LONDON MARKET MIDDAY: Stocks Up Ahead Of US CPI; Shire Pursues Split

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LONDON (Alliance News) - London equities were higher Wednesday midday ahead of the closely-watched US consumer price figure index for January, due at 1330 GMT.

The FTSE 100 was supported by pay-TV provider Sky, which scored an improved football rights deal, while Coca-Cola HBC popped higher after a strong set of full-year results.

Reporting at midday, Irish drugmaker Shire said it enjoyed record operating cash flow in 2017, together with 8% growth in pro forma product sales. Total revenue for 2017 was USD15.2 billion, up 33% including 2016 acquisition Baxalta. Non GAAP net income rose 36% to USD4.60 billion.

Shire said it is "well underway" with creating two division for rare diseases and neuroscience, saying it is optimizing its portfolio in each division, which may lead to opportunities for disposals.

Shire shares were up 1.6% in the FTSE 100 following the announcement.

Meanwhile, the index of midcap firms was higher, led by Sirius Minerals and bank CYBG and despite a drag from housebuilder and construction company Galliford Try, after it set out intentions to seek funds following the collapse of Carillion.

The FTSE 100 index was up 0.7%, or 51.69 points, at 7,219.70 Wednesday midday. The FTSE 250 index was up 0.6% at 19,436.13. The AIM All-Share index was up 0.5% at 1,021.64.

The BATS UK 100 index was up 0.6% at 12,260.53. The BATS 250 was up 0.6% at 17,654.79, and the BATS Small Companies was flat at 12,134.22.

"European markets are on the rise, as yesterday's breather appears to have paved the way for another sustained assault on last week's mountain of losses," said IG market analyst Joshua Mahony.

"While the volatility of last week seems to have largely abated, there is certainly an element of weariness today, as traders prepare for the US CPI inflation reading. With last week's sharp rise in downside volatility partly attributed to the recent rise in US wage growth, there is a fear that a rise in CPI today could spark a similar response in the global markets," Mahony added.

US CPI is seen rising 1.9% on a year-on-year basis for January, slowing from December's 2.1%. Core CPI is expected to come in at 1.7% from 1.8% the month before.

US retail sales are due alongside CPI at 1330 GMT, with EIA crude oil stocks at 1530 GMT.

In mainland Europe at midday, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both up 0.6%.

In European data on Wednesday, flash estimates from Eurostat showed the euro area economy grew at a slightly slower pace in the fourth quarter, in line with expectations.

Gross domestic product climbed 0.6% sequentially, following third quarter's 0.7% expansion. On a yearly basis, GDP growth eased slightly to 2.7% from 2.8% in the preceding period.

Over the whole of 2017, eurozone GDP grew 2.5%.

In a separate report, Eurostat said eurozone industrial production rose 0.4% in December from November, when it climbed 1.3%. Production of durable consumer goods increased 2.7%, and output of intermediate goods and energy rose 1.4% and 1.3%, respectively. On a yearly basis, growth in industrial output accelerated to 5.2% from 3.7% in the previous month.

Earlier on Wednesday, data from Destatis showed the German economy also grew as expected at the end of 2017, largely driven by foreign demand.

Gross domestic product grew 0.6% sequentially in the fourth quarter, in line with expectations, but slightly slower than the revised 0.7% expansion seen in the third quarter. At the same time, the calendar-adjusted GDP advanced at a faster pace of 2.9% annually, after rising 2.7%. GDP was forecast to grow 3%.

Commerzbank analyst Joerg Kraemer said the upswing in the German economy could continue for another two or three years despite the roll-back of labor market reforms, because cyclical tensions on the labor market are not yet in sight.

The euro was quoted at USD1.2347 at midday, soft compared to USD1.2363 at the European equities close on Tuesday.

Stocks in New York were called for a higher open on Wednesday, with the Dow Jones Industrial Average pointed up 0.5%, and the S&P 500 and Nasdaq Composite indices both up 0.4%.

Reporting before the Wall Street open are e-commerce platform Groupon, hotelier Hilton Worldwide, and drinks firm Dr Pepper Snapple, which recently agreed to a takeover by JAB Holding Co.

After the New York close, online review platform TripAdvisor and hotel operators Hyatt Hotels and Marriott release results.

