Sunday 17 June 2018

Engineering giant GKN boosts FTSE 100 on sell-off plans

The FTSE 100 Index closed up 45.96 points at 7,213.97.

GKN promised to make a £2.5 billion payout to investors (David Davies/PA)
GKN promised to make a £2.5 billion payout to investors (David Davies/PA)

By Ben Woods, Press Association Chief City Correspondent

Engineering giant GKN dragged the London market higher on Wednesday after revealing plans to sell chunks of the business to help fight a takeover swoop from Melrose.

The FTSE 100 Index closed up 45.96 points at 7,213.97, with GKN rallying higher on promises to make a £2.5 billion payout to investors over the three years by offloading non-core operations.

The plan is the result of a “wide-ranging and strategic” review of the business that was launched last month following a hostile bid by turnaround specialist Melrose.

Shares in GKN lifted more than 3%, or 13.3p to 411.3p, helping to shift the top flight back into the black as volatile trading conditions continued to dog global markets.

On Wall Street, the Dow Jones Industrial Average was marginally down and the S&P 500 lifted 0.4% in a mixed session for American-listed equities.

US indexes eventually calmed following a bout of market jitters over January’s inflation data, with consumer prices across the Atlantic climbing at a faster 0.5% rate than economists were expecting.

In a potential sign of resilience the markets soon shook off those losses Connor Campbell, Spreadex

Across Europe, France’s Cac 40 and Germany’s Dax both rallied higher, up 1.1% and 1.2% respectively.

Connor Campbell, Spreadex’s financial analyst, said: “The latest CPI numbers clearly provided an immediate gut punch for those investors fearing a rate-hiking Federal Reserve, the boards suddenly bathed in red within seconds of the release.

“However, in a potential sign of resilience the markets soon shook off those losses, with the European indices especially actually stretching their legs in the aftermath.”

On the currency markets, the pound was dining off the US dollar’s weakness, rising 0.5% against the greenback but staying short of the 1.40 mark at 1.395.

Versus the euro, sterling was 0.1% ahead at 1.12.

The price of oil enjoyed a resurgence, rising 0.6% to $62.93 a barrel on a smaller-than-expected rise in US crude stocks.

Focusing on UK stocks, Sky and BT had contrasting fortunes on the top tier after the two media giants stumped up £4.5 billion to claim broadcasting rights to dozens of Premier League football matches.

Sky was up nearly 2%, or 21p to 1,082p, as it won the race to become the main broadcaster of live Premier League football by seizing four of the seven TV rights packages for 2019-22.

However, BT closed down 0.3p to 225.6p after securing a smaller bundle of games.

A further two packages are still up for grabs, with bidding set to continue when the auction restarts on Thursday, but the cost-per-game price has fallen to £9.3 million, down from the current £10.2 million.

Away from the top flight, the ongoing fallout of Carillion’s collapse sent Galliford Try careering into the red as it moved to strengthen its balance sheet.

The housebuilding-to-construction firm was among the biggest fallers on the FTSE 250 Index after booking a £25 million exceptional charge and announcing plans to raise £150 million in new equity capital.

The company had been part of a joint venture with both Balfour Beatty and Carillion to construct the Aberdeen Western Peripheral Route (AWPR), but its partner’s liquidation means Galliford Try is likely to have to contribute an extra £30 million to £40 million to the project.

Shares were down more than 18%, or 187.5p, to 800p.

The biggest risers on the FTSE 100 Index were Randgold Resources up 296p to 6,386p, Coca-Cola HBC up 108p to 2,344p, Fresnillo up 58.5p to 1,329.5p, Evraz up 14.7p to 375.3p.

The biggest fallers were TUI down 74p to 1,540p, Standard Life Aberdeen down 9.5p to 389.3p, Shire down 45.5p to 3,135.5p, CRH down 32p to 2,427p.

Press Association

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