Date: Tuesday 23 Mar 2010
Rising commodity prices, US strength and some well-received company updates sent London to a fresh 21-month closing high Tuesday.
The leading index hasn’t finished up at this level since 19 June 2008 and is just one decent session away from breaking through 5,700.
Cairn Energy was easily the most popular blue chip. The oil group raised forecasts for peak production from its Indian assets by over a third to 240,000 barrels per day, and boosted its total reserve estimate for India.
There were also sizeable gains for Legal & General after it upped its final dividend by 33% and gave heavy hints more increases could be on the way. It comes after big cuts in the last two payouts.
Broker Panmure Gordon reiterates its ‘buy’ recommendation following the “excellent” results which “address many of the concerns that have hung over L&G over the past 12 months”. Killik Capital is less certain and, although L&G has been mooted as a bid target for some time, advises selling into strength.
Metal prices headed higher, giving miners ENRC, Vedanta and Lonmin a boost.
Carnival reported lower first-quarter earnings but shares in the cruise operator rose after the group upped its full-year outlook thanks to improved booking trends.
Tobacco group Imperial Tobacco said trading for the financial year to 30 September 2010 has so far been in line with management’s expectations. Its global strategic cigarette brands have performed strongly, the company said, with both Davidoff and West growing volumes.
The UK government has handed a £4bn armoured vehicle contract to US defence giant General Dynamics (GD), putting hundreds of jobs at BAE Systems in jeopardy. BAE warned last week that its tank factory in Newcastle may have to close if the British army decided not to hand it the deal to build new light tanks.
BAE came under further bombardment when Bernstein Research cuts its stance on the shares to "market perform" from "outperform" on valuation grounds.
BT will have to share its telegraph poles and underground cable ducts with its rivals under new proposals put forward by regulator Ofcom to boost the introduction of a super-fast broadband network. The regulator also wants BT to open its fibre lines so rivals firms can provide their own services to consumers. BT would be able to make a fair rate of return, the proposal said. BT said it was happy enough with the proposals.
British Airways rose despite the threat of more strikes at the weekend. The company said yesterday that it is losing an estimated £7m a day in revenue as a result of the current strike but added that ‘full year earnings expectations to March 31, 2010 remain broadly unchanged.’
Anglo-Dutch oil giant Shell has signed a 30-year deal to explore for natural gas in China. In a partnership with the China National Petroleum Corporation (CNPC), it will appraise and potentially develop gas reservoirs in a 4,000-square-kilometre area in Sichuan Province.
Lacklustre mortgage lending figures for February has soured investors’ views on DIY retailers Home Retail Group and Kingfisher.
Carpet and floor coverings retailer Carpetright added to retail woes. It said the rate of recovery seen towards the end of 2009 has not been sustained and group profits for the year to 1 May 2010 are likely to fall below current market expectations.
Support services group Babcock is to take over rival VT Group after the two companies reached agreement on a tie-up after weeks of wrangling. The transaction will be worth about 735p for every VT share based on Babcock’s latest closing price, comprising 361.6p in cash and 0.701 new Babcock shares, and values VT at about £1.33bn. Shares in both stocks are higher, with Babcock finding itself the subject of bid rumours; US aerospace giants Lockheed Martin and Boeing have been cited as possible suitors for Babcock.
Iron ore producer Ferrexpo saw earnings slump in 2009 as demand for iron ore remained poor until the final quarter of the year. On the bright side, the outlook for 2010 is much more positive, chief executive Kostyantin Zhevago claimed, with increased visibility and strengthening iron ore prices.
Since the end of its financial year at the end of September Aberdeen Asset Management has seen assets under management increase by a shade over one-tenth. Assets under management (AUM) at the end of February totalled £161.4bn, versus £146.2bn at the end of September 2009.
Car parts and bike retailer Halfords said it expects earnings for the year to be ahead of expectations after seeing a rise in sales in the 11 weeks to 19 March. Sales increased by 1.3% compared with the same period the previous year and rose by 0.8% on a like-for-like basis, stripping out the impact of new stores.
After a tough first nine months of 2009 trading stabilised in the fourth quarter at online gaming company 888 Holdings and has shown signs of improvement in 2010. Profit before tax, excluding share benefit charges of $7m ($8m the year before) fell to $34.6m in 2009 from $48.6m the year before.
Serviced office group Regus continues to push higher after its upbeat statement yesterday and bullish comments from brokers today.
Gulfsands Petroleum has confirmed that bid approach it rejected last week was pitched at price of 315p per share, which would value the whole company at about £381m.
Shares in Healthcare Locums fell out of bed after the company reported pre-tax profit below market expectations following a review of it accounting policies on revenue.
FTSE 100 - Risers
Cairn Energy (CNE) 408.90p +7.95%
Legal & General Group (LGEN) 85.10p +4.67%
Eurasian Natural Resources (ENRC) 1,194.00p +3.83%
Petrofac Ltd (PFC) 1,228.00p +3.54%
Admiral Group (ADM) 1,327.00p +3.27%
TUI Travel (TT.) 304.20p +3.22%
Lloyds Banking Group (LLOY) 63.00p +3.11%
Vedanta Resources (VED) 2,704.00p +2.74%
British Airways (BAY) 247.50p +2.70%
Lonmin (LMI) 2,032.00p +2.52%
FTSE 100 - Fallers
Kingfisher (KGF) 227.00p -2.58%
Home Retail Group (HOME) 275.00p -2.45%
BAE Systems (BA.) 380.20p -2.21%
Unilever (ULVR) 1,909.00p -1.60%
United Utilities Group (UU.) 545.50p -1.36%
Smith & Nephew (SN.) 672.00p -0.88%
Prudential (PRU) 522.00p -0.85%
Severn Trent (SVT) 1,188.00p -0.83%
ICAP (IAP) 378.50p -0.76%
GlaxoSmithKline (GSK) 1,284.50p -0.73%
FTSE 250 - Risers
Ferrexpo (FXPO) 340.60p +9.73%
Regus (RGU) 108.10p +7.56%
Babcock International Group (BAB) 560.00p +5.16%
Imagination Technologies (IMG) 226.00p +5.07%
VT Group (VTG) 721.50p +4.57%
Resolution (RSL) 77.40p +4.52%
Yell Group (YELL) 39.41p +4.51%
Petropavlovsk (POG) 1,155.00p +3.49%
GKN (GKN) 135.50p +3.44%
PZ Cussons (PZC) 268.80p +3.34%
FTSE 250 - Fallers
Carpetright (CPR) 825.00p -10.91%
888 Holdings (888) 103.00p -8.04%
Savills (SVS) 337.50p -4.93%
Galiform (GFRM) 80.80p -3.87%
Eaga (EAGA) 150.10p -3.78%
DSG International (DSGI) 33.97p -3.44%
Mothercare (MTC) 603.50p -3.13%
Hansen Transmissions International (HSN) 92.15p -3.00%
Hargreaves Lansdown (HL.) 340.20p -2.55%
ITE Group (ITE) 130.70p -2.46%
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