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LONDON (Alliance News) - UK shares have opened firmly Thursday, following gains in the US and Asia after the minutes from the most recent FOMC meeting showed mixed views on the timing of a US interest rate hike.
M&A remained in focus after Wednesday's agreement by Royal Dutch Shell to buy BG Group, as generic drug maker Mylan said it has offered to buy Dublin-based Perrigo for USD205 per share in cash and stock, or USD28.9 billion.
Miners Anglo American, Rio Tinto and BHP Billiton are dragging on the FTSE 100, down between 2% and 3%, after Credit Suisse cut ratings and price targets for the stocks.
Burberry leads blue-chip gainers, up 4.0%, after JPMorgan raised its price target for the luxury goods stock.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,964.07
FTSE 250: up 0.2% at 17,595.04
AIM ALL-SHARE: up 0.3% at 727.61
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Hang Seng: up 3.2% at 27,065.10
Nikkei 225: closed up 0.8% at 19,937.72
DJIA: closed up 0.2% at 17,902.51
S&P 500: closed up 0.3% at 2,081.90
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GBP: down at USD1.4859
EUR: down at USD1.0775
US crude oil snapped a two-day gain to end 6.6% lower on Wednesday, after an official weekly oil inventory report from the US Energy Information Administration showed crude stockpiles to have increased much more than expected last week. A weekly report from EIA showed US crude oil inventories to have surged 10.9 million barrels in the week ended April 3, while analysts expected an increase of 3.2 million barrels.
GOLD: down at USD1,195.80 per ounce
OIL (Brent): up at USD56.24 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
(all times in BST)
09:30 UK Trade Balance
11:00 Ireland Consumer Price Index
12:00 UK BoE Interest Rate Decision and Asset Purchase Facility
13:30 Canada Building Permits (MoM)
13:30 US Jobless Claims
13:30 Canada New Housing Price Index
15:00 US Wholesale Inventories
15:30 US EIA Natural Gas Storage
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The minutes from the March meeting of the US Federal Reserve's Federal Open Market Committee showed that several members determined that the economic data and outlook were likely to warrant beginning the process of raising rates in June. However, others said conditions would not be appropriate to begin raising rates until later in the year due to the effects lower energy prices and the dollar's appreciation have on inflation. The Fed noted that a couple of participants suggested that the economic outlook likely would not call for an increase until 2016.
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The British Chambers of Commerce's Quarterly Economic Survey showed manufacturing and services companies in the UK reported slightly weaker growth in the first quarter of 2015 in comparison to the closing months of 2014. The BCC said that though the first quarter results showed weaker balances in most areas in comparison to the fourth quarter of 2014, the quarter-on-quarter trends back its view that the UK economy is growing at a "steady rate".
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UK 3-MONTHS TO MAR HOUSE PRICES RISE 8.1% ON YEAR, CONSENSUS 8.2%; UP 0.4% ON MONTH, CONSENSUS +0.1%
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Germany's industrial production increased at a faster-than-expected pace in February, after falling in the previous month, preliminary figures from Destatis showed. Industrial production rose a seasonally and working-day-adjusted 0.2% in February, exceeding economists' expectations for a 0.1% climb. In January, production had fallen 0.4%, which was revised down from a 0.6% increase.
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BROKER RATING CHANGES
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CREDIT SUISSE CUTS ANGLO AMERICAN TO 'NEUTRAL' ('OUTPERFORM') - TARGET 1400 (1600) PENCE
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CS CUTS BHP BILLITON TO 'UNDERPERFORM' ('NEUTRAL') - PRICE TARGET 1400 (1850) PENCE
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CS CUTS RIO TINTO PRICE TARGET TO 2800 (3400) PENCE - 'NEUTRAL'
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CS CUTS PRICE TARGET SHELL TO 2250 (2350) PENCE - 'OUTPERFORM'
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JPMORGAN RAISES BURBERRY PRICE TARGET TO 1560 (1470) PENCE - 'NEUTRAL'
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COMPANIES - FTSE 100
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Shire said the phase two trial of its SHP625 investigational compound failed to meet primary or secondary endpoint goals in its study of pediatric patients with Alagille syndrome. Alagille syndrome a rare genetic disorder which presents with chronic cholestasis, or accumulation of bile acids in the liver, and severe pruritus, or itching. FTSE 100-listed Shire said mean serum bile acid levels and pruritus at the end of the study were lower in both SHP625 and placebo treated groups as compared to baseline. But in a separate analysis, a positive correlation between the percent changes from baseline in serum bile acid levels and pruritis was observed in the SHP625 treated group.
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COMPANIES - FTSE 250
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PZ Cussons said its performance for the period from January 28 to April 8 has been in line with expectations and its country performance has been line with "the comments made in the interim results announcement". The maker of bath products Imperial Leather and Original Source said that trading in Nigeria, the group's largest market, has resumed as normal following a "short period of lost trading days during the presidential election process", and that the naira exchange rate is currently stable after further devaluation in the period. It said the outlook for the financial year remains in line with expectations.
