News

London's rally continues with banks and miners leading the way after Asian central banks joined the concerted action to cut interest rates.

US banks Citicorp and Goldman Sachs are at odds over where this week's rescue plan for the banking system leaves UK banks. Citicopr has upgraded banks to "neutral" from "underweight" whereas Goldman Sachs has cut its price targets for some of the sector's big names; Barclays has been cut from 390p to 250p, Lloyds' price target has been slashed from 270p to 170p, Royal Bank of Scotland's price target has been virtually halved from 240p to 140p while HBOS's price is projected at 140p versus a previous valuation of 220p.

Investors are generally upbeat on banking shares this morning with HBOS adding about one-third to its overnight value and RBS up by about one-sixth. Lloyds also notches up a double-digit percentage gain.

Barclays is a faller, however, on reports it is talking to existing investors about raising £3bn through a preference share issue.

The round of interest rate cuts and, perhaps more significantly from a psychological standpoint, the fact that government agencies worldwide are working in harmony to stabilise markets, has boosted oil and metal prices. Resource stocks such as Cairn Energy, Antofagasta, BHP Billiton and Rio Tinto are back in favour.

Conversely, defensive favourites such as Scottish & Southern Energy, National Grid and Tesco get the cold shoulder from investors. Tesco's rival, Sainsbury, however, bounces back strongly today from the hammering it received yesterday after it emerged that Robert Tchenguiz's 10% stake was up for grabs at 250 per share.
Oilfield services company Wood Group said its trading performance for the year to date has been strong and it expects growth to continue. "Demand for our services and products remains high, despite the significant current volatility in financial, commodity and currency markets," said the group.

Full year profits at newsagent WH Smith were pretty much in line with expectations, rising 15% before tax and exceptional items to £76m, although like for like sales fell 2%.

Weir advanced after the engineer said it expects profits from continuing operations before intangibles to be slightly ahead of guidance thanks to foreign exchange benefits. The group said the foreign currency translation benefits, mainly from the strengthening of the dollar against sterling, increases its confidence in the full year outlook.

Construction and support services firm Carillion is also going well as it continues to expect strong progress in 2008 and to deliver materially enhanced earnings in 2009. "Overall, our principal businesses continue to perform well and the intake of good quality new orders remains strong," said the group.

Greggs is leading the FTSE 250 fallers after the bakery chain cut its full-year operating profit forecasts by some £3m following a period of slower sales growth and higher costs.

Insurer Aviva said is capital position remains strong in the face of the recent market turmoil, adding that it has protected itself against further falls in the equity markets through increased hedges.

Communications technology group Spirent has traded as predicted during its third quarter. In a short statement, the firm, which tests phone and broadband connections, said: "Trading for the period since 29 June 2008 is in line with the board's expectations".

Recruitment firm Hays said the 10% net fee growth, 4% on a like-for-like basis, for the quarter to September represents a solid start to the year despite the increasing difficult economic environment. The difference between the headline and like-for-like growth rate is due to the more favourable euro and Australian dollar exchange rates.

Production for the nine months ended 30 September met expectations at Fresnillo and the Mexican silver miner and recent Footsie entrant is confident of hitting its 2008 production target. Output came in at 26.4 million silver ounces, higher than the September 2007 quarter due to an increase in ore milled and higher ore grade at Fresnillo.

Touch screen maker Feedback slumps after revealing that first three months of the current year have started slowly, although profitably.