Thursday May 15, 12:38 PM
London shares higher midday; banks down; Wall Street set to edge up
LONDON (Thomson Financial) - Leading UK shares had turned positive by midday, with continued gloom in the banking sector after a Barclays (LSE: BARC.L - news)
update offset by strength in oils and positive earnings elsewhere, while Wall Street was set for a modestly higher open.
At 12:05 p.m., the FTSE 100 index was up 12.1 points at 6,228.1, having been down as much as 47.2 points earlier. The FTSE 250 index was up 27.8 points at 10,303.1.
Wall Street is on track to open slightly higher before a speech by U.S. Federal Reserve chairman Ben Bernanke on the credit crisis, with General Electric Co. an early focus on a report it is preparing to auction off its appliances business.
A string of economic reports will also provide direction for investors.
According to spread bettors IG index, the Dow Jones Industrial Average is expected to open about 15 points higher at 12,913.
David Buik, of BGC partners, said the main reason for the turnaround in the UK is that traders had taken a slightly more upbeat view of where the United States would open.
He added: 'The earnings news has been positive, but trading volumes in shares are still very low. Fund managers seem to be uncertain.'
SABMiller (LSE: SAB.L - news) stood out, up 56 pence at 1,259, after it said its full-year pretax profit increased 15 percent to $3.64 billion, thanks to price increases and mix improvements, beating analyst expectations for $3.54 billion.
Credit Suisse said it believes the company's high-growth emerging market exposure makes it one of the best stocks in brewing sector.
The broker said it was retaining its 'outperform' rating and 1,580 pence price target.
Staying with earnings news, BT (LSE: BT-A.L - news) added 8-1/2 to 231-3/4, as the telecoms group reported a solid set of fourth-quarter numbers and raised its dividend.
Meanwhile, 3i Group reported a 37 percent increase in assets under management in its full-year results and a diluted net asset value per share of 10.77 pounds, up from 9.32 pounds in 2007 and above analyst expectations.
The shares added 11 to 880.
A positive trading update helped Cadbury to rise 32-1/2 to 679-1/2. The company said following the demerger of Americas Beverages, the new company is off to a strong start.
London Stock Exchange (LSE: LSE.L - news) was up 39 at 1,210 after Sanford Bernstein upgraded the shares to 'market perform' from 'underperform', while cutting its target price to 1,100 pence.
Oil shares were higher as prices recovered from Wednesday's fall. New York-traded West Texas Intermediate crude for June delivery was last up 84 cents at $125.48 a barrel.
Cairn Energy (LSE: CNE.L - news) gained 163 pence to 3,551, hitting a record high, after UBS (Virt-X: UBSN.VX - news) upgraded its rating to 'buy' from 'hold' and upped its target to 4,500 pence from 3,250, as part of a positive review of the sector.
Tullow Oil (Dublin: TQW.IR - news) increased 23 to 925-1/2, with UBS raising its target to 1,050, from 690, while keeping its 'neural' rating
AMEC (LSE: AMEC.L - news) , primarily an oil services company, was up 22 at 845, recovering ground lost after Wednesday's trading update. UBS lifted its target price to 935 from 875, and maintained its 'buy' rating. ABN Amro (Amsterdam: ABAGB.AS - news) also upgraded its target on AMEC to 940 from 850 and kept its 'hold'.
UBS also upgraded midcap Dana Petroleum (LSE: DNX.L - news) to 'buy' from 'neutral, helping it rise 39 to 1,917, a record.
Banking stocks continued to dominate the FTSE 100 loserboard at midday, with Barclays down 13-3/4 to 413-1/2, after saying in its trading statement first-quarter group profit was below the same time last year, while its Barclays Capital investment banking unit made a net loss of 1.006 billion pounds.
Cazenove said that while the comments on trading are broadly as expected, it thinks the market will remain focused on capital ratios.
Traders said it may yet have a capital injection, but perhaps not a rights issue.
Other banking issues performed poorly, with Royal Bank of Scotland (LSE: 91ID.L - news) down 44-1/2, or 13.9 percent, at 274-3/4, as the stock traded ex-rights, while Lloyds TSB was down 4-3/4 at 405-3/4 after Societe Generale (Paris: FR0000130809 - news) cut its rating to 'hold' from 'buy'.
Sector peers fell, with HBOS (LSE: HBOS.L - news) 9 lower to 461-1/4 and Alliance & Leicester down 8 to 437-3/4, near a record low.
The mining sector did not weigh quite as much on the blue chips. However, Vedanta Resources (LSE: VED.L - news) was down 24 at 2,508 despite reporting decent full-year numbers.
Xstrata (LSE: XTA.L - news) was down 39 at 4,244. BHP Billiton (LSE: BLT.L - news) dropped 29 at 2,089, and Antofagasta (LSE: ANTO.L - news) fell 12-1/2 to 761.
In broker-led movements, Sainsbury (LSE: SBRY.L - news) fell 2 to 372-1/2, after Deutsche Bank (Frankfurt: DB9999 - news) downgraded the supermarket chain to 'sell' from 'hold' after results on Wednesday.
On the second line, DSG International (LSE: DSGI.L - news) slumped 6-1/2 pence to 62-3/4, after the electricals retailer said it will slash its total dividend payout by 50 percent and announced a reorganisation of its business, including the closure of some Currys stores.
Seymour Pierce downgraded its stance on DSG to 'sell' from 'hold' in reaction.
A broker downgrade also hit WH Smith, down 19 to 398-1/2, as Citigroup (NYSE: C - news) cut its recommendation to 'hold' from 'buy' on valuation.
Elsewhere, news Balfour Beatty (LSE: BBY.L - news) will place 43.32 million shares sent it 9-1/2 lower at 444.
Uninspiring trading updates from Ferrexpo (LSE: FXPO.L - news) and Informa (LSE: INF.L - news) sent shares down 6-1/2 to 391-1/2 and 8-1/2 at 375-1/4 respectively.
Among midcap risers, Telecity was on top of the leader board, up 14-1/2 at 242-1/2, after a trading update which Landsbanki said was confident, leading it to upgrade its full-year EBITDA.
Similarly, Tullett Prebon (LSE: TLPR.L - news) rose 16 to 478 after a bullish statement. The company said it expects a good outcome for the year, and continues to actively pursue acquisition opportunities.
Euromoney reported a 23 percent rise in first-half adjusted underlying pretax profit to 30.5 million pounds, helped by a reduction in net interest costs.
The shares added 20-1/4 pence to 395-1/4. Dresdner Kleinwort was positive on the update, but maintained its 'hold' rating.
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