LONDON (ShareCast) - London is trading near its worst levels of the day following a gloomy start on Wall Street and as British Airways struggles and oil companies dip on weaker crude prices.

Investors decided to bank profits at airline BA following a big rally during the past two weeks. No-frills airline easyJet also upset proceedings as it said capacity growth for winter 2008/2009 has been reduced and is currently planned to be in the region of 4%-6%. At Stansted, capacity will be reduced by 12% this winter.

Oil's recent tumble from record highs is bad news for BP, Shell, Tullow Oil and Cairn which are all lower today.

Not even a huge rise in second quarter profits could prevent BG Group from hitting the skids. Underlying earnings more than doubled driven by higher prices, E&P volumes and increased LNG margins.

Mining stocks are out of favour, with ENRC the worst affected, as copper, prices ease back.

Kingfisher is best performing blue-chip after its trading update revealed the decline in like-for-like sales has decelerated in the last ten weeks. The UK market remains tough, the DIY retailer said, but total sales were up 5.1%, boosted by stronger seasonal sales and Screwfix trade counter openings.

London Stock Exchange is also better after Morgan Stanley upgraded the shares from “underweight” to “equal weight”.

Rolls Royce is also on the up. The engine maker saw profits increase slightly in the first half despite increases in costs as service revenues surged ahead.

More steadily, Imperial Tobacco says trading is on track with Davidoff, Gauloises Blondes and JPS key cigarette growth drivers, complemented by robust performances from cigars and fine cut tobacco products.

Vodafone’s share buy-back programme has encouraged Goldman Sachs to recommend the stock as a buy.

Scottish and Southern Energy is marked down after it said first half profits will be “substantially” lower than last year, though it expects to deliver a modest increase in adjusted profit for the year.

Elsewhere, Yell rose sharply even though the troubled Yellow Pages group posted lower first quarter profits and cautioned it expects further pressure on revenue over the rest of the year. It also indicated it would still meet its earnings guidance.

Housebuilders are going well led by Taylor Wimpey on reports it has appointed an adviser to help it renegotiate its loan covenants.

Shares in Alizyme are looking sickly after the drug developer announced disappointing test results for its COLAL-PRED drug.

Colt Telecom is wanted after the telecoms company’s second quarter profit before tax and exceptional items increased by from €8.9m to €16.5m.

Microchip designer ARM reported a fall in second quarter revenues and pre-tax profits, but said it is on track to meet its full-year guidance.

Cadogan Petroleum slumped after discovering that a court in the Ukraine had declared invalid two of its key licences in the country.

Investors in Bradford & Bingley take heart from the mortgage bank successfully completing its first securitisation of the year.

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