Cigarettes giant British American Tobacco (BATS) heads the FTSE 100 lower board on Monday following newspaper reports that the US Food and Drug Administration (FDA) wants to ban menthol cigarettes.

The story emerged from the Wall Street Journal over the weekend and it has got investors in BAT worried, with shares in the group slumping 9% in early trade to £31.07. BAT owns Newport, which is the biggest menthol cigarette brand in the US, and represented 55% of BAT’s US cigarette volumes last year, says the newspaper.

The news is having a sector-wide knock-on effect, with shares in Imperial Brands (IMB), the other UK listed tobacco group, dragged 4% lower at £26.38.

Tobacco sector stocks have come under hefty selling pressure during 2018 with talk of more hawkish legislation on e-cigarettes, particularly in the US.

BOATMAN BEAR SNARLS AT BABCOCK

Engineering group Babcock (BAB) has confirmed that it is looking into the background of anonymous bear raider Boatman Capital.

This investigation comes after the unknown trading firm put out a report attacking the company, a note which Babcock has said contains ‘many false and malicious statements which the group strongly refutes’.

Babcock’s detective work has so far failed to get to the bottom of Boatman Capital’s ownership conundrum although the search for information goes on. Babcock’s share price responds surprisingly positively on Monday, the stock nudging 8p higher to 608.4p, presumably because investors are encouraged by Babcock’s defensive moves.

The UK restaurant space may be hard going for some operators but nobody seems to have told Frankie & Benny and Garfunkel's owner, The Restaurant Group (RTN).

It has launched a rights issue to raise £315m from shareholders as it pushes ahead with plans to fund its takeover of Far East fusion chain Wagamama. The takeover, which was announced last month, values Wagamama at £559m.

The Restaurant Group is pitching a 13-for-9 rights issue priced at 108.5p, an enormous discount on the current 250p per share price of the shares, allowing investors to beef up their stakes in the business by almost 45% for a comparable song.

DIAGEO IN BOOZE FOR BUYBACKS SCHEME

Spirits giant Diageo (DGE) has sold 19 brands to US company Sazerac in a deal worth approximately 427m.

Brands on the block include several acquired with its merger with Seagrams back in 2001, such as Seagram's VO, Seagram's 83 and Seagram's Five Star. Diageo plans to return around £340m of the net proceeds, after tax and transaction costs, to shareholders through a share buyback programme.

That is small potatoes for a global business worth more than £66.8bn, which likely explains why Diageo’s share price remains largely unmoved on Monday, drifting 2p to £27.445.

Funerals firm Dignity (DTY) has reported a 14% fall in third quarter operating profits on sales marginally ahead at £244.2m.

The company says its average income is lower because of pricing trials where it has ‘unbundled’ its full service funeral pricing so people do not have to buy a whole package from the firm.

Dignity says it expects average income will be lower in the fourth quarter of this year but adds it continues to perform in line with expectations, albeit lowered ones following a huge profit warning thanks to intensifying competition that halved the share price in January from previous highs of more than £19.00.

The stock today declines 4% to £10.03.

Online gambling software supplier Playtech (PTEC) stuck to its most recent full-year guidance, though trading in Asia weighed. Earnings before interest, tax, depreciation and amortisation (EBITDA) for 2018 was still expected to reach a range of between €320m and €360m, the company said.

Shares in the company nudge 1% higher to 465.6p.

Shares in newspapers group Johnston Press (JPR) rally more than 15% on Monday to 3.8p on the back of weekend reports that it could be the subject of a takeover bid by Daily Mail & General Trust (DMGT), the publisher of the Daily Mail newspaper.

The story suggests that DMGT is really after the i newspaper, bought by Johnston Press from the Independent. The Scottish media company is currently struggling to raise cash.

Neither company has so far responded to the reports.

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Issue Date: 12 Nov 2018