Wednesday May 14, 03:51 PM
London shares extend gains midafternoon; NY higher early on; UK miners strong
LONDON (Thomson Financial) - UK blue chips extended gains midafternoon, as Wall Street made a solid start bolstered by below-forecast inflation figures, while mining issues were a positive feature in London amid sector consolidation hopes.
At 3:07 p.m., the FTSE 100 index was 18.9 points ahead at 6,230.8, off a high of 6,246.8, with the FTSE 250 (news) index 74.2 points lower at 10,297.9.
'The lower-than-expected U.S. inflation figures allow the Fed more room for an interest rate cut,' said Mic Mills, of tradindex.com.
The consumer price index for April was up 0.2 percent compared with the median estimate of analysts surveyed by IFR Markets of a 0.3 percent rise, while core CPI (NYSE: CPY - news) , which excludes food and energy, ticked up 0.1 percent compared with an expected 0.2 percent increase.
In early deals on Wall Street, the DJIA was up 99.50 points at 12,931.70, with the S&P 500 index adding 10.03 points to 1,413.07, and the Nasdaq composite (NASDAQ: news) index advancing 21.68 points to 2,516.80.
In UK economics news, the Bank of England published its gloomiest outlook for inflation in a decade. The BoE Governor, Mervyn King, said he expected inflation to reach 4 percent later this year, but then to fall to nearer the 2 percent target.
Back with UK equity movements, mining issues dominated the FTSE 100 riserboard, amid talk of stake-building and sweetened takeover offers, and further helped by pleasing production figures.
BHP Billiton (LSE: BLT.L - news) added 65 pence to 2,085, on the back of market talk Chinese state-owned Chinalco is considering raising its stake in the Anglo-Australian miner.
BHP's takeover target, Rio Tinto (Frankfurt: 855018 - news) was also buoyant, rising 172 pence to 6,817, amid talk which started circulating in late London trade on Tuesday that BHP could again enhance its offer for the group.
But Eurasian Natural Resources was the top blue-chip riser, adding 107 pence to 1,484, after the release of its production figures which revealed a 'very significant increase' in first-quarter revenue on higher commodity prices, particularly in the ferroalloys and iron ore divisions.
Meanwhile, Vedanta Resources (LSE: VED.L - news) added 84 pence to 2,507, Antofagasta (LSE: ANTO.L - news) took on 19-1/2 pence to 777, and Xstrata (LSE: XTA.L - news) climbed 36 pence to 4,256, while Kazakhmys (LSE: KAZ.L - news) , following Tuesday's decline after ENRC said it would not make a bid for its Kazakh peer, added 27 pence to 1,762.
A trading statement from Compass Group (LSE: CPG.L - news) saw the shares add 9 pence to 351-1/4. Earlier, the contract caterer posted a 29 percent increase in first-half underlying pretax profit, boosted by benefits from its management and performance programme (MAP) and said it would continue to buy back shares.
In response, Seymour Pierce upgraded Compass to 'hold' from 'sell', saying the results were better than expected and the broker will need to raise its full-year 2008 estimates.
Elsewhere, AstraZeneca (LSE: AZN.L - news) climbed 40 pence 2,131, after announcing the U.S. Food and Drug Administration has approved Seroquel for the maintenance treatment of patients with bipolar I disorder, as adjunct to lithium or divalproex.
Among the blue-chip casualties, banks featured strongly after mid-cap mortgage lender Bradford & Bingley (LSE: BB.L - news) said it will raise about 300 million pounds, net of expenses, in a 16 for 25 rights issue at an issue price of 82 pence per share.
This represents a 48 percent discount to the closing price of 158.75 pence per share on May 13, the bank said.
Midcap Bradford & Bingley fell 8.6 percent or 13-3/4 pence to 145, while among the large caps, Barclays (LSE: BARC.L - news) lost 8 pence to 429-3/4, Lloyds TSB shed 7-3/4 pence to 410-1/4, HBOS (LSE: HBOS.L - news) slid 17-1/2 pence to 467-1/2, and Alliance & Leicester was 19-1/2 pence lighter at 439-1/4 -- also hit by numerous target price changes after interim results Tuesday.
But FirstGroup was the biggest FTSE 100 faller, slipping 6.5 percent, or 39-1/2 pence to 559-1/2, after accompanying its full-year results with news it is launching an equity placing of up to 10 percent. The travel group said this would strengthen its capital structure and would increase flexibility.
The high oil price, off record levels but still above $125 a barrel in New York, bore down on British Airways (LSE: BAY.L - news) , off 8 pence at 220-1/2, ahead of full-year figures on Friday
Elsewhere, AMEC (LSE: AMEC.L - news) dipped into the red, down 10-1/2 pence at 823-1/4, following its trading statement, which prompted Seymour Pierce to downgrade to 'sell' from 'hold'.
The broker said AMEC's first-quarter numbers were slightly better than expected, but it thinks the company's recovery is already factored into the price.
Investors also sold off J Sainsbury, down 15 pence at 374-3/4, following full-year results which Merrill Lynch (NYSE: MER - news) said were bang in line with expectations but provided no colour on the company's outlook.
Seymour Pierce said it remains cautious on the broader consumer outlook and cautious of a share that has rallied on hopes of a quick return from its Qatari suitors, while Panmure Gordon kept its 'sell' rating on the group.
Tesco (LSE: TSCO.L - news) , meanwhile, dropped 6-3/4 pence to 430-1/4, after it said it has acquired 36 Homever stores in South Korea from the E-Land Group for 958 million pounds, including existing debt.
On the second line, shares in Johnston Press (LSE: JPR.L - news) slumped -- slipping 17.3 percent or 23-1/2 pence to 112-1/4 -- after the regional newspaper publisher announced a 212 million pounds rights issue and subscription to repay its debt, as the company moves to avoid breaching its banking covenants amid deteriorating advertising conditions.
Elsewhere, Soco International (LSE: SIA.L - news) fell 76 pence to 1,873 on profit taking after its interim management statement. Citigroup (NYSE: C - news) said the key will be the update from the TGD-1X side track offshore Vietnam.
On TGD-1X, the broker noted there was the suggestion of greater upside potential, albeit with drilling/testing ongoing. Beyond this, there were no surprises, it said.
Among mid-cap risers, LogicaCMG (LSE: LOG.L - news) was 6 pence firmer at 131-1/2, after the IT services company said its first-quarter revenue stood at 856 million pounds against pro forma revenue of 826 million pounds a year ago and reaffirmed its 2008 guidance, prompting Landsbanki to reiterate its 'buy' rating.
And Dimension Data ticked up 2 pence to 53, after reporting a 58.6 percent increase in first-half pretax profit, helped by a 22.7 percent jump in sales. Altium Securities described the results as 'solid'.
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