed as the custodian for the stake.
Burberry shares have been under pressure in the past year, hit by the slowdown in its key Chinese market, and it is understood to have asked its current banker, Robey Warshaw, to help with the situation. Morgan Stanley, its corporate broker, is also understood to be looking into the matter, the FT said.
Meanwhile, Admiral Group was another rising stock among a handful of gainers, up 1.4%, after Nomura upgraded the insurer to Buy from Hold. The broker also lifted its price target on the company significantly to 2,325 pence from 1,630. The stock was at 1,990.00p early Tuesday.
Miners were giving back some of their gains on Monday, when a steep rise in iron ore prices boosted the FTSE 350 Mining sector index to finish in the green for a seventh consecutive session.
The mining index was down 4.3% shortly after the open Tuesday, with Anglo American down 6.4%, BHP Billiton down 5.5%, Glencore down 4.4% and Rio Tinto down 4.2%.
Worldpay Group was another decliner, down 3.4%. The UK payments processor said it swung to a pretax profit in 2015, reporting its maiden set of results since becoming a publicly listed company. The payments company also said it has had a "good start" to 2016.
Pretax profit amounted to GBP19.1 million in 2015, versus a pretax loss of GBP47.1 million in 2014, the company said in a statement. Worldpay processed 13.1 billion transactions in 2015, up 14% on the number processed in 2014, driving net revenue up by about the same percentage to GBP981.7 million. Underlying earnings before interest, tax, depreciation and amoritsation rose by 8.4% to GBP406.1 million, a slight miss on company-compiled consensus expectations of GBP406.9 million, based on the average of 12 analysts' forecasts.
In the FTSE 250, CLS Holdings was the best mid-cap performer, up 5.8%. Property investor CLS Holdings said its pretax profit fell in 2015, with the gain in the valuation of its property portfolio half what it was in 2014, as its chairman stepped down.
The property investor reported pretax profit of GBP151.2 million for 2015, down from GBP236.8 million the previous year, as it registered a GBP98.0 million gain in the valuation of its property portfolio, compared to a GBP186.0 million gain in 2014. Revenue for the year was GBP118.9 million, up from GBP99.6 million, as its net rental income rose to GBP99.0 million from GBP82.2 million.
CLS is proposing a tender offer buyback of 1 in 57 shares at 1,810 pence per share in April, with a plan to distribute GBP13.4 million to its shareholders, equivalent to 31.8 pence per share. This would bring total shareholder distributions for 2014 to GBP19.1 million, up 20% year-on-year.
At the other end of the index, Close Brothers Group was down 7.9%, even though the banking, securities and asset management group lifted its interim dividend, reported an increase in first-half profit, and said it expects a "satisfactory performance" for its current financial year as a whole.
Pretax profit rose to GBP108.7 million in the six months ended January 31, Close Brothers said in a statement, up from GBP106.2 million the corresponding half the prior year. The company lifted its interim dividend to 19.0 pence from 18.0p.
However, Panmure Gordon cut Close Brothers to Hold From Buy, as the broker believes the recent recovery in the stock implies the shares are now "up with events". The stock touched in mid-February a low of 1,159p, its lowest level since mid-2013. However, it has risen by 14% since, currently trading at 1,275.00p.
Carney will take centre stage at 0915 GMT, addressing the Treasury Select Committee in an oral session entitled "The economic and financial costs and benefits of UK's European Union membership".
"Policymakers are likely to have questions on the timing of yesterday evening's specific pre-announcement of three extra liquidity auctions for banks at around the time of the June Brexit referendum," said CMC Markets chief market analyst Michael Hewson.
"Questions will inevitably be raised as to not only the timing of it, a week before next week's budget, but also why the bank felt it necessary to publicise it when they felt no such compunction to do so before the Scottish referendum vote," Hewson adds.
Banks will be given three additional opportunities to bolster their liquidity reserves with central bank assets, two shortly before the poll on June 23 and one shortly after.
A statement setting out the indexed long-term repo (ILTR) operations said: "The bank will continue to monitor market conditions carefully and stands ready to take additional action if necessary."
In Asia on Tuesday, the Japanese Nikkei 225 index closed down 0.8%, while in China, the Shanghai Composite took back earlier losses ending up 0.1%. The Hang Seng index in Hong Kong finished down 0.7%.
China's exports plunged in February, largely reflecting the shift in the timing of Chinese New Year, official data revealed. Exports tumbled 25% year-on-year in February, the biggest fall since May 2009, the General Administration of Customs reported. Economists had forecast a 15% drop after the 11% drop in January. At the same time, imports logged an annual fall of 14%, bigger than the 10% decrease expected by economists.
Meanwhile, Japan's gross domestic product was revised to a figure of -1.1% year-on-year in the fourth quarter of 2015, the Cabinet Office said. That beat forecasts for a decline of 1.6% following last month's preliminary reading that suggested a contraction of 1.4%. GDP expanded 1.3% in the third quarter. On a quarter-on-quarter basis, GDP dipped 0.3%, which also marked an upward revision from 0.4%.
Germany's industrial production recovered at a faster-than-expected pace in January, data from Destatis revealed. Industrial output grew 3.3% on a monthly basis in January, reversing a revised 0.3% fall in December. Economists had forecast a 0.5% rise for January. Production in industry excluding energy and construction gained 3.2% in January.
Still ahead in the economic calendar Tuesday, eurozone's gross domestic product figures are at 1000 GMT. In the US, the Redbook index is due at 1355 GMT, while American Petroleum Institute crude oil stocks data are due at 2130 GMT.
By Daniel Ruiz; danielruiz@alliancenews.com
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