LONDON (ShareCast) - London's blue chips have turned red as the afternoon session gets underway with oil prices rising again and food groups under pressure.

Barclays leads the risers after it confirmed it is considering a placing and pre-emptive offer to existing shareholders. Weekend reports suggested it was in talks with sovereign wealth funds about raising £4bn. The bank added that profit before tax in May was well ahead of the monthly run rate for 2007.

Housebuilders are also going well on a story that bankers at UBS have drawn up possible plans for a wide-ranging placing by major shareholders in leading companies in the sector including Taylor Wimpey and Barratt Developments. Persimmon is second from top in the FTSE 100.

Eurasian Natural Resources is going strong after higher price estimates for ferrochrome and iron ore pellets prompted ABN Amro to upgrade its rating on the Kazakh miner to ‘buy’ from ‘hold’ and increase its price target to 1,650p from 1,300p.

However, negative broker coverage also influences the leading index, with food companies Unilever and Cadbury lower after UBS downgraded its recommendations on the groups to ‘sell’ from ‘neutral’ as part of a European food sector review.

Fading bid hopes have also hit SABMiller following InBev’s move on Anheuser-Busch and comments from the Belgian brewer that suggest it is determined to take over the Bud brewer.

Oil prices are up to $138 per barrel again, knocking transport groups with British Airways and Carnival in the firing line.

Merrill Lynch has cut its price target on Marston’s to 240p from 266p, saying it expects to see higher food and energy costs hitting the pub group. The broker has reduced its 2008 pre-tax profit forecasts for the Pitcher and Piano owner by 3.6% to £89.8m and for 2009 to £90.9m.

BlueBay Asset Management has slumped on a warning that performance fees for the year are likely to be lower than expected, leading to weaker than forecast pre-tax profit for the period to 30 June 2008. The fixed income fund manager accrued performance fees of £4m during the first five months of the second half, taking fees for the year to date to £22.7m.

Wine retailer Majestic Wine says like for like UK sales were up 0.8% in the first ten weeks to 9 June 2008. Since April, sales have been significantly stronger with like for like UK sales up 4.4% for the six weeks ending 9 June 2008, it added.

Sofa retailer Land of Leather is in the process of finalising an underwritten equity fundraising, which it expects to announce during the course of this week. Furniture chain ScS Upholstery, meanwhile, said it is in talks with a number of external parties to raise additional working capital after an insurer stopped providing cover to help pay suppliers early.

Lombard Medical rallied after it said there is no reason for the recent share price decline.

Content management software and solutions provider Geong International said it has made a strong start to the year as it reported a 28% rise in full year pre-tax profits. In a separate statement, the group announced that it has signed four contracts with second tier banks across China worth a total of £648,000 that will be recognised in the March 2009 results.

Struggling drug developer SkyePharma rallied as the US authorities gave approval to GlaxoSmithKline's once-a -day Parkinson's treatment Requip XL, which uses Skyepharma's technology.

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