Thursday May 15, 10:29 AM
London shares lower midmorning; banks fall after Barclays update
LONDON (Thomson Financial) - UK blue chips were lower midmorning, with continued gloom in the banking sector after Barclays (LSE: BARC.L - news) ' update.
At 10:04 a.m., the FTSE 100 index was down 17.9 points at 6,198.1, having been down as much as 47.2 points earlier. The FTSE 250 index was up 21.2 points at 10,296.5.
Banking stocks dominated the loser board early on, with Barclays down 7-3/4 to 419-1/2, after saying in its trading statement its group profit for the three months to March 31 came in below the level reported during last year, while its Barclays Capital investment banking unit absorbed a net loss of 1.006 billion pounds during the first quarter.
In reaction, Cazenove said that while the comments on trading are broadly as expected, it thinks the market will remain focused on capital ratios.
Other banking issues performed poorly, with Royal Bank of Scotland (LSE: 91ID.L - news) down 48-3/4, or 15.3 percent, at 270-1/2, as the stock traded ex-rights today, while Lloyds TSB was down 7-1/4 at 403-1/4, as Societe Generale (Paris: FR0000130809 - news) cut its rating to 'hold' from 'buy' Thursday.
Sector peers fell, with HBOS (LSE: HBOS.L - news) 15 lower to 455-1/4 and Alliance & Leicester down 16-1/4 to 429-1/2, near a record low.
Away from financials, the mining sector also weighed on the blue chips, falling back from recent gains made on sector consolidation hopes. The losses today came despite Vedanta Resources (LSE: VED.L - news) reporting decent full year numbers.
Vedanta fell 74 to 2,458, BHP Billiton (LSE: BLT.L - news) dropped 60 at 2,058, Rio Tinto (Frankfurt: 855018 - news) fell 105 to 6,776 and Antofagasta (LSE: ANTO.L - news) fell 12 at 761-1/2.
In broker-led movements, Sainsbury (LSE: SBRY.L - news) fell 9 to 365-1/2, after Deutsche Bank (Frankfurt: DB9999 - news) downgraded the supermarket chain to 'sell' from 'hold' this morning.
On the upside, investors cheered results from SABMiller (LSE: SAB.L - news) , up 56 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 of $3.54 billion.
Staying with earnings news, BT (LSE: BT-A.L - news) added 6-1/4 to 229-1/2, 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.
Shares added 5-1/2 to 874-1/2.
A positive trading update helped Cadbury rise 26-1/2 to 673-1/2. The company said following the demerger of Americas Beverages, the new company is off to a strong start.
A Citigroup (NYSE: C - news) upgrade meant Firstgroup (LSE: FGP.L - news) rallied, up 4 to 565-1/2, as the broker moved to 'buy' from 'hold' following a drop in the share price after results and announcement of a rights issue yesterday.
Oil shares were higher as prices recovered from Wednesday's fall. At 8:55 a.m., New York-traded West Texas Intermediate crude for June delivery was up 26 cents at $124.48 a barrel.
Cairn Energy (LSE: CNE.L - news) was up 136 pence to 3,524, 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) was up 9-1/2 at 912.
AMEC (LSE: AMEC.L - news) , primarily an oil services company, was up 18 at 841, recovering ground lost after Wednesday's trading update. UBS upped its target price to 935 from 875, and maintained its 'buy' rating.
On the second line, DSG International (LSE: DSGI.L - news) slumped 6 pence to 63-1/4, 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 21-1/2 to 396, as Citigroup cut its recommendation to 'hold' from 'buy' on valuation.
Elsewhere, Findel (LSE: FDL.L - news) 's full year results failed to impress investors, as the shares lost 7-3/4 pence at 272, while news Balfour Beatty (LSE: BBY.L - news) is to place 43.32 million shares sent it 17 pence lower at 436-1/2.
Uninspiring trading updates from Ferrexpo (LSE: FXPO.L - news) and Informa (LSE: INF.L - news) sent shares down 4 to 394 and 12-3/4 at 371 respectively.
Among midcap risers, Telecity was on top of the leader board, up 16 at 244, after a trading update which Landsbanki said was confident, leading it to upgrade its full year 2008 EBITDA.
Similarly, Tullett Prebon (LSE: TLPR.L - news) rose 25-1/2 at 487-1/2 after its own bullish statement. The company said it expects a good outcome for the year, and continues to actively pursue acquisition opportunities.
Finally, Euromoney reported 23 percent higher first-half adjusted underlying pretax profit at 30.5 million pounds this morning, helped by a reduction in net interest costs.
Shares added 19 pence to 394. Dresdner Kleinwort was positive on the update, but maintained its 'hold' rating.
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