News

Banks are leading the rally in London after a downbeat start, after US banking giant Citigroup said the US government's $20bn cash injection means it will not have to engage in a fire sale of assets. A further boost to sentiment came from Bank of England governor Mervyn King who hinted strongly of further interest rate cuts when addressing a Commons select committee. "We will take whatever action is necessary to ensure that inflation is close to target in the medium term," King said.

Standard Chartered leads the banking sector higher, clawing back some of the losses suffered yesterday when it announced a right issue along with its trading statement. Royal Bank of Scotland gets a boost from Citigroup, which says RBS shares are an attractive long term purchase now the bank has sufficient funds to survive a long recession. Citigroup has a price target of 100p for RBS and rates the shares a buy.

Miners are on the slide after the World Bank cut its growth forecasts for China. Rio Tinto has other things on its mind apart from predictions of a slackening in demand from China. Its shares have slumped after rival BHP Billiton called off its hostile takeover bid, saying it was no longer in the best interests of BHP shareholders. Although the company remains convinced of the logic behind a merger, it said the continued deterioration of global economic conditions has prompted a rethink on whether now is the right time to execute a huge acquisition.

Elsewhere Imperial Tobacco has made "very good progress" with its integration of Altadis, and says it is comfortable with its current debt position. Tobacco net revenue rose 60% in the year to 30 September to £5,238m, slightly below analysts' expectations, from £3,280bn a year earlier. Adjusted profit before tax rose 30% to £1,607m from £1,238 in 2007. The dividend has been increased by 4% to 63.1p.

Water group Severn Trent has ramped up its interim dividend by 8% after announcing it is on track to exceed targets this year. Underlying profit before tax eased 4.3% to £154.5m in the six months to 30 September from £161.5m a year earlier. The interim dividend has been increased to 26.29p from 24.34p.

A cash call is on the cards at heavily indebted plumbing supplies group Wolseley, according to the Royal Bank of Scotland, which has cut its rating on the stock.

Swiss bank Credit Suisse has joined the chorus of doom and gloom for the housebuilders by issuing a negative assessment of the sector. It maintains its "under-perform" rating on Persimmon and is neutral on both Barratt Developments and Taylor Wimpey.

Durex condom and Scholl footwear group SSL remains confident hitting its target of double digit operating profit growth again this year despite the difficult trading background. Sales in the half-year to September increased by 22.8%. Underlying sales rose by 10.0%.Profit before tax grew 45.7% to £32.5m (2007: £22.3m before one-off charges). The interim dividend goes up by 13% to 2.6p.

Greeting card retailer Clinton reports like for like sales for the 16 weeks to 16 November fell by 6% with trading "very challenging". The core Clinton chain saw sales fall by 7.1% over the period while Birthdays was down by 2.5%.

Tiles retailer Topps Tiles scrapped its final dividend as full year profits fell by 27% with the group warning that sales have tumbled further in the first seven weeks of the current year.

JD Sports has snapped up a 10.02% stake in rival JJB Sports just a day after JJB announced it has received an approach to buy its Fitness Clubs business reportedly from the group's founder and former director David Whelan. Stockbroker Panmure Gordon rates JJB shares as a "buy", saying "there is the potential for a deal that could wipe out the company's debt and remove all financing concerns. To us, this suggests that the shares are chronically undervalued."

The share stake building has prompted Altium Securities to upgrade its recommendation on JJB from "sell" to "hold", and has raised its target price from 20p to 32p.

Plumbing supplies distributor BSS Group said sales growth has slowed in October and November and it is reducing its cost base in anticipation of a challenging environment in 2009.

Conroy Diamonds and Gold jumped after it revealed intersecting four previously unknown gold lode zones at its Clontibret project in Ireland.