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Victrex said it delivered a good performance in the first half of its financial year, with revenue rising on the back of an improved sales volume boosted by the strong performance of its consumer electronics division. The FTSE 250-listed polymer products company said group revenue in the first half of its financial year to the end of March is expected to be GBP130.3 million, up 8.7% from GBP119.9 million a year earlier. Its sales volume in the first half was 2,028 tonnes, 28% higher year-on-year. The first half was boosted by a good performance in its consumer electronics business, though this was slightly offset by lower sales in its Invibio medical business.
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Cranswick said it finished its recent financial year with a "strong final quarter" as sales grew, and said it expects its full-year results to be in line with expectations. The food producer reported a 1% rise in underlying sales for its fourth quarter for the year ended March 31 as a lower input prices were passed onto customers, and it said its full-year underlying sales were in line with the year before. Total sales were up 4% for the fourth quarter and 1% for the full year, it said.
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St Modwen Properties said all of the contracts for the New Covent Garden Market development in Nine Elms in London have gone unconditional. St Modwen is working on the project under the Vinci St Modwen joint venture with French construction company Vinci and also is working with the Covent Garden Market Authority. The ten-year project will involve the delivery of a 500,000 square-foot market across a 37-acre site in the Nine Elms development in Battersea.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Gulf Keystone Petroleum said its pretax loss significantly widened in 2014 as a rise in revenue was offset by a substantial impairment charge and a vast increase in costs as the company continues talking to numerous parties about potential corporate or asset sales. The oil and gas producer operating in the Kurdistan region of Iraq reported a pretax loss of USD246.1 million for the year ended December 31, 2014, compared to a USD31.8 million loss in 2013. Despite revenue rising to USD38.6 million from USD6.7 million, a USD144.1 million impairment against the Akri-Bijeel block in Iraq and administrative costs doubling to USD39.0 million from USD15.8 million caused the company's loss to widen.
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Afren said it has decided to take advantage of a grace period on the payment of interest due on its 2019 bonds. The oil and gas company said it would utilise a 30-day grace period under the 2019 bonds on the USD12.8 million interest payment that had been due on Wednesday, pending the completion of its interim funding process.
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Mulberry Group said its retail trading has improved following the introduction of its Spring/Summer 2015 collection into its stores last November, and said sales for its recently completed financial year will be "in line with expectations". The luxury handbag maker said it expects full-year revenue for the year ended March 31 to be at GBP148 million, compared with GBP163 million the year before. It said the 1% full year growth of retail revenue has been "more than offset" by a decline in the wholesale business. It said the retail business returned to growth during the second half of the financial year. The company added that it expects profit before exceptional items to be slightly higher and ahead of market expectations, as a result of "careful cost control".
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Braemar Shipping Services said Chairman Graham Hearne is to retire from his position following its annual general meeting in June. Hearne will be replaced by David Moorhouse, who has been a non-executive director at Braemar since 2005. Braemar also said Finance Director Martin Beer is intending to step down in the summer. Beer will step down from the board at the AGM and will be replaced by Louise Evans, the former finance director of Williams Grand Prix Holdings.
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COMPANIES - INTERNATIONAL
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Mylan said it has offered to buy Dublin-based Perrigo Co for USD205 per share in cash and stock, or USD28.9 billion, as the generic drug maker seeks to create a diversified pharmaceutical behemoth. The offer represents a premium of more than 25% premium to Perrigo's closing price on April 3. The two companies had 2014 pro forma sales totalling about USD15.3 billion. Mylan, based in Potters Bar, England, is one of the largest generics and specialty drug companies, with about 1,400 different products. Last year, Mylan agreed to buy the non-US operations of Abbott Laboratories for USD5.3 billion as a strategy to shift its tax base to the Netherlands. In a similar effort, Perrigo in 2013 had acquired Elan Corp in order to be domiciled in Dublin.
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Swiss cement giant Holcim and its French peer Lafarge agreed to name Eric Olsen, a Lafarge executive, as chief executive officer of the combined group on closing of their proposed merger, according to media reports. The agreement removes an obstacle to shareholder approval of the deal, after a protracted fight that nearly derailed the marriage last month. Both companies hold shareholder meetings next month to approve the combination. The reports indicated that the companies are set to announce the appointment as early as Thursday.
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Alcoa Inc, the largest US aluminum producer, said it swung to a first quarter profit, as revenue increased due mainly to strong organic growth in automotive and aerospace. The company's quarterly earnings per share, excluding items, also came in above analysts' expectations, but its quarterly sales fell short of analysts' forecast.
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French media giant Vivendi and US hedge fund P Schoenfeld Asset Management said they reached a deal to end their public feud, with Vivendi committing to return EUR6.75 billion or EUR5.00 per share to shareholders.
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Thursday's Scheduled AGMs/EGMs
Athelney Trust
Highway Capital
Worldwide Healthcare Trust
Intandem Films
Smith & Nephew
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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