FTSE 100 movers: Burberry leads index on rating upgrade

The FTSE 100 was set to finish the week on a positive note, with the blue chip index up 73.36 points (1.22%) to 6,086.17.

Burberry led the risers after Nomura upgraded the fashion company to ‘buy’ from ‘neutral’ and lifted the price target to 1,500p from 1,450p.

It said since the company announced a review of the global market, its initiatives, efficiency programmes, productivity and capital allocation, expectations have risen in anticipation of change.

Nomura expects the review to be thorough given chief executive Christopher Bailey will have been at the helm for two years in May.

“A change of the group’s approach would be a positive to the market. Despite a recent rebound in the stock, we see potential for a greater valuation if Burberry can successfully drive productivity measures, while being more disciplined on cost and capital allocation,” the Japanese bank said.

Despite sales at publisher Pearson declining 2% in underlying terms in 2015 to £4.47bn, shares were up significantly.

The company cited good growth in Pearson VUE, Connections and Wall Street English in China, but that was more than offset by declines in the US Higher Education, UK Qualifications and South Africa sectors.

Pearson made an adjusted operating profit - also down 2% in underlying terms - though adjusted earnings per share grew 5% to 70.3p, reflecting lower interest and a lower tax rate of 15.5%.

Operating cash flow decreased significantly, by 33%, with Pearson's board blaming challenging trading, disposals and increased US higher education textbook returns, partially offset by an increased dividend payment from Penguin Random House.

"Our competitive performance during the last three years has been strong, but the challenges in our biggest markets have persisted for longer than anticipated," said Pearson chief executive John Fallon.

He said Pearson was now implementing the plans it announced in January to integrate its business, reduce its cost base and focus on fewer, bigger growth opportunities.

London Stock Exchange Group Investors continued to get excited about the proposed merger with Deutsche Borse after the companies revealed more information about the deal.

It said that the combined group would be a UK public limited company domiciled in London.

London Stock Exchange Group in London and Deutsche Borse in Frankfurt would become intermediate subsidiaries of the combined group, and the group would have headquarters in London and Frankfurt.

It would have a 'balanced governance structure' with equal representation from London Stock Exchange Group and Deutsche Borse, including Donald Brydon as chairman, Joachim Faber as deputy chairman and senior independent director, Carsten Kengeter as CEO and executive director, and David Warren as CFO and executive director.

On completion of the transaction, Xavier Rolet would step down from his role as CEO of London Stock Exchange Group.

Meanwhile, shares in RBS plunged after the bank confirmed it made a £1.98bn loss for 2015, down from a £3.47bn loss the previous year

The group, which warned investors in January it would make a loss, said litigation and conduct costs increased 62% to £3.57bn.

That included £2.1bn of additional provisions for mortgage backed securities litigation in the US and an extra £600m of provisions relating to PPI.

Restructuring costs ballooned 154% to £2.93bn as the bank's repositioning accelerated, particularly as it reorganised the Corporate & Institutional Banking business which cost £524m.

The group’s total operating expenses came in at £16.4bn, up from £13.9bn the previous year. However, it shaved 10% off its annual adjusted operating expenses bill, which excluded restructuring costs, litigation and conduct costs and a £498m write down of goodwill, from £10.4bn to £9.4bn.

FTSE 100 - Risers

Burberry Group (BRBY) 1,269.00p 7.54%
Pearson (PSON) 851.50p 6.24%
Glencore (GLEN) 125.50p 5.64%
Anglo American (AAL) 445.90p 5.63%
Standard Chartered (STAN) 419.65p 5.25%
Aberdeen Asset Management (ADN) 243.30p 4.20%
Rio Tinto (RIO) 1,875.00p 3.79%
London Stock Exchange Group (LSE) 2,732.00p 3.72%
HSBC Holdings (HSBA) 465.45p 3.71%
Capita (CPI) 1,048.00p 3.05%

FTSE 100 - Fallers

Royal Bank of Scotland Group (RBS) 226.30p -7.25%
International Consolidated Airlines Group SA (CDI) (IAG) 535.50p -4.12%
Dixons Carphone (DC.) 430.20p -1.56%
Inmarsat (ISAT) 974.50p -1.52%
Sports Direct International (SPD) 393.60p -1.45%
Merlin Entertainments (MERL) 448.30p -1.10%
easyJet (EZJ) 1,479.00p -1.07%
Coca-Cola HBC AG (CDI) (CCH) 1,399.00p -0.71%
Severn Trent (SVT) 2,145.00p -0.60%
ITV (ITV) 251.00p -0.59%