London close: Footsie slides as worries mount

Date: Tuesday 24 Aug 2010

Footsie closed near six week lows as worries over the state of the global economy continued to plague traders, with poor US housing data adding to the gloom.

Miners were among the worst hit, tracking metals prices lower. Among the fallers was Vedanta, which has seen its proposal to mine bauxite in India rejected by the government on environmental grounds,

Kazakh operators Kazakhmys and ENRC also suffered, while Antofagasta fell after it trimmed its full year copper production target from 543,000 tonnes to 530,000 tonnes as a result of delays in adding new capacity to its Los Pelambres mine.

Fellow miner Xstrata is also in the doldrums after it announced a recommended cash bid worth A$428m ($383m) for Africa-focused, Australian-listed Sphere Minerals to beef up its iron ore portfolio.

Already downbeat sentiment was knocked by data showing US sales of previously owned homes fell to 3.83m in the year to July, a 27% annual decrease and the slowest rate since 1995. Analysts had been expecting a much milder fall of about 13%.

Sticking with the US economy theme, a much faster than expected turnaround in the US helped advertising giant WPP lift first half profits by more than a third, with shareholders getting a 15% dividend hike, but the market is underwhelmed and the shares fell back.

Cairn Energy’s revenue before exceptional items increased by 311% from $81m to $333m at the half year stage. In an update on its Greenland drilling programme the company said the first hydrocarbons have been discovered in the Baffin Bay basin by T8-1 well which has encountered gas, in thin sands.

Plumbing supplies group Wolseley continues its divestment programme aimed at cutting debt, but the market seemed to have misgivings about the £43m price achieved for its UK tool and equipment hire business, Brandon Hire.

Shares in Irish building materials supplier CRH also dived as it posted a 77% decline in half year profit and warned full year EBITDA will show a decline of around 10% this year as weakness continues in the US.

Profit before tax slumped to €25m in the six months ended 30th June 2010 compared to €108m a year earlier. Revenue fell 8% to €7.6bn.

In the FTSE 250, interactive learning technology specialist Promethean World fell sharply even after it revealed a surge in half year profit and is to pay a maiden dividend after solid growth across its key markets. The UK and Ireland markets are approaching saturation point, however, and combined sales in these areas fell 12% year-on-year, and now account for just 9% of the group’s total sales.

Persimmon has restarted dividend payments as first half profits and sales rose sharply, though it says the housing market has slowed in recent weeks. Shareholders will get 3p per share after interim profits jumped to £101.4m from £9.8m. Underlying profits, before one-offs and landbank provisions, came in at £39.4m against a loss of £16.7m.

Pubs group Punch Taverns expects full year earnings to be marginally ahead of its previous expectations, as pub refurbishments and favourable summer weather brought in more customers. The group, which has more than 7,100 pubs in total, said like for like sales for the last 12 weeks were up 2.6% after improved trading particularly in the final quarter.

Steam trap and pump maker Spirax Sarco pulled out all the stops in the first half of 2010, achieving record results. Revenue rose 10%, or 8% on a constant currency basis, in the first half of 2010 to £277m from £251.6m the year before.

Wood Group, which provides support services to the oil and gas industry, posted a decline in half yearly profit but said it looks to the second half and 2011 with increasing confidence.

Spectris expects full-year results will meet forecasts after the instrumentation and controls company told investors the gradual recovery witnessed at the end of 2009 strengthened during the first half of this year.

Adverse currency movements hit Gem Diamonds’ first half despite a recovery in sale prices over the period. Profits to June fell to $7.8m from $18.1m as revenues fell to $104m from $117m, though stripping out a one-off gain last year Gem says underlying turnover rose by 20% to $87m.

South Korea's state-run oil company KNOC confirmed press reports that it doesn’t intend to increase its £18 a share cash bid for Dana Petroleum.

Services, maintenance and building firm Interserve is one of six companies chosen as principal supply chain partners in the new NHS framework agreement worth up to £4.5bn over six years.

Pawnbroker H&T continues to prosper amid tough times for the economy , helped by an expanding gold market. Pre-tax profits in the six months to June 30 climbed to £14.5m from £8.5m on revenues that soared to £71m from £30.8m.

IT and telecoms group Redstone slumped to a new all-time low Tuesday on news it is raising about £8.5m via a placing and subscription, both at 0.5p a share. The firm, whose shares briefly traded above £1 three years ago, is also restructuring its debt and replacing executive chairman Stephen Yapp with new chairman Ian Smith and chief executive Tony Weaver.

Leed Petroleum is taking part in operations to sidetrack the Main Pass 64 #1 well in Louisiana , which should develop and add proved reserves, it said. The firm, which owns a 25% non-operated working interest and a 19.18% net revenue interest in the well, adds that oil is being barged to keep up production at the field while a previously announced broken pipeline is repaired.

FTSE 100 - Risers
Associated British Foods (ABF) 1,051.00p +3.44%
Old Mutual (OML) 127.30p +1.92%
Compass Group (CPG) 513.50p +1.78%
Burberry Group (BRBY) 848.50p +1.31%
British American Tobacco (BATS) 2,201.50p +1.10%
African Barrick Gold (ABG) 567.50p +0.71%
Morrison (Wm) Supermarkets (MRW) 289.20p +0.70%
ARM Holdings (ARM) 330.00p +0.70%
Pearson (PSON) 940.50p +0.43%
Marks & Spencer Group (MKS) 338.00p +0.42%

FTSE 100 - Fallers
Vedanta Resources (VED) 1,882.00p -7.61%
Wolseley (WOS) 1,241.00p -4.98%
Legal & General Group (LGEN) 90.75p -4.97%
Rio Tinto (RIO) 3,164.00p -4.21%
Cairn Energy (CNE) 445.50p -4.07%
Kazakhmys (KAZ) 1,102.00p -4.01%
WPP Group (WPP) 644.50p -3.95%
Smith & Nephew (SN.) 552.00p -3.58%
British Airways (BAY) 215.40p -3.41%
Invensys (ISYS) 241.40p -3.32%

FTSE 250 - Risers
Punch Taverns (PUB) 85.15p +8.89%
Hansen Transmissions International (HSN) 54.00p +3.05%
Hansteen Holdings (HSTN) 65.60p +2.50%
Connaught (CNT) 12.59p +2.36%
Britvic (BVIC) 478.00p +2.25%
Daejan Holdings (DJAN) 2,430.00p +2.10%
PZ Cussons (PZC) 348.00p +1.90%
Genus (GNS) 723.00p +1.76%
Restaurant Group (RTN) 247.50p +1.64%
CPP Group (CPP) 231.00p +1.32%

FTSE 250 - Fallers
Promethean World (PRW) 117.80p -20.67%
Yell Group (YELL) 16.03p -6.91%
Balfour Beatty (BBY) 234.50p -5.44%
Ashtead Group (AHT) 82.25p -5.02%
Petropavlovsk (POG) 965.00p -5.02%
Keller Group (KLR) 567.00p -4.87%
DSG International (DSGI) 23.81p -4.68%
Soco International (SIA) 441.50p -4.64%
Cookson Group (CKSN) 425.80p -4.61%
Galiform (GFRM) 64.65p -4.51%

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