STOCKS LOWER AS TRUMP TRAVEL BAN SPOOKS MARKET

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LONDON (Alliance News) – A rise in political instability following US President Donald Trump’s executive order banning refugee travel from seven predominantly Islamic countries hurt sentiment on the London stock market on Monday.

At midday, the FTSE 100 was down 0.7%, or 52.21 points, at 7,132.28. The FTSE 250 was down 0.5% at 18,094.24, and the AIM All-Share was flat at 880.85.

The BATS UK 100 was down 0.7% at 12,054.65, the BATS 250 index was down 0.5% at 16,442.96, and the BATS Small Companies was down 0.1% at 10,848.26.

European stocks were also suffering, with the CAC 40 in Paris down 0.9% and the DAX 30 in Frankfurt down 0.8%.

Ahead of the New York open, futures indicated the DJIA down 0.4%, the S&P 500 down 0.5%, but the Nasdaq Composite up 0.1%.

Trump’s executive order over the weekend restricted entry into the US for people arriving from Syria, Yemen, Iran, Iraq, Somalia, Libya and Sudan, despite a federal judge’s order placing a hold on part of Trump’s controversial order.

The US President’s decision sparked a backlash of protests including mass gatherings at US airports and streets of major cities. In the UK, a petition to cancel Trump’s planned state visit surpassed 1 million signatures on Monday.

Trump responded on Sunday by reiterating his position that the order is “about terror and keeping our country safe”. He also said the US will again issue visas to all countries named in the order once the administration is sure its has reviewed and implemented “the most secure policies” for admitting people.

“The resulting press criticism and mass protests appear to have pushed some investors to the sidelines as rising uncertainty in the ability of the president not to cause damage to the US economy starts to increase, and uncertainty rarely bodes well for financial markets,” said Michael Hewson, chief market analyst at CMC Markets.

On the London Stock Exchange, Vodafone Group was one of the biggest gainers in the FTSE 100, up 2.6%, after it confirmed it is in talks for a merger of its Indian business with a rival domestic carrier, only a few months after it put plans to float that business on hold.

The telecoms giant had been mulling an initial public offering of Vodafone India, however, the market in India became significantly more competitive upon the arrival of new entrant Reliance Jio Infocom last year. This resulted in Vodafone booking a hefty EUR5.0 billion impairment on the Indian subsidiary last November.

On Monday, Vodafone confirmed in response to press speculation that it is in talks for an all-share merger of its Vodafone India business with rival domestic carrier Idea Cellular.

Vodafone India is the number two player in the market, behind Airtel India, and Idea Cellular is number three. A merger of the two would see the combined company overtake Airtel by some distance to be the largest mobile provider in the Indian market by subscribers.

Barclays was one of the worst blue-chip performers, down 2.2%, after Berenberg downgraded it to Sell from Hold. The German bank said it remains a fan of the core UK business of Barclays, but believes the current valuation of the bank is unjustified given the structural headwinds faced by investment banks globally and a normalisation in credit losses.

Design, engineering and project management consultancy WS Atkins was the biggest FTSE 250 gainer, up 5.1%, after The Times reported that US engineering consultant CH2M is understood to have approached UK peer WS Atkins about a possible merger.

CH2M, which is working on the UK’s High-Speed 2 rail project, is believed to have contacted WS Atkins at the end of 2016 to explore whether a tie-up between the two had merit, sources told The Times. It is believed an approach was made at a senior level, though it is unclear how far the talks developed, the newspaper said.

Aggreko was down 3.9% after Deutsche Bank cut it to Hold from Buy. The German bank said the expected earnings inflection point for the temporary power provider is now priced into its share price.

“We find it increasingly hard to argue with conviction that there is an incremental catalyst that is not priced in on a 12 month view,” Deutsche said.

Still ahead in the economic calendar, the German consumer price index is at 1300 GMT, and US personal consumption expenditure is at 1330 GMT. US pending home sales are at 1500 GMT, and the Dallas Federal Reserve manufacturing index is at 1530 GMT.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

Copyright 2017 Alliance News Limited. All Rights Reserved.

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