UK Market News

LONDON (ShareCast) - Rio Tinto (LSE: RIO.L - news) dominated late trading as its deal with Chinese giant Chinalco looked all but dead in the water as the mining giant confirmed it is considering its options.

A rights issue to raise up to $15bn could be announced as soon as tomorrow according to reports in Australia. Rio shares slumped by 7% on the news and dragged other miners down with it.

The Australian newspaper also reported that Rio Tinto will, instead, look to form a joint venture with rival BHP Billiton (LSE: BLT.L - news) , which last year abandoned a bid for Rio Tinto, with the two mining titans combining their iron ore interests. Lonmin (LSE: LMI.L - news) , Fresnillo (LSE: FRES.L - news) and Kazakhmys (LSE: KAZ.L - news) are the main fallers alongside Rio.

Disappointment with the Bank of England's decision not to expand its quantitative easing programme also unsettled sentiment. Financials remain firm, however, with property stocks Liberty International, British Land (LSE: BLND.L - news) and Hammerson (LSE: HMSO.L - news) and banking stocks Royal Bank of Scotland (LSE: RBS.L - news) , Barclays (LSE: BARC.L - news) and Lloyds Banking (LSE: LLOY.L - news) clawing back some of their recent losses.

Retailers have been in the spotlight, with Wm. Morrison, Debenhams (LSE: DEB.L - news) and WH Smith all making statements today.

Wm Morrison edges higher after the supermarket made a good start to the new trading year, with sales growth well ahead of the sector norm. Like for like sales improved by 8.2%, or by 5.0% including fuel, maintaining the rate of LFL growth seen in the year to 1 February 2009. Sector peers Sainsbury (LSE: SBRY.L - news) and Tesco (LSE: TSCO.L - news) rose in sympathy with Morrison.

Department store Debenhams is to raise £323m through a placing and open offer to reduce its debt burden and improve its ability to acquire retail assets that may arise if the economic downturn persists. It said its high debt levels had damaged investor sentiment towards the company, which has impacted its share price.

Newsagent WH Smith's like-for-like sales in the first 13 weeks of the second half were down 4% on the same period last year, with total sales up 1%. The group said its financial position is in line with market expectations and its balance sheet remains strong as it continues to generate high levels of cash from its operations.

PC World and Currys owner DSG International (LSE: DSGI.L - news) was wanted after receiving a strong response to its recently sharply discounted rights issue. Acceptances were received in respect of 97.1% of the shares on offer.

Dairy Crest, the firm behind Cathedral cheese and Country Life butter, is bubbling higher after one of its competitors, Dairy Farmers of Britain, called in the receivers.

Platinum refiner and car catalyst supplier Johnson Matthey (LSE: JMAT.L - news) saw profits for the year fall 5% and warned interim operating profit in the new year will be lower as the downturn in the car industry hits demand for auto-catalysts.

Outsource giant Capita said it is in early discussions to the partial disposal of IBS OPENSystems (LSE: OPN.L - news) after the Competition Commission deemed part of the business will lessen competition.

Healthcare support services provider Synergy Health (LSE: SYR.L - news) is on track to fully restore margins during autumn of this year. The company saw a 1.6% decline in operating margins in the year to 29 March 2009, caused mainly by rapid escalation of energy and commodity costs together with one off start-up costs incurred on new contracts in the Decontamination Services business.

Budget airline easyJet posted a 1.8% rise in passengers in May as travellers continued taking advantage of low cost fares amid difficult economic conditions.

IT services business FDM Group (LSE: FDMG.L - news) said it is currently in discussions with its management team, which may lead to an offer at 120p per share in cash.

XXI Century Investments is selling off assets as it battles to meet debt repayment schedules. The company said that if adverse market conditions continue there is a real risk that the company will not be able to meet 'certain significant debt-related commitments, unless it succeeds in restructuring such payments as they become due.'

IT and telecoms group Redstone (LSE: RED.L - news) suffers a double-digit percentage decline after it said trading since the second half has been slightly below expectations after cost reduction measures took longer than expected to implement and as market conditions remain extremely challenging.

FTSE 100 - Risers Liberty International (LII) 420.00p +12.00% Hammerson (HMSO) 303.00p +9.29% ICAP (LSE: IAP.L - news) (IAP) 430.25p +4.56% British Land Co (BLND) 379.00p +3.76% Aviva (AV.) 346.75p +3.66%

FTSE 100 - Fallers Lonmin (LMI) 1,410.00p -6.62% Rio Tinto (RIO) 2,720.00p -6.59% Fresnillo (FRES) 685.50p -5.90% Kazakhmys (KAZ) 662.00p -5.29% Eurasian Natural Resources (ENRC) 636.00p -3.78%

FTSE 250 (news) - Risers Synergy Healthcare (SYR) 470.00p +13.32% Great Portland Estates (LSE: GPOR.L - news) (GPOR) 334.00p +7.74% Mouchel Group (LSE: MCHL.L - news) (MCHL) 263.00p +6.26% Big Yellow Group (LSE: BYG.L - news) (BYG) 341.00p +4.76% Hays (HAS) 88.75p +4.41%

FTSE 250 - Fallers 3i Group (III) 225.00p -7.12% Morgan Crucible (LSE: MGCR.L - news) (MGCR) 100.50p -6.94% Pace (PIC) 187.25p -6.72% DS Smith (SMDS) 71.50p -6.54% Ashtead Group (LSE: AHT.L - news) (AHT) 56.75p -5.81%