LONDON (ShareCast) - Share prices of tobacco rivals Imperial and British American both dropped on Tuesday as investors gave a cool reaction to the planned merger between US peers Reynolds and Lorillard, which involves both UK companies parting ways with a lot of cash.

As part of the deal, Imperial is to buy a portfolio of cigarette brands and assets from Reynolds and Lorillard worth a combined $7.1bn which it says will "transform" its business in the States.

Meanwhile, British American, which owns 42% of Reynolds, said it plans to spend $4.7bn to maintain its shareholding in the enlarged group. The UK company said it would have to suspend its £1.5m buyback programme as a result.

UK housing stocks Barratt Developments and Persimmon were also trading in negative territory after a bigger-than-expected jump in inflation sparked concerns that the Bank of England will move quickly to hike interest rates.

Heading the other way were mining stocks with precious metal producers Fresnillo and Randgold on the rise as gold and silver prices gained. Gold in particular was recovering after its biggest decline this year on Monday.

Banking peers RBS and Barclays were also higher, along with utility providers Severn Trent and United Utilities.


FTSE 100 - Risers
easyJet (EZJ) 1,270.00p +2.09%
Royal Bank of Scotland Group (RBS) 324.10p +1.44%
Anglo American (AAL) 1,521.50p +1.33%
BHP Billiton (BLT) 2,018.50p +1.28%
Fresnillo (FRES) 930.50p +1.20%
Vodafone Group (VOD) 194.25p +1.12%
Severn Trent (SVT) 1,930.00p +1.10%
Barclays (BARC) 211.85p +1.07%
United Utilities Group (UU.) 885.00p +0.97%
Royal Mail (RMG) 487.50p +0.93%

FTSE 100 - Fallers
Imperial Tobacco Group (IMT) 2,666.00p -2.67%
Barratt Developments (BDEV) 360.60p -2.09%
Sports Direct International (SPD) 710.00p -1.80%
Wolseley (WOS) 3,172.00p -1.73%
Schroders (SDR) 2,490.00p -1.70%
British American Tobacco (BATS) 3,535.00p -1.68%
St James's Place (STJ) 752.00p -1.51%
Persimmon (PSN) 1,231.00p -1.44%
Hargreaves Lansdown (HL.) 1,137.00p -1.39%
Associated British Foods (ABF) 2,915.00p -1.19%

BC

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