On the London Stock Exchange at midday, Sky was up 3.2%, the best performer in the FTSE 100.

Late Tuesday, the Premier League announced the sale of five out of an available seven football packages.

Sky has won the rights for four of the packages, comprising Sunday slots, Saturday nights, Monday night and Friday nights for the three year contract starting in 2019, airing 128 games a season, up from 126 matches currently.

This means Sky will be paying 16% less per game compared to its existing agreement, at GBP9.3 million versus GBP11.0 million previously. Sky will pay an average of GBP1.19 billion per season for 128 live games, compared to GBP1.39 billion for 126 games currently.

BT, meanwhile, is paying GBP295 million per season for 32 games as opposed to 42 last time, for which it paid GBP320 million. This means BT will be paying an average of approximately GBP9.2 million per game, compared to GBP7.6 million under the current deal.

"Today's announcement not only suggests a de-escalation in the UK pay-to-view sports arms race; most interestingly, the fact that two packages remain on offer leaves a fresh opportunity for new media providers such as Amazon, Facebook and Twitter to enter the affray," said Henry Croft, research analyst at Accendo Markets.

Shares in BT were up 1.4%.

Coca-Cola HBC was the third best performer in the FTSE 100, up 3.2% after it reported a rise in profit and revenue for 2017.

The soft drinks bottler reported pretax profit in 2017 of EUR564.9 million, up from EUR457.8 million the year before, helped by a further reduction in finance costs to EUR36.7 million from EUR62.3 million.

Net sales revenue was up 4.9% at EUR6.52 billion from EUR6.22 billion the prior year, and rose by 5.9% in constant currencies. Coca-Cola HBC declared a full-year dividend of EUR0.54 per share, up 23% from the year before.

In the FTSE 250, Sirius Minerals was up 2.2% after announcing it has entered a design and build contract with DMC Mining Services UK and DMC Mining Services, both subsidiaries of KGHM Polska Mieda, a Polish mining company.

The contract is for sinking and mining contractor DMC Mining to construct the four shafts required for Sirius' polyhalite project in North Yorkshire.

The contract with DMC Mining replaces that awarded to Associated Mining Construction UK in July last year. Protracted discussions with AMC on commercial arrangements led to Sirius seeking out alternatives.

Bank CYBG was up 1.9% after RBC Capital raised the midcap firm to Sector Performer from Underperform.

Dragging at the other end of the index was Galliford Try, sinking 18%. The housebuilding and construction firm reported a fall in interim profit and announced it was seeking additional funds after taking a GBP25 million charge relating to Carillion's collapse.

Releasing its interim results on Wednesday, Galliford Try said revenue rose 14% in the six months to December 31, though pretax profit dropped 11% to GBP56.3 million from GBP63.0 million. Pre-exceptional items, profit before tax rose 29%.

The company cut its dividend to 28.0 pence from 32.0p a year before, bringing forward its plan to "increase dividend cover to 2.0x pre-exceptional earnings".

The firm said it has taken an exceptional charge to GBP25 million due to the collapse of support services company Carillion. Due to the "additional financial obligations" arising from the Aberdeen Western Peripheral Route contract, Galliford also announced plans for a capital raise of GBP150 million.

Galliford is part of a joint venture with Balfour Beatty, and collapsed Carillion, on the GBP550.0 million AWPR contract. Balfour Beatty was down 1.1% on Wednesday.

Soft drinks maker AG Barr was down 2.1% after JPMorgan cut the company to Underweight from Neutral.

On AIM, Plus500 rose 5.0% after reporting a record year in 2017, with a steep rise in earnings driven by improved margins and customer growth ahead of expectations.

Plus500's earnings before interest, tax, depreciation, and amortisation for 2017 rose 72% to USD259.2 million from USD151.0 million in 2016, with its Ebitda margin rising to 59% in 2017 from 2016's 46%. Revenue rose to USD437.2 million from USD327.9 million, a climb of 33%.

The company is paying out a total dividend of USD1.6867, almost double 2016's total of USD0.8852. This is made up of its USD0.2388 interim payout, a final dividend of USD0.8219, and a special dividend of USD0.635.

Plus500 said 2018 has started with further record key performance indicators, and it now expects revenue for the year to be "significantly" ahead of market expectations.

By Lucy Heming; [email protected]

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