By John Harrington
Date: Tuesday 22 Mar 2011
- Market Movers
- FTSE 100 5,800.44 +0.25%
- FTSE 250 11,519.84 +0.07%
- techMARK 1,860.44 +0.25%
LONDON (ShareCast) - London’s leading stocks are firmer on balance, with financial stocks leading the way on the back of a general recovery in global stock markets.
Worse than expected inflation figures are putting a cap on excitement, however. The inflation rate, as measured by the consumer prices index, rose to 4.4% in February from 4.0% in January. The rate topped market expectations of a figure of 4.2% and will pile on the pressure on the Bank of England’s rate setting committee to hike rates in order to rein in inflation.
As stock markets worldwide rally fund managers Schroders and Man Group rise with the tide, as do insurers Prudential, Resolution and Standard Life . Inter-dealer broker ICAP is also enjoying the increased volatility seen in global markets this month.
Elsewhere in the financial sector banking groups Barclays and Royal Bank of Scotland are both going well. The latter is buoyed by comments from the bank’s senior management concerning the money making opportunities open to the group in the Gulf, Middle East and Africa this year, where the schedule of flotations and bond issues looks packed.
Cairn Energy has yet to reach an agreement with the Indian authorities over the proposed sale of its Rajasthan assets to Vedanta. Hopes had been raised that Cairn would announce a deal had been struck with today’s results, but the group just repeated that the sale of its 51% stake in Cairn India is awaiting approval. Cairn posted a net profit of $1.08bn in 2010, up from $53m.
An update on the oil explorer’s plans for Greenland was generally well received. RBS analyst Phil Corbett said that Greenland is an exciting exploration opportunity over the long term, “and that the shares deserve to trade at a premium to our 400p estimate of the read through from the Vedanta deal.” RBS rates the shares a “buy” and has a 510p target price for the stock.
Turkish Airlines has signed a $200m order for Rolls-Royce’s flagship Trent 700 engines to power three Airbus A330 freighters.
Punch Taverns, the biggest pubs group in Britain, is to split itself in two by the end of the summer and sell thousands of boozers. The review, which started in October, has concluded that the way forward is to separate the Spirit managed pubs business from the struggling leased operation - Punch. This will create two independent public companies and allow the investment and development needed to speed up its operational turnaround and drive growth.
The market – most of it anyway – raised a glass to news of the deal. Broker Peel Hunt was a dissenting voice. “The proposed demerger is less favourable to equity shareholders than we would have assumed, and as a result we expect to reduce our valuation of Spirit to c70p. Although shareholders still get the potential benefit of equity in the tenanted division of Punch, we struggle to attribute any value to this,” the broker said, as it moved its rating from “buy” to “hold”.
Another stock getting downgraded is advertising giant WPP. Exane BNP Paribas has moved to a neutral stance on the company that some pundits speculate may be the subject of a move by the Chancellor of the Exchequer in tomorrow’s Budget to move its tax base back to Britain from Ireland.
Ports operator Forth Ports has agreed a bid worth 1,630p a share from major shareholder, the Arcus European Infrastructure Fund. Shareholders will also get to keep the proposed final dividend of 20p a share expected to be paid on 13 May. "The Arcus offer gives Forth Ports shareholders the opportunity to realise their investment for cash at a fair price,” chairman David Richardson said.
An extensive exploration programme in 2010 has hauled gold miner Petropavlovsk’s proven and probable reserves up by 36%.
Treatt, which makes ingredients for the flavour, fragrance and cosmetic industries, said results for the full year are expected to be materially higher than previously anticipated after strong trading at its US division. Trading during the half year 'significantly exceeded expectations' while order books have remained strong, the group.
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