Stock prices in London, Paris and Frankfurt were in the green on Thursday morning, with Direct Line shining on the FTSE 250, as traders in New York sit on the sidelines amid the Thanksgiving holiday.
The FTSE 100 index added 17.45 points, 0.2%, at 8,292.20. The FTSE 250 rose 133.28 points, 0.7%, at 20,734.91, and the AIM All-Share added 0.32 of a point at 731.72.
The Cboe UK 100 was up 0.2% at 833.22, the Cboe UK 250 added 0.9% at 18,246.36, and the Cboe Small Companies was down 0.1% at 15,681.97.
The CAC 40 in Paris and the DAX 40 in Frankfurt each rose 0.6%.
In New York overnight, the Dow Jones Industrial Average lost 0.3%, the S&P 500 fell 0.4%, and the Nasdaq Composite declined 0.6%.
In China on Thursday, the Shanghai Composite ended 0.4% lower, while the Hang Seng in Hong Kong fell 1.2%. Tokyo’s Nikkei 225 added 0.6%, while the S&P/ASX 200 in Sydney climbed 0.5%.
Investors were digesting another slew of US economic data which showed a pick up in an inflation measures and continued robust growth.
According to the Bureau of Economic Analysis the core personal consumption expenditures index rose 2.8% on-year in October, picking up speed from 2.7% in September.
The reading was in line with the FXStreet-cited market consensus. The core PCE is the Federal Reserve’s preferred inflation gauge.
The headline PCE index, which unlike the core data factors in food and energy, showed the pace of annual inflation rose to 2.3% last month, from 2.1% in August, also in line with consensus.
On month, headline PCE rose 0.2% while the core measure increased 0.3%, both as expected.
In a separate report, the BEA said the US economy expanded 2.8% quarter-on-quarter on an annualised basis in the three months to September 30, in line with a prior estimate.
Growth slowed from 3.0% in the second-quarter but was in line with expectations.
‘Overall, there was no big surprise in yesterday’s data,’ Swissquote analyst Ipek Ozkardeskaya commented.
The pound was quoted at $1.2649 early Thursday, down from $1.2687 at the time of the London equities close on Wednesday. The euro faded to $1.0540 from $1.0579. Against the yen, the dollar rose to JP¥151.84 from JP¥150.71.
Brent oil was quoted at $71.96 a barrel, falling from $72.79. Gold slipped to $2,640.96 an ounce from $2,643.13.
Direct Line jumped 37% to 217.42 pence, giving it market capitalisation of £2.83 billion.
Aviva said late Wednesday it had made an approach to buy Direct Line Insurance Group, which was rejected. London-based Aviva said the cash and shares proposal was made last week Tuesday.
Direct Line shareholders would be entitled to receive 112.5 pence per share in cash, and 0.282 new Aviva shares per Direct Line share. Based on Aviva’s share price on the day before the proposal was submitted, the plan valued Direct Line at 250p per share, around £3.26 billion as a whole.
But Aviva said Direct Line on Tuesday had rejected the proposal as substantially undervaluing Direct Line, and has declined to engage further with Aviva.
In a statement, Direct Line, the Bromley, London-based motor and home financial services group, said it had concluded that the plan was ‘highly opportunistic and substantially undervalued the company’.
In March, Ageas withdrew a proposed bid for Direct Line after failing to secure the backing of its UK peer. The Belgian insurer had made two proposals to buy Direct Line, but its advances were rejected.
Aviva lost 2.2%, while Direct Line peers Admiral and Sabre rose 3.8% and 2.3%. Admiral was the best large-cap performer, while Direct Line was the best of the 250s.
Also rising sharply on M&A developments, Loungers jumped 28% to 305.55p.
It backed a roughly £340 million takeover offer from private equity firm Fortress Investment Group. Fortress will pay 310 pence in cash for each share in the operator of cafes and bars, giving a £338.3 million equity value and a £350.5 million enterprise value. It is a 30% premium to the 238p closing price on Wednesday.
Loungers Chair Alex Reilley said: ‘We remain very confident about Loungers’ future prospects and the half year results that we announced separately today clearly demonstrate the strong momentum that we have in the business. Loungers has come a long way since we opened our first site in Bristol in 2002, and we are hugely proud of the jobs we’ve created, the positive impact we’ve made on the UK’s high streets, and the outstanding hospitality our amazing teams have provided since then. We are more ambitious than ever and we see Fortress as being an ideal partner to help us take Loungers into the next phase of its growth journey. We believe that the Acquisition represents a compelling proposition for all of our stakeholders and will allow us to execute our ambitious growth plans even more decisively and effectively.’
Dr Martens was also on the front foot, jumping 15%. The firm reported half-year results, which Peel Hunt expect to be the boot maker’s ‘nadir’.
‘Overall, the brand is clearly fine, the company is addressing operational challenges, but recovery is a multi-year event,’ Peel Hunt analysts said.
On the decline among London-listed mid-caps, Ithaca Energy slumped 11%. Shares in the North Sea operator have gone ex-dividend, meaning new buyers will not qualify for the latest payout.
Shares are still up some 5% over the past month.
James Latham plunged 17% as it warned of annual earnings fall. The distributor of timber, panels and decorative surfaces said pretax profit in the half-year to September 30 declined 17% to £13.6 million from £16.4 million a year prior.
Revenue fell 2.3% on-year to £186.6 million from £190.9 million.
The firm said: ‘We were expecting the market to show signs of improvement in the second half of this year but so far this has not materialised. We have seen considerable challenges in our marketplace, including a significant competitor going into administration and others looking to quickly turn inventories into cash, which has affected short-term margins in some product groups. This has created opportunities to increase our market share and enabled us to take on three new brands of melamine and laminate panel products as well as some key specialist salespeople to help promote these new products.’
Nonetheless, it expects results for the full-year will ‘fall slightly below last year’s results’. An expected improvement in market conditions is now not expected ‘until the middle of 2025’.
On the up, Sainsbury’s added 3.1% and grocer peer Tesco rose 2.4%. JPMorgan double upgraded the duo to ’overweight’ from ’underweight’, also placing the FTSE 100 listings on ’positive catalyst watch’.
The economic diary has a eurozone consumer confidence reading at 1000 GMT and German inflation data at 1300 GMT.
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