News

London midday: Equities pause for breath

09 July 2008 11:59:00

Having broken through the 5,000 barrier the FTSE 100 is struggling to hold the higher ground, as a gentle wave of profit taking sets in.

Financials continue to lead the way with banks especially in favour, following in the footsteps of their US counterparts, who rallied last night after Federal Reserve chairman Ben Bernanke said troubled banks could be given more time to tap into the Fed's emergency funds.

Lloyds TSB, Barclays, Royal Bank of Scotland and Standard Chartered all bank chunky gains, while insurers Legal & General, Aviva and Old Mutual also prosper.

Also going well are the whipping boys of the sector, Alliance & Leicester and Bradford & Bingley. Alliance & Leicester has reacted well to the appointment of former Ulster bank man Alan Gillespie as its new chairman, while Bradford & Bingley is also up on reports that its main shareholders are firmly committed to its rescue.

Despite the strength of banks, it is the London Stock Exchange which tops the pile of Footsie favourites after it revealed that first quarter revenue rose 8% to £178m, or by 3% in constant currency.

Tullow Oil estimates its Jubilee field in Ghana could hold as much as 1.8bn barrels and will start production in 2010. "The recoverable resources of the field are now estimated to range from 500m barrels up to 1.8bn barrels," it said. Tullow added that group working interest production for the first half of 2008 averaged 70,550 boepd, 1% higher than the 2007 average. Sales volumes for the first half of 2008 averaged 60,000 boepd.

A recovery in the oil price has British Airways, Ryanair and easyJet flying lower, while WPP is another stock stuck in reverse after the advertising giant went hostile with its 260.6p per share bid for market research group Taylor Nelson. The bid consists of 173p in cash and 0.1889 of a new WPP share. The offer, which counters a nil-premium merger agreed with Germany's Gfk, values TNS at around £1.082bn.

GfK has responded to WPP's move by terminating its merger proposal and intends to opt instead for a straight all-cash offer for TNS.

Private equity firm 3i said the mid-market remained healthy in the second quarter of 2008, providing both investment opportunities and chances to realise investments.

Housebuilders are axing more jobs, with Redrow and Bovis both set to shed 40% of their staff. Bovis is to cut its interim dividend by 75% to 5p to counter what it says is the worst market backdrop it has seen for many years.

Investors have reacted favourably to the round of job cuts and cost reductions in the housebuilding sector, and bargain hunters have returned to grab shares in Barratt Developments, Taylor Wimpey, Berkeley Group and Persimmon.

Also hitting the recovery trail after recent heavy losses are care home group Southern Cross and price comparison web-site Moneysupermarket.com. Private equity buyers are rumoured to be sizing up Southern Cross.

Multi-utility group Telecom Plus reports "exceptionally good trading" in the first quarter to June with turnover, profits, customer numbers, new services and new distributor recruitment all running substantially ahead of last year.

Insolvency specialist Begbies Traynor posted lower full year profits but expects a recovery this year as the impact of the credit crunch sends more firms to the wall.

In House Group shot up after the property trading company confirmed that it has received an approach from a third party that may lead to an offer being made for the company.

FTSE 100 - Risers
London Stock Exchange Group (LSE) 745.50p +11.10%
Lloyds TSB Group (LLOY) 303.00p +6.04%
Legal & General Group (LGEN) 101.70p +5.61%
Royal Bank of Scotland Group (RBS) 205.50p +5.44%
Barclays (BARC) 294.00p +5.38%
British Land Co (BLND) 711.50p +4.94%
Aviva (AV.) 520.00p +4.84%
Carphone Warehouse Group (CPW) 200.25p +4.57%
Old Mutual (OML) 92.10p +4.30%
Standard Chartered (STAN) 1,464.00p +4.27%

FTSE 100 - Fallers
WPP Group (WPP) 449.75p -3.07%
British Airways (BAY) 214.00p -1.50%
International Power (IPR) 434.00p -1.25%
Amec (AMEC) 891.50p -1.16%
John Wood Group (WG.) 445.00p -1.06%
BG Group (BG.) 1,185.00p -0.84%
G4S (GFS) 197.40p -0.80%
Petrofac Ltd (PFC) 704.50p -0.77%
SABMiller (SAB) 1,095.00p -0.73%
Thomas Cook Group (TCG) 205.00p -0.61%

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