Business Insight

Blue chips up on rumour of engineering firm GKN split

FTSE 100 was nudged higher by the likes of GKN, which topped the index after rising 15.6p to end the trading session at 319p

INVESTORS cheered reports that engineering firm GKN could split in two, sending its shares to the top of the FTSE 100 and helping the blue chip index edge into positive territory.

The FTSE 100 ended the day relatively flat, rising just 1.22 points to 7524.45.

It was nudged higher by the likes of GKN, which topped the index after rising 15.6p to end the trading session at 319p.

It comes in the wake of media reports suggesting that GKN was putting together a plan to split up its aerospace and automotive units, and that the break-up could materialise within months.

David Madden, a market analyst at CMC Markets UK, said: "GKN is up on the day over a report the engineering company is contemplating splitting in two.

"A few weeks ago the firm shocked the market by revealing it would incur costs of £40 million, for two charges.

"The talk of the split in the company has helped them recoup some of the lost ground."

In currency markets, the pound was mixed, falling flat against the US dollar at around 1.319 but rising 0.2 per cent versus the euro to 1.122.

Investors were digesting data from the Confederation of British Industry (CBI), which showed that orders and output in the manufacturing sector softened in the past three months, while optimism about business conditions fell for the first time in a year.

Across Europe, the French Cac and German Dax ended the day higher by 0.27 per cent and 0.09 per cent, respectively.

Brent crude prices were down nearly 0.9 per cent at US$57.38, amid supply fears as fighting between Iraqi forces and pro-independence Kurds continued.

Mr Madden said: "Iraq is a major oil producer, and the oil-rich north is seeking to separate from the rest of the country, and this is fuelling fears over supply."

In UK stocks, RBS shares dropped 2.8p to 279.5p after Britain's financial watchdog published an interim report looking at the treatment of small businesses at the hands of the bank's controversial Global Restructuring Group (GRG).

The Financial Conduct Authority (FCA) added that it was still investigating the lender.

However, while the FCA identified a number of failings at RBS, it said the bank had not engaged in the "systematic inappropriate treatment of customers".

Shares in Spire Healthcare surged 39.7p to 301p after the company confirmed that it had rejected a takeover offer from South Africa's Mediclinic which valued it at more than £1 billion, saying that Mediclinic significantly undervalued Spire and its prospects.

Mediclinic International tumbled 17p to 623.5p following the news.

Pendragon plunged 5.25p to 23.75p as the car dealership owner warned that profits will take a hit from falling demand for new cars as consumer confidence declines.

It now expects full-year profit to come in at £60m, down from last year's £75.4m.

The biggest risers on the FTSE 100 were GKN up 15.6p at 319p, Micro Focus International up 54p to 2,521p, Associated British Foods up 46p at 3,371p, and Centrica up 2.3p at 175.4p.

The biggest fallers on the FTSE 100 were Mediclinic International down 17p at 623.5p, ITV down 3p at 171.9p, RSA Insurance Group down 11p at 630p, and Hammerson down 8p at 521p.

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