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Marks & Spencer jumps as pension debt cut

Marks & Spencer jumps as pension debt cut

(UPDATE) 17.10: Shares made slow progress throughout Wednesday, amid mixed comments from US politicians over the fiscal cliff negotiations that have been dictating the direction of global markets.

Having fallen this morning, the FTSE 100 inched ahead 0.06%, or 4 points, to 5,803 and the Mid-250 index gave up 0.2%, or 23 points, to 11,891.

Markets turned after US house speaker, John Boehner, said he was hopeful a deal to avert the tax hikes and spending cuts could reached before the end of the year.

Shares in Marks & Spencer (MKS.L) took on 8.3p, or 2.2%, to 391p after the retailer reduced its pension funding burden.

Marks & Spencer announced that it had more than halved its annual cash contributions to its pension funding plan from £60 million to £28 million per annum until 2017/2018, raising fresh speculation that the company could be the target of a takeover bid.

BP (BP.L) lost 1.9p, or 0.4%, to 421p as the US Environmental Protection Agency (EPA) announced the company will be prevented from winning any further government contracts until it can demonstrate it meets business standards set by the government.

The decision comes after BP pleaded guilty to criminal charges in relation to its role in the Deepwater Horizon disaster earlier this month. The EPA cited its ‘lack of business integrity’ in responding to the explosion and the criminal charges as the reason for the ban.

Markets were mixed on Wall Street: the Dow Jones Industrial Average took on 0.08% to 12,887; the Standard & Poor's 500 index shed 0.06% to 1,399; and the Nasdaq Composite index lost 0.05% to 2,640.

Luxury retailer Burberry (BRBY.L) rose 34p, or 2.7%, to £12.73, following positive noises from China, one of the company’s biggest growth regions. Chinese commerce minister, Chen Deming, stated the country’s economy is certain to hit its 7.5% GDP growth target in 2012.

United Utilities () took on 17.5p, or 2.6%, to 684p as price rises boosted company revenues 3.8% in the six months to the end of September, keeping it on track to meet its full-year targets.

Bunzl (BNZL.L) gave up 43p, or 4%, to £10.42 as analysts at Citigroup cut their target price on the stock from £12.50 to £11.90.

FTSE falls over Greek fudge as Smith & Nephew finds its bid target

09.16: The FTSE 100 dipped 18 points or 0.3% to 5,780 after relief over the latest Greek bailout talks quickly evaporated as it became clear that the country’s lenders had not reached a full agreement.

According to the Financial Times eurozone countries are still haggling over whether they should shoulder up to €53 billion (£43 billion) in losses on their Greek bonds to complete the overhaul of the country’s bailout.

This is important because the measures agreed this week will only lower Greece’s debt to 126.6% of the country’s GDP by 2020, not the 124% level announced by eurozone leaders.

Meanwhile, fears of the US ‘fiscal cliff’ were sapping investors’ enthusiasm. Overnight Asia markets ended a seven-day rising streak and followed Wall Street down after Harry Reid, the majority leader in the US Senate, expressed his disappointment that there had been little progress in resolving the threat of a $600 billion spending and tax squeeze on the world’s largest economy.

In Europe the Euronext 100 dipped 0.1% to 661. On currency markets the pound slipped slightly to $1.6007 against the dollar while the euro weakened to 80.76p against the pound. Gold dipped to $1,739.90 an ounce. Brent oil rose above $110 per barrel.

However, in London there was bid news to enliven proceedings.

Smith & Nephew (SN.L) fell 2.2% to 645p after the artificial hip and knee maker, backed by Invesco Perpetual’s Neil Woodford, splashed $782 million (£488 million) on a cash bid for Healthpoint of the US. The company’s chief executive Olivier Bohuon has been looking for acquisitions for some time. He said the deal was ‘an important step’ because it strengthened the company's position in advanced wound care, one of the fastest growing areas of its business.

Healthpoint, which is based in Fort Worth, Texas, had turnover of $190 million (£118 million) in 2012. It makes Santyl, an ointment for the removal of dead tissue in wounds.

Down among the smaller companies, John Menzies (MNZS.L) slipped 4p to 569p as the newspaper distributor surprised investors with the £13.6 million acquisition of Orbital Marketing Services, a market leader in the distribution of travel brochures.

United Utilities () gained 1.3% to 677p after its half-year results.

ARM Holdings (ARM.L) was the biggest riser on the FTSE 100 rising 2% to 775p as Barclays Capital raised its price target to 820p and the Daily Mail again reported takeover speculation around the chip designer.

Vodafone (VOD.L) shed 1.3p or 0.8% to 155.6p after analysts at Berenberg cut their rating on the shares from ‘buy’ to ‘hold’ arguing that full-year earnings would be lower as a result of a weak first half performance.

Thomas Cook (TCG.L) fell 0.8p or 3.4% to 23.2p, valuing the travel agent at £202 million, after full-year operating profits slumped 49% to £156 million. Including goodwill, wrtiedowns and restructuring costs the firm fell to a pre-tax loss of £485 million.

However, winter trading has started well in Thomas Cook's main markets and new chief executive Harriet Green said: ‘These results reflect the major issues that Thomas Cook faced last year, but they mask the material improvement that we made in the fourth quarter.’

Shares in Thomas Cook have soared 57% this year but remain well off their 2007 peak of around 330p.

MegaFon, Russia’s second-biggest mobile phone operator, which is going for a dual listing in Moscow and London, priced the initial public offer at $20 per depositary receipt, the bottom of the price range. This raises $1.7 billion (just over £1 billion) for the company, which is controlled by Alisher Usmanov, the country’s richest man.

Electra Private Equity (ELTA.L) gained 29p or 1.6% to £18.46 as full-year results showed the investment company boosted by the maturing of several large investments. It expects the number of deals it is involved in to rise over the next 18 months.

Daisy Group (DAY.L) gained 1.4p or 1.6% to 91.4p as the telecoms and internet service provider pleased investors by saying it would pay its first dividend at the end of its financial year if it could not find suitable big acquisitions. Liberum analyst Andrew Darley said despite a widening in half-year losses, the company was on track to hit its full-year targets.

Interserve (IRV.L) added nearly 3p to 352p as the construction and support services firm proposed to transfer its interest in 19 private finance initiatives to the trustee of its pension scheme, in order to reduce a funding gap. The deal requires shareholder approval.

For the rest of the day's big risers and fallers see our FTSE data pages.

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Neil Woodford
Neil Woodford
90/90 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: -3.51%
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