LONDON MARKET OPEN: Stocks Higher; Aviva Up But Smith & Nephew Down

LONDON (Alliance News) - Stocks in London opened higher on Thursday, with insurer Aviva on the rise after selling its 50% stake in life insurance joint venture Antarius, while medical devices Smith & Nephew was out of favour despite reporting a rise in profit for 2016.

Anglo-Australian miner BHP Billiton started the day higher after approving further investment in the Mad Dog project in the US, but immediately gave back that gain, trading lower shortly after the open.

Meanwhile, FTSE 250-listed Ashmore was the biggest mid-cap gainer after the emerging markets-focused asset manager said its pretax profit almost doubled in its financial half-year, with market sentiment continuing to improve.

The FTSE 100 index started the day up 0.2%, or 11.73 points, at 7,200.55. The FTSE 250 was up 0.1% at 18,630.17, and the AIM All-Share was 0.2% higher at 899.30.

The BATS UK 100 index was up 0.1% at 12,191.91, the BATS 250 was up 0.2% at 16,947.41, and the BATS Small Companies was up 0.1% at 10,880.64.

Outside corporate news, the UK news highlight was the approval late Wednesday of the European Union (Notification of Withdrawal Bill) by Parliament. The passing came after around 40 hours of debate during which the government saw off a series of attempts to change it to safeguard against a "hard Brexit".

This will allow the prime minister to begin exit negotiations under Article 50 of the EU treaties, which Prime Minister Theresa May has promised by April, once it passes through the House of Lords. The bill was passed by 494 votes to 122 - a majority of 372.

The pound was quoted at USD1.2556 after the London equities open on Thursday compared to USD1.2530 at the close on Wednesday.

May meets on Thursday with Italian Prime Minister Paolo Gentiloni at Downing Street at 1230 GMT, followed by a joint press conference.

Meanwhile, Bank of England Governor Mark Carney gives a speech at central bank's Inclusion Reception in London at 1830 GMT.

Also in the economic calendar Thursday, US initial and continuing jobless claims are at 1330 GMT.

Already released were Germany's trade figures for December. Imports remained flat in December compared to the 3.5% seen in November, but beat economists expectations of a 1.0% fall. Exports, however, fell 3.3%, more than the 1.1% decline economists expected, compared to a 3.9% increase in November.

The German trade balance was at EUR18.4 billion in December, compared to EUR21.7 billion in November. The trade balance was expected to come in at EUR21.4 billion.

The DAX 30 index in Frankfurt and the CAC 40 in Paris were both 0.4% higher.

In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.5%. In China, the Shanghai Composite ended up 0.5%, while the Hang Seng index in Hong Kong finished 0.2% higher.

Back in London, Aviva sold its 50% stake in Antarius to a subsidiary of French bank Societe Generale for approximately GBP425.0 million. The insurer said it will sell the holding to SocGen subsidiary Sogecap, following the exercise of a purchase option. The selling price is approximately 1.7 times Aviva's share of the net asset value of Antarius, or GBP180.0 million above its book value.

The sale will increase Aviva's Solvency II capital, a measure of financial strength, by approximately GBP200.0 million. Completion of the sale is expected in April. Aviva was up 0.8%.

BHP said its board has approved spending USD2.20 billion for its share of the development of the Mad Dog phase 2 project in the Gulf of Mexico in the US. BHP has a 23.9% participating interest in the project, with operator and fellow blue-chip BP holding a 60.5% stake and Union Oil Co of California, an affiliate of Chevron Corp, holding the other 15.6%.

The project, located in the Green Canyon area of the deepwater Gulf of Mexico, is a southern and southwestern extension of the existing Mad Dog oil field. The second phase will include a new floating production facility with capacity to produce up to 140,000 gross barrels of crude oil a day from 14 producing wells. BHP said production is set to start in its 2022 financial year.

BHP was down 0.3%, while BP was up 0.9%.

Smith & Nephew was down 3.6%. The company posted a pretax profit of USD1.06 billion for 2016, nearly double the USD559 it reported in 2015, mostly as a result of a USD326 million profit on the sale of its Gynaecology business to Medtronic in August.

Revenue rose marginally to USD4.67 billion from USD4.63 billion. This included a 3% fall in revenue in the fourth quarter, hampered by foreign exchange headwinds and the sale of the Gynaecology business, as well as four fewer selling days compared to the comparative quarter the previous year.

Smith & Nephew proposed a final dividend of 18.5 US cents, taking its full-year dividend to 30.8c, maintained in-line with its previous year.

FTSE 250-listed Ashmore was 5.7% higher after reporting a pretax profit of GBP121.5 million in the six months to December 31, almost double the GBP62.7 million profit in the same period the prior year. The asset manager declared an interim dividend of 4.55 pence per share, unchanged from the prior year.

Pennon Group was another gainer, up 3.7%. The UK water utility and waste management company said it expects to deliver a full year trading performance in line with its prior guidance, and said it has also agreed terms with Japanese bank Nomura to unwind a derivative.

Plastic products maker RPC Group was up 2.4% after saying it has agreed to acquire US plastic packaging company Letica for up to USD640.0 million and will back the deal with a GBP552.0 million one-for-four rights issue.

Tate & Lyle was up 1.2%. The ingredients maker said its full-year results are set to modestly beat prior expectations thanks to a strong third quarter for its Bulk Ingredients unit.

Travel operator Thomas Cook Group was the biggest mid-cap decliner, down 6.6%, after taking a cautious view on its outlook. Nevertheless, it reported growth in revenue in the first quarter of its financial year and said it remains on track to meet full-year expectations.

"We remain cautious about the rest of [financial year 2017], given the uncertain political and economic outlook," said Chief Executive Peter Fankhauser.

By Daniel Ruiz; danielruiz@alliancenews.com

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