London close: US gives Footsie a lift

Date: Monday 26 Jul 2010

Sentiment improved after the US open following a sluggish start, helping Footsie close with modest gains.

A bigger than expected rise in US house sales reassured investors over the state of the world economy.

Banks Lloyds, Royal Bank of Scotland and Barclays were all strongly ahead after they sailed through the tests last week.

BPmoved ahead after the oil giant confirmed it will t will hold a board meeting today to decide the fate of chief executive Tony Hayward, but said no final decision has been made. All may be revealed tomorrow with the company’s second quarter results.

Elsewhere in the oil sector, Tullow Oil was in demand after it said it has found a significant column of excellent quality light oil when drilling the Owo-1 exploration well in the Deepwater Tano licence offshore Ghana. Results of drilling, wireline logs and samples of reservoir fluids have established Owo as a major new oil field requiring further appraisal, it added.

Financial Times publisher Pearson was another riser after it reported a rise in first-half profits and upped its full-year outlook. Adjusted pre-tax profit rose to £203m in the six months period from £111m on sales of £2.34bn compared with £2.15bn previously. The board declared an interim dividend of 13p per share, a 7% increase on 2009.

But household products group Reckitt Benckiser finished lower by a whisker even after it saw net revenue rise by 10% to £2,061m in the second quarter of 2010. Net income improved 23% to £380m. Chief executive officer Bart Becht said the results were in line with the group’s full year targets. Guidance on full year performance has been left unchanged.

In the FTSE 250, shares in Connaught collapsed. The bad news keeps piling up for the social housing group, which issued a profits warning last month, with the company admitting it is in dire need of cash. The company said its “urgent requirement for additional funds to meet the current and ongoing needs of the business” has been caused, in part, by additional pressure from suppliers and sub-contractors.

But results from Digital TV set-top box maker Pace were given a good reception. It reported a 46% hike in half year pre-tax profit and announced the proposed acquisition of 2Wire for an expected $55m to beef up its US customer base. "Given the group's first half performance and good visibility for the second half, the board is in the process of revising its expectations for the 2010 financial year," it said in a company statement.

Broker KBC Peel Hunt did not find much to get excited about in the interim results from set-top box maker Pace but it likes the look of the acquisition of 2Wire, the US network router firm.

Betting firm William Hill is to close down its UK telephone betting operations and switch them to Gibraltar.

Wind turbine gearbox maker Hansen Transmissions is seeing tentative signs of a recovery in a tough market. Revenue in the second quarter of 2010 fell 21% to €107.0m from €136.3m the year before, while earnings before interest, tax, depreciation and amortisation (EBITDA) dipped 6.4% to €6.68m from €7.14m.

Aberdeen Asset Management saw a net inflow of funds in the April to June quarter, with demand for its pooled fund products especially robust. The fund manager saw assets under management during its third quarter slide, however, to £164.7bn from £170.9bn at the end of Match, as equity markets declined and exchange rate movements proved unhelpful.

Insurance broker Jardine Lloyd Thompson (JLT) has acquired a stake in Austrian peer GrECo and entered into a trading agreement with the broker and two others. The company is paying €17.6m and transferring over its Polish operations, valued at €0.65m, to the Austrian firm in return for a 20% stake in GrECo.

Business process outsourcing specialist Xchanging and its business partner Allianz Global Investors are to take over administration of savings plan accounts for OnVista Bank.

Business support systems group Intec Telecom Systems has confirmed that it is in talks that may lead to an offer for the company following a sharp rise in its share price.

FTSE 100 - Risers
Pearson (PSON) 1,029.00p +5.76%
Tullow Oil (TLW) 1,238.00p +5.00%
BP (BP.) 416.70p +4.54%
Barclays (BARC) 315.65p +4.52%
Man Group (EMG) 224.60p +3.79%
Lloyds Banking Group (LLOY) 65.90p +3.75%
Royal Bank of Scotland Group (RBS) 46.67p +2.96%
Investec (INVP) 512.50p +2.91%
Old Mutual (OML) 122.10p +2.52%
Legal & General Group (LGEN) 92.45p +2.10%

FTSE 100 - Fallers
African Barrick Gold (ABG) 553.00p -3.66%
Fresnillo (FRES) 1,063.00p -2.57%
ARM Holdings (ARM) 346.10p -2.04%
Randgold Resources (RRS) 5,920.00p -1.91%
Smith & Nephew (SN.) 546.00p -1.80%
Cobham (COB) 243.50p -1.66%
BG Group (BG.) 1,066.00p -1.43%
GlaxoSmithKline (GSK) 1,172.00p -1.26%
Experian Group (EXPN) 646.00p -1.07%
Rexam (REX) 343.40p -0.95%

FTSE 250 - Risers
Pace (PIC) 214.00p +14.13%
International Personal Finance (IPF) 238.00p +7.45%
PartyGaming (PRTY) 248.30p +6.25%
Grainger (GRI) 118.30p +6.19%
Afren (AFR) 92.60p +5.83%
Game Group (GMG) 75.20p +5.25%
Hansen Transmissions International (HSN) 71.00p +4.41%
BTG (BGC) 212.10p +4.07%
Domino Printing (DNO) 464.00p +3.87%
AG Barr (BAG) 1,197.00p +3.82%

FTSE 250 - Fallers
Connaught (CNT) 31.70p -68.95%
Supergroup (SGP) 950.00p -4.04%
Premier Foods (PFD) 20.72p -3.63%
Resolution (RSL) 225.70p -3.63%
Promethean World (PRW) 157.40p -3.44%
De La Rue (DLAR) 756.50p -2.39%
Babcock International Group (BAB) 595.50p -2.06%
PZ Cussons (PZC) 360.00p -1.91%
Hays (HAS) 93.85p -1.73%
TR Property Inv Trust Sigma Shares (TRYS) 64.90p -1.59%

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