LONDON MARKETS: British American Tobacco Shares Light Up, But FTSE 100 Direction Indecisive
October 21 2016 - 6:02AM
Dow Jones News
By Carla Mozee, MarketWatch
U.K. blue-chip benchmark set for 0.3% weekly gain
U.K. stocks swayed between minor gains and losses Friday, but
British American Tobacco PLC climbed the most in nearly two months
as the Lucky Strike maker aimed to expand its reach.
The FTSE 100 index was up less than 1 point at 7,027.16, as it
searched for firm footing. The index was weighed by losses across
most sectors, with only the consumer goods, technology and basic
materials groups showing gains.
The index on Thursday also had a choppy session
(http://www.marketwatch.com/story/uk-stocks-slip-as-retail-sales-miss-forecasts-2016-10-20)
and closed up less than 0.1% higher.
But for the week, the British blue-chips benchmark was on track
for a 0.3% rise, which would come after last week's loss of
0.4%.
Atop the benchmark on Friday was British American Tobacco
(BATS.LN) (BATS.LN) as shares climbed 2.8%, on track for their best
session since Sept. 2, FactSet data showed. The move came after the
company proposed buying the stake in Reynolds American Inc
(http://www.marketwatch.com/story/bat-in-47-billion-offer-for-reynolds-stake-2016-10-21).
(RAI) that it doesn't already own for $47 billion.
Shares are up as investors "look past the hefty price tag and
think of the increased market share and revenues that will accrue
in the future," said Chris Beauchamp, chief market analyst at IG,
in a note.
Stock in competitor Imperial Brands PLC (IMBBY) (IMBBY) was up
2.2%, higher "on expectations that it too might either be forced to
look for new acquisitions or, perhaps more plausibly, become a bid
target itself," Beauchamp said.
Reynolds shares zoomed up 17% ahead of Wall Street's open
(http://www.marketwatch.com/story/reynolds-jumps-18-premarket-on-47-billion-bat-offer-2016-10-21).
Trading in the other direction, InterContinental Hotels Group
PLC
(http://www.marketwatch.com/story/ihg-strikes-confident-tone-about-yearly-outlook-2016-10-21)(IHG)
shares fell 1.6%. The owner of the Holiday Inn, Crowne Plaza and
other chains posted a 1.3% rise in third-quarter revenue per
available room, slower than the 2.1% rate expected by analysts
polled by FactSet.
"It's not all bad news though. With 50% of group and 40% of
European central costs in sterling, as well as 70% of group debt,
the lower pound should prove a benefit, even if (as a dollar
reporter) a stronger [U.S. dollar] undermines revenue growth,"
wrote Laith Khalaf, senior analyst at Hargreaves Lansdown.
The pound was buying $1.2225, compared with $1.2252 late
Thursday.
(END) Dow Jones Newswires
October 21, 2016 05:47 ET (09:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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