London midmorning: Footsie holds on

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Date: Monday 07 Jul 2008

  • Market Movers
  • techMARK 1,358.88 -0.12%
  • FTSE 100 5,415.00 +0.04%
  • FTSE 250 8,493.50 -0.26%

LONDON (ShareCast) - Footsie is just managing to stay in the blue now, with Carphone Warehouse still leading the index higher after Goldman Sachs re-initiated coverage of the mobile phone retailer with a ‘buy’ rating.

Broker coverage also lifts Amec. Citigroup lifted its rating on the oil services group to ‘buy’ from ‘hold’, saying it sees management targets as too cautious.

J Sainsbury moves higher after JP Morgan lifted its rating on the supermarket to ‘overweight’ from ‘neutral’ and on Tesco to ‘neutral’ from ‘underweight’ saying that valuations in the European food retail sector are defensive for the first time in two years.

However, there was more misery for Marks and Spencer again after JPM cut its price target on the clothes and food retailer to 200p from 345p and kept its ‘underweight’ rating. Boss Stuart Rose also faces a difficult week with one in four shareholders expected to abstain or vote against his election as executive chairman.

Elsewhere, JP Morgan has cut its target price on Shire to 882p from 1050p and kept its ‘neutral’ stance on the drug group after examining various profit and loss factors.

Miners are led lower by Rio Tinto after the European Commission said it will investigate BHP Billiton’s $163bn offer for its fellow mining giant, saying such as take-over may be incompatible with the single market. BHP also joins the 10 heaviest fallers.

Also in mining, Lonmin revealed the extent of production losses as normal smelting operations at its Number One furnace resumes after being closed because of a small water leak. The platinum giant estimates that the impact on production and sales of the power down is the deferral of between 5,000 and 10,000 ounces of the precious metal from the 2008 financial year into the 2009 financial year.

No-frills airline Easyjet reported its June load factor remained strong at 86.9% and passenger numbers grew 19.5% to 4.1m compared to last year. Loads on a rolling 12 month basis fell to 83.3% from 84%. "In line with expectations, total revenue per seat continues to improve and to date nearly 70% of seats for the second half of the year have been sold," it added.

Irish airliner Aer Lingus also released strong figures, saying the total number of passengers grew by 7.6% in June 2008 compared with the same period last year. Passengers for short haul flights rose 7.8% while long haul flights increased 6.7%.

House builders are on the back foot with reports this morning already suggesting that Persimmon will make 1,000 staff redundant tomorrow.

Elsewhere, gaming machines group Inspired Gaming is to raise £40m through an issue of 80m convertible preference shares at 50p each. The money raised will fund its exit from its Pubs Division, pay down £10m of senior debt facilities and fund the further expansion of its core business. The pubs division is being sold to Danoptra for a nominal consideration. Inspired reported an after tax of loss of £45.3m for the half year to 12 April including a pub division write-down of £47.6m.

Engineer Morgan Crucible's turnover rose by about 13% in the first half of its financial year. On a like for like basis, excluding acquisitions, revenue growth is expected to be c.10% (c.4% on a constant currency basis). "Our organic revenue growth guidance for the full year remains in the 5-6% range on a constant currency basis," it added.

Courtesy car supplier Helphire reports satisfactory progress in the year to June just ended, but cautions that the UK non-fault accident management market is maturing and its caseload is growing less rapidly. If the economic environment remains challenging in the near future and fuel prices remain high, motoring activity and therefore growth in the use of credit hire may slow, it added.

Support services firm Spice reported a 40% rise in full-year pre-tax profit and said it continues to look to the future with confidence.Pre-tax profit increased to £17.1m in the year ended 30 April from £12.2m last time on revenue of £312.2m compared with £228.6m.

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