LONDON (ShareCast) - Footsie slid ever closer toward the 5,000 point mark today after slumping on the back of a poor performance on Wall Street overnight then falling further after another poor opening in the US.

Banks were under the cosh amid continued worries over the banking sector with analysts expressing scepticism over the US government’s plan to prevent a collapse of the mortgage firms Freddie Mac and Fannie Mae. Royal Bank of Scotland, Barclays. Standard Chartered and Lloyds TSB posted heavy losses.

Alliance & Leicester fell after a number of possible suitors ruled themselves out of a bid. The Telegraph says that sources close to Clive Cowdery, who plans to consolidate the UK's financial services industry, and private equity firm JC Flowers made it clear neither was likely to enter the fray. Lloyds TSB is expected to review its options but bankers said it was almost certain to be precluded on competition grounds.

Thomson Reuters was out of favour after a broker downgrade yesterday, while ITV retreats as bid hopes fade.

Carphone Warehouse slipped on competition worries as BT unveiled plans for a new superfast broadband network, which will cost it £1.5bn.

British Airways chairman Martin Broughton told shareholders at the annual meeting that it would be a "considerable achievement" if BA broke even for the current financial year. At a press conference after the AGM, chief executive Willie Walsh said BA will cut capacity by 3%-5% in its winter season due to the rising cost of fuel. Ironically, the airline’s share price advanced as the price of a barrel of oil slid below $141 a barrel.

British Energy defied the downward trend after Morgan Stanley raised its target price on the stock to 650p from 550p and kept its ‘equal-weight’ rating, saying the nuclear power station operator should benefit from higher power prices in the long term.

Kazakhmys sparked a mining sector sell-off after it denied press speculation that it is in talks with Russia's Metalloinvest regarding a possible reverse takeover. "Kazakhmys confirms that it is not currently contemplating the implementation of such a combination through a structure that would be classified as a reverse takeover under the rules of the UK Listing Authority," it said this morning.

Also in the mining sector, Investec has upgraded its recommendation on the platinum miner Lonmin to ‘buy’ from ‘hold’ pointing to strong prices for the precious metal.

Cable and Wireless relinquished early gains. The stock advanced early on after it left its underlying earnings guidance for the year to March 2009 unchanged at between £702m and £725m, an increase of between 16% and 20% on the previous year. International is expected to chip in between £447m and £455m; Europe, Asia & US between £285m and £295m. "Both business units have made a pleasing start to the financial year," it said.

JP Morgan has initiated coverage on Old Mutual with an ‘overweight’ recommendation and a 114p target price saying the insurer offers investors a cheap, geared entry into the market. Elsewhere, Morgan Stanley maintained its ‘overweight’ stance on Old Mutual, but cut its target price to 114p from 166p.

Away from the FTSE 100, Credit Suisse has slashed its price target on mid cap stock Yell Group to 55p from 140p, saying it remains negative on European directories as they become by-passed in the move to online.

Russia-focused oil producer Imperial Energy gushed higher after it said it is discussing a possible cash offer of 1,290p per share.

Carpetright saw Altium upgraded the stock to “buy” from “hold”.

Plant hire group Speedy Hire reports an encouraging start to its new financial year, underpinned by strong demand from public-sector projects. Revenue for the three months to June rose by 36% over this time last year, it added.

Premier Foods' first half group sales rose by approximately 7% on the same period last year. The driver of the sales growth has been price rises to recover the significant input cost inflation, which began during the second half of 2007. Trading profit continues to be in line with our expectations, the Hovis to Branston group added. Expectations for the year remain unchanged, it added.

Luxury goods firm Burberry shrugged off problems in Spain to post forecast-beating quarterly sales growth. In the three months to end-June (the group’s first quarter) total revenue grew 22% at constant exchange rates or 26% on an as reported basis, to £211m.

Sales have continued to slow at struggling photographic retailer Jessops prompting a warning that annual losses will top the £7.5m reported last year. It said trading has not improved since its last trading update at the end of May when the group posted a 5% drop in first half like for like sales and a 5.6% slide for the 34 week period.

Electronic tagging group Dmatek has forecast record sales in the first half of 2008 despite slower than expected growth in its elderly persons business.

Sales and profits at China-based solar panel provider Jetion in the first half of 2008 were well ahead of last year.


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Tesco (TSCO) 364.70p +2.85%
Thomas Cook Group (TCG) 179.50p +2.10%
Imperial Tobacco Group (IMT) 1,710.00p +1.91%
British Airways (BAY) 210.75p +1.69%
Morrison (Wm) Supermarkets (MRW) 261.00p +1.56%
Compass Group (CPG) 345.75p +1.39%
3i Group (III) 827.50p +1.35%
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Carphone Warehouse Group (CPW) 185.50p -6.64%
Antofagasta (ANTO) 547.00p -6.42%
Vedanta Resources (VED) 1,893.00p -5.82%
Ferrexpo (FXPO) 298.00p -5.62%
ITV (ITV) 40.50p -5.59%
Anglo American (AAL) 2,813.00p -5.38%
Kazakhmys (KAZ) 1,434.00p -5.35%
Eurasian Natural Resources (ENRC) 1,163.00p -5.29%
Lonmin (LMI) 2,614.00p -5.19%

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