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Trump trade talk lifts FTSE but Intu falls on scrapped dividend

Trump trade talk lifts FTSE but Intu falls on scrapped dividend

The FTSE 100 has risen, buoyed by optimism over trade talks between the US and China and a surge in the shares of Lloyds (LLOY) as the bank raised its dividend and unveiled a bumper buyback.

The UK blue-chip index rose 25 points, or 0.4%, to 7,204, with Lloyds leading the way, up 5.6% at 61.7p.

Investors were encouraged by Donald Trump's claim that talks with China were going well and signs the US president was open to extending the 1 March deadline he had set to complete negotiations.

'They are very complex talks. They're going very well,' he told reporters.

'I can't tell you exactly about timing, but the date is not a magical date. A lot of things can happen.'

That helped the FTSE 100 shake off a dive in the shares of Sainsbury's (SBRY), down 16.3% at 241p, as the Competition and Markets Authority warned of 'extensive' concerns over the supermarket's planned merger with Asda. Morrisons (MRW) was also knocked by the news, down 5.7% at 226.4p.

On the FTSE 250, Intu Properties (INTUP) was a heavy faller, dropping 8.2% to 108.5p as the shopping centre operator was forced to scrap its final dividend due to tough conditions in the retail sector.

Intu had paid 14p in dividends in 2017, but November's 4.6p interim will not be followed by a final dividend.

Investors in the stock have endured a torrid 12 months, which have featured the collapse of two separate takeover deals, from rival Hammerson and a consortium of investors. The shares have nearly halved in value over that period.

'Intu has had a challenging year with a difficult retail and uncertain economic environment, together with responding to two aboritve corporate offers for the company,' said Intu chairman John Strachan.

Jefferies analyst Mike Prew retained his 'underperform' rating on the shares and 75p target price.

'Intu is over-geared and over-committed on shopping centres facing structural obsolescence, but the company thinks this asset derating has run its course which, we believe, it hasn't,' he said.

'The final [dividend] was passed and we predict nil for the next two year which destabilizes the shareholding register.'

Peel Hunt analyst Matthew Saperia, who rates the shares a 'hold', cut his target price from 120p to 110p.

'With no yield support, a constrained capital structure, the continuing search for new leadership, and the ongoing seismic shift in the retail landscape, caution must persist,' he said.

Intu's news also weighed on rival real estate investment trusts (Reits). On the FTSE 100, British Land (BLND) fell 1.4% to 575p and Land Securities (LAND) dropped 1.3% to 870.2p, while among 'mid-caps', Hammerson (HMSO) dropped 2.9% to 366p.

On the FTSE Small Cap index, shares in McBride (MCB) tumbled 31% to 90p as the cleaning products maker warned full-year profits were likely to fall by up to 15% as it struggles to cut raw material and logistics costs.

Shares in Flybe (FLYB) soared 85% to 2.4p as the airline said it had received a rival bid from a new consortium of investors, challenging the approach from a group backed by Richard Branson.

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