News

Footsie's Monday gains were lost as resources stocks suffered a stark reversal of fortunes having jumped yesterday.

Metals prices were lower and crude slipped below $60 a barrel.

Miner Vedanta was down nearly 15% despite UBS raising its price target from 1,000p to 1,250p. 'We have included two further aluminium projects (Jharsuguda II and Lanjigarh II) in our base case discounted cash flow [valuation]DCF, resulting in a 34% uplift in the March 2010 estimated net present value,' UBS said.

In the oil sector, BP and Shell were among the fallers.

Mobile phone giant Vodafone provided some cheer, with turnover in the six months to September slightly ahead of forecasts at £19.9bn, an increase of 17.1%. Underlying profits rose by 10.3% to £7.2bn. Revenue guidance for the full year has been lowered again, from around £39.8bn to a range of £38.8bn to £39.7bn.

Killik analyst Jonathan Jackson remains a buyer of the stock, particularly as Vodafone has indicated it will switch to a 'progressive' dividend policy, with growth reflecting the underlying trading and cash performance

Lloyds TSB fell sharply lower as threats emerge to its agreed take-over of HBOS. The government has clarified that HBOS will be eligible for government assistance should the merger with Lloyds TSB not go through, which will be seen as a boost to the efforts of Scottish banking grandees Sir George Mathewson and Sir Peter Burt to engineer an independent future for the embattled mortgage lender.

Additionally, there are rumours that the Bank of China is interested in acquiring HBOS, with former HBOS chief executive Jim Spowart lined up to take over at the helm.

Tesco seems to be turning the tide of opinion on its Asian operations. Yesterday the company released disappointing like-for-like sales figures for its South Korean and Chinese businesses ahead of an organised trip to Asia for investment analysts who cover Tesco. Today, the shares are among the few to make headway.

Broker Panmure Gordon has suggested that its growth estimates for Tesco's South Korean operations will need to be revised upwards, as the roll-out of hyper-markets is happening faster than envisaged. 'In all, we estimate that our sales forecast three years out is 13% too low for South Korea. This is significant, because it is a high-margin, high-return country," the broker added.

US investment house Citigroup, which also has an analyst on Tesco's Asian junket, said there is 'significant hidden store of value represented by Tesco's real estate,' with recent t valuations suggesting that the average Korean store is now worth around 2.7 times what it originally cost.

Taylor Wimpey expects no recovery in the UK housing market in the short term and said it may need to make further provisions against its land and work in progress in the absence of any improvement to current market conditions.

To add to its woes, the latest survey from the Royal Institution of Chartered Surveyors (RICS) has shown that estate agents in England and Wales had sold an average of only 10.9 properties per firm in the 12 weeks to the beginning of November, with agents in London struggling to sell one house a fortnight.

Yellow Pages publisher Yell Group has warned of "negative organic growth", lower revenue and a big drop in earnings during the third quarter. It expects an underlying fall in group revenue of around 5% at constant exchange rates due to the worsening economic environment across all its operations.

InterContinental Hotels has reported global revenue per available room (RevPAR) grew 1.6% at constant currency during the third quarter, but warned of a sharp deterioration in market conditions during October. Broker Evolution Securities believes that it is too early to buy the stock, even though the share price has almost halved in the last year. Evolution, which has a 450p price target for the stock, said: 'The time to buy is when occupancy starts to recover - which could be a year away.'

Broker Charles Stanley is also a seller of the hotel group. 'The valuation is well below the historic range, but visibility is poor and there is material downside risk to forecasts if recent trading trends continue,' said Charles Stanley analyst Sam Hart.

Hedge fund manager Man Group is friendless. Morgan Stanley has cut its price target for Man to 260p to adjust for material de-leveraging, which reduces the expected run-rate Assets Under Management by around 15% for FY10 and earnings by 20%

Ceramics group Cookson will miss expectations for the full year as the impact of global slowdown on the steel industry starts to take its toll. The weaker end-market conditions are expected to prevail throughout the fourth quarter and into 2009, and management has initiated appropriate and decisive actions across the group to mitigate the effects of this slowdown, Cookson added.

