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Date: Tuesday 26 Aug 2008

  • Market Movers
  • techMARK 1,433.36 -0.11%
  • FTSE 100 5,428.40 -1.40%
  • FTSE 250 9,098.70 -0.91%

LONDON (ShareCast) - Commodity plays and financials lead the Footsie lower, with the former easing in line with lower metal and oil prices and the latter once again under a cloud as concerns over credit markets refuse to recede.

Mining stocks are lower despite an upbeat results announcement from Rio Tinto, which reported record underlying earnings of $5,47bn, up 55%, and record net earnings of $6.91bn, up 113%, in the half year to June. Both figures were ahead of market forecasts and boosted by the 2007 acquisition of Alcan and strong metals demand for from China.

Ferrexpo, Anglo American, Kazakhstan’s ENRC and Kazakhmys are the worst performers in the mining sector.

Oil stocks are led down by Cairn Energy, even though it swung from an operating loss of $18.7m to a profit of $44.2m in the half-year to June as its average price per barrel of crude more than doubled. Revenue jumped to $180.4m from $138.7m.

Oil services group John Wood posted a 46% rise in first-half profit to $181.3m and added it would to beat full-year expectations. All major business areas are showing good growth with upstream very active and strong demand for subsea engineering activities. Revenue rose by 19% to $2.53bn.

Russia-focused oil producer Imperial Energy is finalising terms on a possible agreed offer for the company. The company expects to recommend acceptance of an offer from ONGC Videsh on the basis of 1,250p per Imperial share. The terms of the potential offer value the whole of Imperial Energy at about £1.4bn.

Shares in India and Nigeria focused Hardy Oil fell back as it abandoned an exploratory well on its GS-01 block in India. Hardy also revealed a net profit of $6.2m, up from $1.9m, in the half year to June.

Shopping centre owner Liberty is up on bid hopes after specialist mall owner Westfield announced a 2.96% stake and property investor Simon Property Group took its holding past 4%. Liberty also benefited from an upgrade to ‘neutral’ at Credit Suisse.

Other financials perform less well, with competition threats continuing to depress London Stock Exchange while yesterday’s poor performance by banks on Wall Street has spread to harm Lloyds TSB in the UK.

Housebuilder Bovis's interim profits crumbled by more than 80% in what it describes as the "Toughest period of trading it has experienced in its time as a public company". Profits in the six months to June tumbled from £58.4m to just £9.5m on sales of £149m, down from £259m. However, housebuilders are given a lift by a report in Building magazine which suggests lenders have agreed to relax Taylor Wimpey’s loan covenants; it had been feared that the company would have to issue new capital to tide it over the housing slump.

Temporary power and temperature control supplier Aggreko expects full year performance will exceed market expectations after a strong first half. Profit before tax rose 42.8% to £67.9m from £47.5m on the back of strong demand in emerging markets and the rewards from heavy investment in the new rental fleet.

KBC Peel Hunt reacted by maintaining its ‘hold’ rating on Aggreko while lifting its earnings estimates on the company.

KBC Peel Hunt has raised its rating on Domino’s Pizza to ‘buy’ from ‘hold’, saying the pizza delivery company is doing too well to be blown off course by a period of weaker demand.

IT services group Axon has been snapped up by a fast-growing Indian rival. Infosys, for £407m.

Broadband and telecoms systems company BATM Advanced Communications is on target to fulfil its forecast of sparkling full-year results after reporting sharply increased profits at the interim stage. Pre-tax profit in the first six months of 2008 rose 161% to $14.9m from $5.7m in the first half of last year, on revenue that jumped 68% to $66.4m from $39.6m.

Irish building group CRH revealed a 10% drop in half year profit as it experienced more difficult trading conditions and a weaker dollar.

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