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London close: US drags Footsie lower

Date: Wednesday 07 Jan 2009

London’s leading share index finished heavily in the red with Marks and Spencer’s well-received Christmas trading update not enough to stem a decline that was compounded by a poor start on Wall Street.

Utility group Scottish and Southern Energy (SSE) led the utilities sector lower. It intends to place around 40m shares, representing 5% of its issued ordinary share capital. It added said that as well as bolstering its balance sheet, the funds from the placing will give SSE additional means to acquire small and medium sized assets.

Elsewhere in the sector, water groups Northumbrian, United Utilities and Severn Trent post substantial losses, while power generators National Grid and Drax were also friendless – the latter after UBS cut its price target for the stock from 625p to 600p.

The market has responded positively to Marks & Spencer’s efficiency plans. The High Street giant said it is to cut 1,230 jobs as it announced a 7.1% drop in third quarter like for like sales. The clothing and food retailer also announced that it is to close 27 stores, including 25 small under-performing Simply Food stores and two small main chain stores.

Moving along the High Street, clothing chain Next gets a lift from Citigroup, which has raised its price target from 900p to 1000p in the wake of yesterday’s trading update, though the broker still rates the stock a sell. The US bank has changed its stance on department store Debenhams which also issued a trading statement yesterday. Citi now rates Debenhams a “hold”, having previously advising clients to sell.

Bakery chain Greggs is slightly lower even though it increased like-for-like sales during the four-week Christmas trading period by 5.3%. For the second half of the financial year, comprising the 28 weeks to 27 December 2008, total sales increased by 6.6%, including like-for-like sales growth of 3.9%. This gave total sales growth for the financial year as a whole of 7.1%, including like-for-like sales growth of 4.4%.

Sub-prime lender Cattles relinquished some of its recent gains after announcing it is to slash 1,000 jobs and sharply reduce the amount of new business it writes this year to conserve its cash.

Another stock giving back recent gains is Man Group, after UBS changed its stance on the stock from “buy” to “sell” ahead of the hedge fund group’s trading update next week. UBS has cut its price target for Man from 315p to 260p.

Confectioner Thorntons said total sales over the Christmas period declined 2.3% with its branded stores the worst hit. Like for like sales in the 12 weeks up to and including Saturday 27 December 2008 fell by 6.6% in the "challenging retail environment with weak high street footfall and consumer demand," the group said in a trading update.

No frills airline easyJet said passenger numbers and the load factor both rose in December. December passenger numbers were up 7.3% compared to a year earlier while the load factor, the number of passengers as a proportion of the number of available seats, rose to 82.3% compared with 78.9% in 2007.

Outdoor clothing and equipment retailer Blacks Leisure expects operating profits to be below market forecasts due to the weak performance of its board wear business.

Shares in Qonnectis dropped sharply after the data monitoring service provider for utilities and big commercial users of energy and water warned that results for the current financial year are likely to fall significantly below market expectations.
Shares in investment company Z Group jumped by a third after it will be acquiring business strategy group Avisen for an undisclosed fee. Z Group previously traded as a marketing-led internet technology services company, before becoming a cash shell.

Shares in William Ransom looked sickly today after the natural healthcare products distributor returned from suspension having published its final results at the end of last year. On New Year’s Eve, the company revealed it had slipped into losses of £500,000 in the half-year to September on flat sales of £17.2m. Trading in the shares has been suspended since 26 June when the group said it was undertaking a strategic review and talking to its banks about increasing its existing facilities.

FTSE 100 - Risers
3i Group (III) 362.50p +5.92%
HBOS (HBOS) 72.70p +5.52%
Lloyds TSB Group (LLOY) 123.90p +4.12%
Barclays (BARC) 169.80p +3.98%
Legal & General Group (LGEN) 80.00p +3.09%
Hammerson (HMSO) 613.00p +2.77%
Friends Provident (FP.) 84.00p +2.44%
Marks & Spencer Group (MKS) 244.00p +2.20%
RSA Insurance Group (RSA) 148.00p +1.86%
TUI Travel (TT.) 236.75p +1.83%

FTSE 100 - Fallers
Man Group (EMG) 260.00p -9.41%
Cairn Energy (CNE) 2,000.00p -8.42%
Antofagasta (ANTO) 453.25p -8.30%
Scottish & Southern Energy (SSE) 1,159.00p -8.23%
BHP Billiton (BLT) 1,334.00p -8.00%
Standard Chartered (STAN) 920.00p -7.91%
National Grid (NG.) 666.50p -6.26%
Carnival (CCL) 1,553.00p -6.16%
Rio Tinto (RIO) 1,812.00p -5.97%
London Stock Exchange Group (LSE) 570.00p -5.94%

FTSE 250 - Risers
Goldman Sachs Dynamic Opportunities EUR (GSDE) € 0.84 +10.82%
CLS Holdings (CLI) 388.00p +8.99%
Barratt Developments (BDEV) 89.50p +7.51%
Punch Taverns (PUB) 62.50p +6.84%
Henderson Group (HGG) 67.00p +6.77%
Electra Private Equity (ELTA) 591.00p +5.91%
Persimmon (PSN) 279.75p +5.87%
TR Property Investment Trust Sigma Shares (TRYS) 45.50p +5.81%
Derwent London (DLN) 843.00p +5.38%
Micro Focus International Plc (MCRO) 306.25p +5.33%

FTSE 250 - Fallers
Cattles (CTT) 24.50p -16.95%
Premier Oil (PMO) 922.50p -12.14%
Chloride Group (CHLD) 138.00p -10.53%
Interserve (IRV) 231.50p -10.27%
Renishaw (RSW) 468.00p -10.26%
Britvic (BVIC) 232.50p -9.88%
Salamander Energy (SMDR) 128.00p -9.86%
Dimension Data Holdings (DDT) 39.75p -9.66%
Big Yellow Group (BYG) 257.75p -9.56%
ARM Holdings (ARM) 92.25p -8.89%

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