Irish airline Aer Lingus has upgraded its forecast for the current year slightly, but still expects to report a thumping loss this year and another operating loss in 2009.

Insurance broker Jardine Lloyd Thompson said it remains on track to deliver sustainable profitable growth in 2008, despite the current uncertainty in the financial sector. The group's trading performance in the third quarter was in line with expectations across all five lines of business.

Support services firm Babcock International posted a 30% rise in half year pre-tax profit and is wanted after declaring it is confident of further progress for the full year.

Goodfellas' pizza group Northern Foods saw currency moves and pension credit changes knock 16% off pre-tax profits in the first half. Profit before tax for the 26 weeks ended 27 September fell to £16.9m from £20.1m a year earlier despite a 6.8% increase in revenue to £468.6m. Revenue excluding the impact of currency translation and acquisitions rose 3.8%.

The volatile Imperial Energy Corporation is enjoying an 'up' day after Indian company ONGC Videsh confirmed that both of the pre-conditions of its offer for Russia-focused Imperial Energy (IEC) have been satisfied; IEC's share price shot up last Friday when the Russian authorities indicated that the bid had been approved, but then fell back sharply yesterday after ONGC said further regulatory approvals were still being awaited.

Shares in Psion were sharply lower after the mobile phone software specialist said it is cutting 200 jobs and warned that second half profits are expected to be below the level reported in the first half.

FTSE 100 - Risers
Vodafone Group (VOD) 115.00p +6.19%
Tesco (TSCO) 331.60p +2.66%
GlaxoSmithKline (GSK) 1,220.00p +1.04%
Capita Group (CPI) 644.00p +0.47%
Shire Plc (SHP) 835.00p +0.30%
British Energy Group (BGY) 750.50p +0.07%
Cable & Wireless (CW.) 141.80p -0.14%
Marks & Spencer Group (MKS) 255.25p -0.20%
Sainsbury (J) (SBRY) 272.25p -0.64%
Next (NXT) 1,111.00p -0.80%

FTSE 100 - Fallers
Vedanta Resources (VED) 683.00p -14.41%
Man Group (EMG) 248.00p -11.67%
WPP Group (WPP) 341.00p -10.50%
Eurasian Natural Resources (ENRC) 283.00p -9.94%
Tullow Oil (TLW) 498.00p -9.78%
Kazakhmys (KAZ) 305.00p -9.76%
Xstrata (XTA) 1,076.00p -9.66%
BG Group (BG.) 904.00p -9.42%
BHP Billiton (BLT) 1,019.00p -9.26%
Lloyds TSB Group (LLOY) 177.40p -9.12%

FTSE 250 - Risers
Imperial Energy Corporation (IEC) 1,126.00p +12.60%
Yell Group (YELL) 68.75p +4.96%
Dexion Absolute Ld (DAB) 105.50p +3.94%
Babcock International Group (BAB) 418.25p +3.53%
Brit Insurance Holding (BRE) 219.00p +3.06%
Carphone Warehouse Group (CPW) 152.25p +3.05%
Hochschild Mining (HOC) 140.00p +2.19%
St James's Place (STJ) 199.00p +1.79%
Synergy Healthcare (SYR) 407.00p +1.75%
Hiscox (HSX) 300.00p +1.69%

FTSE 250 - Fallers
Cookson Group (CKSN) 130.00p -24.42%
Taylor Wimpey (TW.) 10.75p -18.87%
Mecom Group (MEC) 2.27p -14.98%
Salamander Energy (SMDR) 131.50p -14.75%
Morgan Crucible (MGCR) 92.75p -13.52%
Mapeley (MAY) 219.00p -13.18%
UK Coal (UKC) 75.75p -12.68%
Barratt Developments (BDEV) 73.50p -12.50%
Enterprise Inns (ETI) 110.00p -11.65%
International Personal Finance (IPF) 140.25p -11.37%