LONDON (ShareCast) - UK shares started the week on the front foot, helped by strong performances from oils and defence stocks.

BAE Systems was wanted after it confirmed its shipbuilding joint venture with VT Group will become operational Tuesday. However, it was sector peer Cobham which was the best performing stock of the day as investors turned bullish on defence stocks, also to the benefit of Rolls-Royce.

The strength of the oil price boosted oilfield services group John Wood as well as the integrated oil giants such as BG Group. Tullow Oil failed to participate in the sector’s advance after a drilling update this morning.

Cable & Wireless prospered after it confirmed it has upped its offer for Thus with a cash offer of 180p per share. Vodafone also did well on talk of a float in Qatar and tie-up with My Space to broadcast content.

Xstrata was up in a strong mining sector. Rio Tinto is in demand on talk that Lakshmi Mittal may buy a stake. Anglo American was wanted on reports that it is waiting to snap up any Australian interests that Rio and BHP Billiton might be obliged to sell in order to gain regulatory approval for a merger.

Lonmin retreated, however, after it announced a safety-related shut-down of its Number One furnace.

Support services group Serco has repeated the guidance given with its interims on 13 May. "Our performance remains strong, and our markets continue to offer substantial opportunities, underpinning our revenue and margin guidance. Serco remains on track to deliver on expectations for 2008," it said.

ITV was the worst performing blue-chip, after getting a double-whammy in the form of a Competition Commission referral for its “Project Kangaroo” joint venture with the BBC and Channel 5, and a gloomy set of results from fellow media stock Trinity Mirror, which warned that full-year operating profits will be some 10% lower than forecasts as advertising market conditions continue to deteriorate.

Southern Cross was poorly, shedding over half of its value on the back of a warning over a bank covenant, poor trading and the departure of its finance director

Taylor Wimpey was also lower as it announced write-offs of £660m and confirmed it is talking to shareholders over a placing and open offer. Other builders are down in sympathy led by Barratt.

JP Morgan has slashed its target price on Yell Group to 92p from 510p, citing weak economic conditions in the UK, US and Spain and debt concerns.

Goldman Sachs has lowered its rating on French Connection to ‘neutral’ from ‘buy’, saying the outlook for the European consumer is continuing to deteriorate.

Citigroup has begun coverage on the student accommodation specialist Unite with a ‘hold’ stance and a 245p price target.

Power station Drax now expects full year results will be modestly higher than recent market EBITDA consensus of around £400m, reflecting its current contracted position as well as prevailing conditions in the commodity markets.

Ground engineer Keller reports trading in the first five months of 2008 has been strong, with revenue, operating profit and orders all ahead of the same period last year.

Residential property group Grainger was higher on comments from property investor Regis to the effect that it may be interested making a bid but not at the moment.

Online fashion group ASOS saw underlying profits surge 176% to £8.25m in the year to March 31 on a 90 percent increase in revenues to £81m. Sales in the 13 weeks to June 27 were up 95%, it added.

Contractor Costain said that since 8 May 2008, the group has continued to perform in-line with the board's expectations. Costain says it has secured a number of significant new orders since the beginning of the year and the group's forward order book today stands at in excess of £2bn, which is a record level.

Shares in ClinPhone were lower after Quintiles Transnational said it will not proceed with an offer for the clinical trial technology provider.

Shares in Pendragon fell sharply after the car dealer said the car market is experiencing a decline in sales of new and used cars.

FTSE 100 - Risers
Cobham (COB) 197.80p +6.12%
John Wood Group (WG.) 494.50p +5.27%
Vodafone Group (VOD) 149.15p +5.26%
BG Group (BG.) 1,307.00p +4.48%
International Power (IPR) 432.00p +3.97%
Anglo American (AAL) 3,526.00p +3.83%
Cadbury (CBRY) 632.50p +3.77%
British American Tobacco (BATS) 1,739.00p +3.51%
BAE Systems (BA.) 442.50p +3.51%
Rolls-Royce Group (RR.) 341.50p +3.41%

FTSE 100 - Fallers
ITV (ITV) 44.70p -5.89%
Friends Provident (FP.) 102.20p -3.58%
London Stock Exchange Group (LSE) 780.00p -3.17%
Wolseley (WOS) 376.50p -2.96%
Lonmin (LMI) 3,191.00p -2.95%
Barclays (BARC) 291.50p -2.18%
Admiral Group (ADM) 798.50p -2.14%
Tullow Oil (TLW) 955.00p -2.05%
Marks & Spencer Group (MKS) 328.50p -2.01%
Lloyds TSB Group (LLOY) 310.75p -1.97%

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