Thursday March 27, 09:34 AM
London shares higher in early trade; Compass and FirstGroup stronger UPDATE
(updating with full report)
LONDON (Thomson Financial) - Leading shares were higher in early trade, with Compass and FirstGroup (LSE: FGP.L - news)
boosted by reassuring updates, but B&Q owner Kingfisher (LSE: KGF.L - news) falling after reporting lower annual profit and slashing its dividend.
At 9.02 am, the FTSE 100 was up 54.2 points at 5,714.6, having fallen 28.7 points to close at 5,660.4 yesterday. The FTSE 250 was up 129.4 points at 9,885.5.
Volume was average with 276.4 mln shares changing hands in 77,181 deals.
Wall Street pulled back yesterday after a drop in February's durable goods orders injected more pessimism about the economy into the stock market.
The Dow Jones Industrial Average fell 109.74, or 0.88 pct, to 12,422.86, after sinking as much as 155 points during trading.
Broader stock indicators also retreated. The Standard & Poor's 500 index fell 11.86, or 0.88 pct, to 1,341.13, while the Nasdaq composite (NASDAQ: news) index fell 16.69, or 0.71 pct, to 2,324.36.
The indices ended the day at levels similar to where they had been as the London market was closing.
In Asia this morning, Japan's Nikkei 225 (news) ended the day 102.05 points, or 0.8 pct, lower at 12,604.58. Hong Kong's Hang Seng (news) closed up 47.21 points, or 0.2 pct, at 22,664.22.
Oil prices were higher in Asian trade, bolstered by a weaker-than-expected energy stockpiles report in the US, the world's biggest energy user.
In afternoon trade, New York's main contract light sweet crude for May delivery rose 45 cents to 106.35 usd a barrel from Wednesday's close of 105.90 during US floor trading hours.
London's Brent North Sea crude for May delivery gained 35 cents to 104.34 usd a barrel.
Back in London, caterer Compass Group (LSE: CPG.L - news) headed the FTSE 100 leaderboard after saying trading in the first five months of the current year was ahead of its expectations and it is confident the current momentum will be maintained throughout the second half.
The shares rose 12-1/4 pence to 322-3/4.
Bus and train operator FirstGroup rose 19 pence to 563-1/2 pence after an in-line trading update.
The company said it hopes to meet UK government demands to improve the performance of its controversial train franchise First Great Western (FGW) as it forecast full year results in line with expectations.
Banking shares recovered some of the ground lost yesterday. Barclays (LSE: BARC.L - news) was 8-1/4 pence higher at 453, after Merrill Lynch (NYSE: MER - news) added the company to its 'most preferred' list on valuation grounds and on the expectation that the Bank of England will take action to help return the UK money markets to a more normal state.
Standard Chartered (LSE: STAN.L - news) , retained on the broker's most preferred list, was up 15 at 1,773.
Building materials group Wolseley (LSE: WOS.L - news) was 18 higher at 545 rose after Goldman Sachs (NYSE: GS - news) upgraded it to 'neutral' from 'sell' on valuation grounds.
The higher oil price boosted Cairn Energy (LSE: CNE.L - news) , up 78 at 2,764, and Tullow Oil (Dublin: TQW.IR - news) , up 9-1/2 at 667.
Kingfisher was the biggest FTSE 100 faller in early trade, down 2.1 pence at 133 pence after the global home improvement retailer slashed its final dividend payout by 50 pct as it reported an expected 2.8 pct fall in full year underlying pretax profit.
The group, which trades from about 780 stores in nine countries in Europe and Asia, also said it expected to cut its interim dividend in the current year by the same magnitude.
For the year to Feb 2, 2008 Kingfisher made a profit before tax and exceptional items of 386 mln stg -- in line with analysts' consensus forecast of 385 mln stg but down from 397 mln stg in the previous year.
In reaction, Pali International, which has a 'sell' rating on Kingfisher, said the dividend cut was not as bad as it had expected, but with the interim to be halved to 1.9p, the cut is actually worse than it looks, with the rebased annual dividend effectively 5.33 pence. There is no trading update, but we can assume that the key Easter weekend for B&Q was pretty disastrous, said Pali.
Among the midcaps, Northern Foods (LSE: NFDS.L - news) was up 7 pence, or 8.1 pct, at 94, after saying its trading performance continued to meet expectations and it sees adjusted pretax profit for the year to March 29 beating the median market consensus.
The maker of Goodfella's pizzas and Fox's biscuits said full-year underlying revenue grew 3.2 pct, with prices up 2.4 pct and volumes up 0.8 pct.
Chloride Group rose 15-3/4 pence, or 9.3 pct, to 185, making it the biggest FTSE 250 (news) riser, after saying it expects its results for the year ended March 31 to be ahead of its expectations, with an increase in operating profit before amortisation of 50 pct over the previous year, as it announced the retirement of its chief executive.
The power services company said it continues to make excellent progress, and that it expects sales for the year to be around 30 pct higher than last year 'with organic sales growth well ahead of the market'.
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