Tuesday July 15, 10:56 AM
London midmorning: Footsie stuck lower after US slump
LONDON (ShareCast) - The FTSE 100 has recovered a little but is still firmly in the red after slumping early on following a difficult day in the US. Banks are under the cosh following the hammering for US regional banks on Wall St overnight.
Barclays (LSE: BARC.L - news) and Royal Bank of Scotland (LSE: 91ID.L - news) are the worst performers in the sector.Alliance & Leicester is lower after a number of possible suitors ruled themselves out of a bid. The Telegraph says that sources close to Clive Cowdery, who plans to consolidate the UK's financial services industry, and private equity firm JC Flowers made it clear neither was likely to enter the fray. Lloyds TSB is expected to review its options but bankers said it was almost certain to be precluded on competition grounds. British Energy (LSE: BGY.L - news) leads the risers after Morgan Stanley (SPU - news) raised its target price on the stock to 650p from 550p and kept its 'equal-weight' rating, saying the nuclear power station operator should benefit from higher power prices in the long term. Scottish and Southern Energy also rose. Oil stocks also feature among the top gainers as oil futures trade above $145 a barrel. Cairn Energy (LSE: CNE.L - news) , Tullow Oil (Dublin: TQW.IR - news) and Shell (LSE: RDSB.L - news) are among best performers. Elsewhere in commodities though, Anglo American (LSE: AAL.L - news) leads the mining sector lower after Kazakhmys (LSE: KAZ.L - news) denied press speculation that it is in talks with Russia's Metalloinvest regarding a possible reverse takeover. "Kazakhmys confirms that it is not currently contemplating the implementation of such a combination through a structure that would be classified as a reverse takeover under the rules of the UK Listing Authority," it said this morning. Also in the mining sector, Investec (LSE: INVP.L - news) has upgraded its recommendation on the platinum miner Lonmin (LSE: LMI.L - news) to 'buy' from 'hold' pointing to strong prices for the precious metal. Cable and Wireless (LSE: CW.L - news) advanced early on after it left its underlying earnings guidance for the year to March 2009 unchanged at between £702m and £725m, an increase of between 16% and 20% on the previous year. International is expected to chip in between £447m and £455m; Europe, Asia & US between £285m and £295m. "Both business units have made a pleasing start to the financial year," it said. JP Morgan has initiated coverage on Old Mutual (LSE: OML.L - news) with an 'overweight' recommendation and a 114p target price saying the insurer offers investors a cheap, geared entry into the market. Elsewhere, Morgan Stanley maintained its 'overweight' stance on Old Mutual, but cut its target price to 114p from 166p. Credit Suisse has slashed its price target on Yell Group (LSE: YELL.L - news) to 55p from 140p, saying it remains negative on European directories as they become by-passed in the move to online. Plant hire group Speedy Hire (LSE: SDY.L - news) reports an encouraging start to its new financial year, underpinned by strong demand from public-sector projects. Revenue for the three months to June rose by 36% over this time last year, it added. Premier Foods (LSE: PFD.L - news) ' first half group sales rose by approximately 7% on the same period last year. The driver of the sales growth has been price rises to recover the significant input cost inflation, which began during the second half of 2007. Trading profit continues to be in line with our expectations, the Hovis to Branston group added. Expectations for the year remain unchanged, it added. Luxury goods firm Burberry shrugged off problems in Spain to post forecast-beating quarterly sales growth. In the three months to end-June (the group's first quarter) total revenue grew 22% at constant exchange rates or 26% on an as reported basis, to £211m. Sales have continued to slow at struggling photographic retailer Jessops (LSE: JSP.L - news) prompting a warning that annual losses will top the £7.5m reported last year. It said trading has not improved since its last trading update at the end of May when the group posted a 5% drop in first half like for like sales and a 5.6% slide for the 34 week period. Electronic tagging group Dmatek (LSE: DTK.L - news) has forecast record sales in the first half of 2008 despite slower than expected growth in its elderly persons business.
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