By Steve Goldstein, MarketWatch
Merger talks boost Gailliford Try, hurt Bovis Homes
U.K. stocks inched higher on Tuesday, with markets getting their first opportunity to react to yet another rejection of a new election and the start of the proroguing of Parliament.
On Monday, Parliament voted for a second time against a new election , with Prime Minister Boris Johnson continuing his string of vote losses since heading the government. The five-week shutdown of Parliament has begun.
BlackRock Investment Institute said in a note to clients that the U.K. political situation remains in flux. "Against this backdrop, we do not see the Bank of England raising rates as it has guided. This underpins our positive view on U.K. gilts. We hold a neutral view on U.K. equities but see opportunities if Brexit-related fears lead to indiscriminate selloffs, particularly in U.K. companies that derive most of their earnings from global markets," the fund manager said.
But the economic news in the U.K. was rosy, as the U.K. unemployment rate in July fell to a lower-than-forecast 3.8% while average weekly earnings grew a faster-than-forecast 4%.
The pound fell slightly to $1.2342 as the FTSE 100 index rose 0.1% to 7241.16.
Of stocks in focus, Gailliford Try (GFRD.LN) shot up 9.2% after announcing it's re-engaging in talks about combining its housing businesses with Bovis Homes Group. Gailliford Try said it would still remain a U.K.-listed construction-focused group if the deal talks are successful.
Preliminary terms call for the housing businesses to be swapped for GBP675 million of Bovis Home shares, GBP300 million in cash and the assumption of GBP100 million in debt.
Bovis Homes shares (BVS.LN) fell 4.4%.
JD Sports Fashion rallied 7% as the sporting-goods retailer reported a 37% increase in first-half comparable EBITDA to GBP235.2 million, with revenue rising by 47% to GBP2.72 billion.