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Full probe averted at Menzies merger partner

London Stock ExchangeMarket close: Menzies merger target DX Group has been told by the City of London Police Economic Crime Directorat that, after careful consideration of allegations made, the City of London Police will not be proceeding to a full investigation.

There had been allegations against DX’s document delivery service.

The company said it had co-operated with the preliminary investigation, which centred on the DX Exchange operations. It has reviewed and made changes to internal business processes in this unit, which will be kept under review.

John Menzies said it would “consider its position”. The tie-up with Menzies Distribution has been under pressure from activist investor Gatemore, which only dropped its opposition to the merger last month after the pair revised terms.

DX shares have been suspended since merger proposal was announced in March.

On the economic front, new data raised questions about the chances of the Bank of England raising interest rates this year.

Factory output and the construction sector unexpectedly shrank in May, on top of weak spending by consumers who are feeling the pinch from accelerating inflation since last year’s vote to exit the European Union.

The Office for National Statistics said manufacturing output fell by a monthly 0.2%, while construction figures were worse than expected. Output in the three months to May were down 1.2%, the sharpest such drop since October 2015.

Sterling dipped below $1.29, down 0.7% against the dollar to its lowest level since 28 June. Government bond prices rose.

Analysts said the UK economy was now unlikely to recover much speed in the second quarter, after expanding by just 0.2% in the first three months of the year (0.8% in Scotland).

US employment rose by more than expected last month, but wage growth remained subdued.

The economy added 222,000 jobs in June. However, wage growth remained tepid. Average wages rose 2.5% year-on-year, which analysts said was a sign the market still had room to improve.

The FTSE 100 closed up 13.64 points at 7,350.92.


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