Germanys Chancellor Angela Merkel is willing to consider a bailout fund increase.
– Man Group rises after shaking up divi policy.
– Tata weighing up a bid for Cable and Wireless Worldwide.
-Italian and Spanish long-term bond yields fall below 5%.
London’s footsie 100 index was trading at its highest levels of the day by lunchtime, with reports that Germany may be considering an increase in the Eurozone bailout fund which is helping to lift sentiment. Man Group was leading the rise on the Footsie by mid-afternoon today rising by almost 7%.
A meeting of the European Council in Brussels is scheduled for this evening, with the leaders expected to discuss the size of the Eurozone’s permanent bailout fund. Officials have said that while they will work long and hard throughout the month of March to take action, to strengthen the firewall & stave off the current crisis, absolutely nothing will be decided on Thursday about the size of the rescue-fund, known as the ESM (European Stability Mechanism).
However, in a turn-up for the books, German Chancellor Angela Merkel could finally give in to international pressure and accept the increase in the permanent bailout fund to €750bn, or so some say. According to a report from the German paper Sueddeustche Zeitung, official sources have indicated that both the temporary and the permanent funds – the European Financial Stability Facility & the ESM, respectively – could be run simultaneously for at least a year. Thus, the €250bn left over in the EFSF would be added to the €500bn ESM firewall.
German Finance Minister Wolfgang Schäuble made sure the markets know that the topic can wait. He is on record as having stated that the subject won’t be discussed at today’s summit. “We will have a debate on the subject, but it will take place throughout March”, he said.
Markit (financial information services company) & CIPS UK purchasing managers’ index (PMI) for the month of February came in below expectations at 51.2 points, versus last month’s reading of 52.0. “The manufacturing sector consolidated on January’s sharp increase in growth, but the return of rising oil prices and lacklustre demand is a cause of some trepidation,” said CIPS’s David Noble.
The Eurozone’s PMIs compiled by Markit showed signs of improvement in February, rising to a six-month high of 49.0 compared to 48.8 in the previous month. It is the third consecutive monthly rise but the index still remains below the crucial 50-point mark. It remains uncertain whether Europe will be able to avoid a return to recession, according to Markit’s chief economist Chris Williamson.
China’s manufacturing PMI increased from 50.5 to 51 in February, the best reading since September.
Markets are looking ahead to the US Institute for Supply Management’s factory index results which will be out after the open in New York.
MAN UP AFTER NINE-MONTH RESULTS
A more generous dividend policy and a slow-down in the net outflow of funds led to the ascent of Man, the hedge fund manager, on Thursday. The group said funds under management (FUM) at the end of February clocked in at around $59.5bn, up from the end of 2011 figure of $58.4bn, on the back of good investment performance and a significant reduction in the rate of net outflows.
Meanwhile, the company announced a change to its divided policy in which 100% of adjusted management fee earnings per share each financial year will be paid out in dividends. Shares rose 6% in the opening hour.
Advertising giant WPP was also a high riser after reporting champion revenues and profits as its gears up for Olympic year. Revenues at the Dublin head-quartered company came in at £10bn, ahead of analysts’ predictions of £9.9bn. Profits before tax came in at £1.4bn, against a market consensus of £1.1bn, and 17% ahead of 2010 on a constant currency basis.
Mining giant Kazakhmys edged lower despite saying that 2011 revenues rose to $3,563m, from $3,237m the year before, while earnings nudged slightly higher. The group said that output of copper in 2012 should be similar to the level produced in 2011.
Leading the fallers was engineering group Weir due to its ongoing issues in the takeover of Australian mining equipment maker Ludowici. Weir is nervously awaiting the outcome of the Review Panel of the Australian Takeovers Panel regarding the bid battle for Ludowici and has reminded the firm’s shareholders that its offer will remain open for acceptance until six hours past the publication of the Panel’s verdict.
Biopharmaceuticals giant AstraZeneca edged higher after announcing that its Chairman of eight years, Louis Schweitzer, intends to retire at the start of September. The group also revealed a number other changes to its boardroom, including the proposed appointment of the Rexam CEO and a Uniliver executive as non-executive directors.
CWW SOARS ON TATE COMMS SPECULATION
Tata Communications said it is in talks with telecoms firm Cable & Wireless Worldwide (CWW) regarding an offer – confirming earlier speculation – stepping on the toes of Vodafone which last month revealed its interest in the company. CWW’s shares surged nearly 20% early on, and were up around 16-17% by midday. According to Bloomberg, Tata must decide to whether or not to make an offer by March 29th, however Vodafone has until just March 12th.
Communications technology company Spirent was performing well after it reported a 10% rise in annual profit after a strong performance at its major division performance analysis.
Also in demand was UNITE Group, the student accommodation manager, after it reinstated its dividend following a ‘strong year’ in 2011 in which it achieved 99% occupancy and an increase in net asset value (NAV).
Defence group Chemring was a heavy faller after saying that while it is trading in line with expectations, its long-serving Finance Director will step down by the end of July. A search is underway to find a replacement for Paul Rayner who will step down no later than July 31st. Rayner has been with Chemring since 1994 and has been Finance Director since 1999.
FTSE 100 – Risers
Man Group (EMG) 139.90p +6.88%
Essar Energy (ESSR) 111.30p +6.10%
WPP (WPP) 840.00p +4.54%
Schroders (Non-Voting) (SDRC) 1,258.00p +2.61%
ITV (ITV) 88.15p +2.56%
Barclays (BARC) 250.95p +2.43%
Schroders (SDR) 1,581.00p +2.26%
Carnival (CCL) 1,889.00p +2.22%
ICAP (IAP) 393.10p +2.16%
Hargreaves Lansdown (HL.) 436.80p +1.98%
FTSE 100 – Fallers
Weir Group (WEIR) 2,064.00p -1.99%
Cairn Energy (CNE) 340.80p -0.99%
Evraz (EVR) 419.90p -0.90%
Reed Elsevier (REL) 546.00p -0.82%
International Consolidated Airlines Group SA (IAG) 163.10p -0.67%
Whitbread (WTB) 1,686.00p -0.65%
Polymetal International (POLY) 1,077.00p -0.65%
Kazakhmys (KAZ) 1,103.00p -0.54%
Capita (CPI) 763.00p -0.52%
Severn Trent (SVT) 1,567.00p -0.51%
FTSE 250 – Risers
Cable & Wireless Worldwide (CW.) 32.48p +16.50%
Spirent Communications (SPT) 148.40p +5.32%
Ocado Group (OCDO) 97.90p +5.21%
Howden Joinery Group (HWDN) 121.60p +4.65%
Telecom Plus (TEP) 641.00p +4.48%
Unite Group (UTG) 192.40p +4.00%
Hays (HAS) 83.65p +3.85%
AZ Electronic Materials SA (DI) (AZEM) 293.50p +3.71%
Redrow (RDW) 131.00p +3.56%
Investec (INVP) 414.00p +3.50%
FTSE 250 – Fallers
Chemring Group (CHG) 423.00p -3.60%
JD Sports Fashion (JD.) 800.50p -3.55%
New World Resources A Shares (NWR) 530.50p -3.02%
Petropavlovsk (POG) 699.50p -2.64%
Hochschild Mining (HOC) 500.00p -2.15%
Drax Group (DRX) 509.00p -1.93%
Centamin (DI) (CEY) 89.25p -1.71%
Misys (MSY) 320.00p -1.69%
Rank Group (RNK) 135.30p -1.67%
International Personal Finance (IPF) 243.60p -1.66%