When President Putin announced the €10.2 billion sale of a 19.5 per cent stake in Rosneft to Glencore and Qatar in December, he heralded it as “the largest privatisation deal, the largest sale and acquisition in the global oil and gas sector” of the year. Only a few months on, reports yesterday suggested that Russia was poised to buy back some of the stake in the largely state-owned oil company. That, in turn, prompted an outbreak of City headscratching about what that might mean for the commodities group.
Yesterday shares in the company traded sideways as investors assessed a report in The Wall Street Journal in which sources said that the original December deal had functioned as an emergency loan for Moscow. Glencore shares closed almost flat at 283p, up a third of a penny, after the Kremlin hit back, describing any suggestion of a buyback as “not possible and incorrect”.
In London, the markets endured a sluggish day of trading on the last full day of campaigning ahead of today’s general election. The FTSE 100 closed down 46.33 points, or 0.62 per cent, at 7,478.62.
As Standard Life and Aberdeen Asset Management prepare to merge, the fund managers received a boost from Morgan Stanley. The American investment bank upgraded both, arguing that the £11 billion pairing had helped to erase some of the uncertainty surrounding their prospects. Analysts lifted Standard Life from “equal weight” to “overweight,” sending its shares up 6p to 381p. They revised their rating for Aberdeen, meanwhile, from “underweight” to “equal weight.” It rose 4¾p to 286½p.
Investec boosted Royal Bank of Scotland, dropping its “sell” rating after shareholders abandoned a lawsuit over the bank’s 2008 rights issue. “With this settlement, RBS has disposed of a major ‘distraction’,” analysts at the bank said, introducing a “hold” rating and lifting their target from 240p to 260p. Shares in RBS picked up 3½p to 255p as Lloyds Banking Group gained more than a penny to finish at 70p.
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Builders climbed after Halifax estimated that house price inflation stood at 3.3 per cent in May, down from 3.8 per cent in April but ahead of market expectations. Persimmon rose 48p to £23.93, Taylor Wimpey advanced 2¾p to 181¾p and Bellway increased 59p to £27.86.
With oil prices on the slide, BP and Royal Dutch Shell held the index back, falling 8p to 456¾p and 21½p to £21.25, respectively. Pharmaceuticals stocks also struggled, with Shire slipping 145½p to £43.76½p, Astrazeneca dropping 53p to £53.02 and Glaxosmithkline closing down 12½p at £16.88½.
WPP tumbled sharply after reporting a slight fall in like-for-like net sales growth. Shares in the global advertising company dipped 45p to £16.76.
The FTSE 250 started to recover from its 214-point drop on Tuesday, closing up 41.08 points, or 0.21 per cent, at 19,695.92. RPC, the plastic packaging company, shed 61½p to 788½p after investors were left disappointed by its full-year release.
Ocado was also in the red. The online grocery service initially rose having finally announced a licensing agreement with a European retailer on Monday. However, some in the City continue to question what impact the deal will have and its shares closed down 24½p, at 284p.
Midatech gets cancer drug boost
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Midatech Pharma appeared to be in ruder health after it struck a licensing deal with Novartis, the Swiss medical group (Alex Ralph writes).
The Aim-quoted cancer drugs minnow will develop panobinostat, Novartis’s treatment for diffuse intrinsic pontine giloma (DIPG), a rare childhood brain cancer.
Jim Phillips, chief executive, said that the compound and the technology “hold promise as a potential therapeutic treatment for DIPG, for which there are no approved or effective therapies.
“We look forward to driving it through development for treatment of DIPG and to making a real difference to the children suffering from this devastating and terminal disease.” Clinical trials are due to start this year.
Panmure Gordon, which rates the stock a “buy”, said: “We expect such an agreement would likely comprise only a small or minimal upfront payment.”
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Midatech’s biggest shareholder is Woodford Investment Management and its chairman is Rolf Stahel, a former chief executive of Shire.
Midatech shares rose 4½p to 107½p, valuing the company at £52 million. They were changing hands for 300p-plus in 2015.
Wall Street report
Shares edged up after testimony from James Comey, the former FBI boss, held no big surprises about an inquiry into Russian meddling with the presidential election. The Dow Jones industrial average rose 37.46 points to 21,173.69.