Friday May 2, 11:21 AM
London mid-morning: Insurers lead advance
LONDON (ShareCast) - Weak features are few and far between as London follows Wall Street's lead, with insurers spearheading the advance on reports that German insurance group Allianz is sizing up its UK rivals. "In principle, the UK market
is for us an interesting one," the Financial Times quoted Allianz board member Clement Booth as saying. Booth declined to specify the size of deal the board is looking at except to say that there was no upper limit. Admiral, Standard Life (LSE: SL.L - news) , Prudential, Royal & Sun Alliance, Aviva (LSE: AV.L - news) and Friends Provident (LSE: FP.L - news) all react positively to the FT's report. Royal Bank of Scotland (LSE: 91ID.L - news) is also going well on a report in the Telegraph that private equity firm Texas Pacific Group is considering a bid for its insurance arm. "It is very premature and no decision has yet been made to bid for it, but TPG is interested," the report said. Rio Tinto (Frankfurt: 855018 - news) is ahead after its chairman told an Australian paper it might consider a break-up to thwart BHP Billiton (LSE: BLT.L - news) 's bid. Next is the best performer in a buoyant retail sector which also sees Marks & Spencer going well. Barclays (LSE: BARC.L - news) is up despite the widely reported departure of Paul Idzik, chief operating officer and one of the key lieutenants in efforts by John Varley, chief executive, to overhaul the bank's culture and management. Wolseley (LSE: WOS.L - news) , with its huge exposure to the US housing market, is enjoying a rare spell in the sun, buoyed by the strength of the dollar. The dollar's strength is having a detrimental effect on the price of oil and has pushed down the price of oil producers BG Group (LSE: BG.L - news) , Cairn Energy (LSE: CNE.L - news) and Royal Dutch Shell (Amsterdam: RDSA.AS - news) . Property group Capital & Regional has rallied after yesterday's rout on worries concerns that its flagship fund had breached its banking covenants. After the market closed the company acknowledged the "market concern around the capital structure of the Mall Fund". Rentokil (LSE: 647054.L - news) shareholders face the prospect of a dividend cut after its problems within its parcels business, City Link, hit it hard in the first quarter. Revenue rose by 6.6% to £553.6m but profits slumped by 59% to £14.6 m after a loss of £15.4m at City Link. Excluding City Link, revenue rose by 8% and adjusted operating profit up 0.7%. Rentokil added that its current dividend is not sustainable and will be reviewed. Reinsurance broker Benfield expects 2008's trading result to be marginally below 2007 due to currency moves and a softening reinsurance market. "Benfield has not been materially affected by the global credit crisis, and although it has had an adverse effect on some reinsurers, the overall impact on the global reinsurance market has been muted," it said in a statement. Aircraft and car parts maker Hampson Industries (LSE: HAMP.L - news) has conditionally agreed to buy two US firms for up to $314m (£158.2m) and raise around £65m from a placing and open offer to part fund the acquisitions. Best of the Best (LSE: BEST.L - news) , which displays luxury cars as competition prizes in airport terminals, said profit and revenue for the year will be below expectations. Business transformation consultancy firm Axon (Berlin: AYW.BE - news) said its Axon Solutions unit has bought EnterSys, a leading provider of SAP (Xetra: 716460 - news) consulting services to the oil, gas & chemical sector in North America, for an initial consideration of $7.5m in cash. Deuxmil Marine (LSE: DML.L - news) rocketed higher Friday as it conditionally agreed to buy YCO for €9m (£7m) in cash plus €6m (£4.7m) in shares and raise £8.2m via a placing to fund the purchase and cover costs. Philippine-focused oil and gas group Forum reported slightly higher pre-tax losses but said its working capital position is stronger than last year while the Galoc development remains on schedule.
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