LONDON (ShareCast) - Buoyant commodity plays are about the only stocks preventing a clean sweep of retreating stocks on the Footsie, although losses are not as severe as might be expected after yesterday’s carnage on Wall Street.

A profit warning from German insurance giant Munich Re has sparked selling in insurances, with Legal & General the worst performing blue-chip, with Aviva, RSA and Standard Life not far behind.

The panic selling of banks in the US after Bill Gross, the highly respected manager of Pacific Investment Management Company (PIMCO) predicted that falling house prices in the US would compel financial firms to write down $1,000bn from their balance sheets, has hit UK banks too, though not to the same extent. Lloyds TSB, Barclays and HBOS are all nursing losses of around 5%.

The Telegraph reported that JP Morgan, the US banking giant that rescued Bear Stearns earlier this year, has held talks with several interested parties about forming a consortium to break up HBOS.

BHP Billiton advanced after it agreed to spend US$625m of its own money on the full field development of the Turrum oil and gas field in the Gippsland Basin, offshore Victoria. The miner said the Turrum development will produce new supplies of natural gas and liquids through new and existing Bass Strait facilities.

Other miners are also in demand on the back of higher metal prices while oil stocks are lifted by an improvement in the oil price. Hochschild Mining gets an additional lift from UBS, which has upgraded the stock to “buy” from “neutral”.

In other broker action, speciality chemicals firm Johnson Matthey is higher after US bank Morgan Stanley upgraded the stock to “equal weight” from “underweight”. However, engine maker Rolls Royce gets the thumbs down from Deutsche Bank, which recommends selling the shares on the back of slowing demand caused by worsening economic conditions and soaring oil prices.

Water group United Utilities said current trading is in line with expectations and added that preparations for the forthcoming price review are underway. “United Utilities' preparations for the forthcoming price review are well advanced and the company is in active deliberations with its regulators and other key stakeholders. The group is on track to submit its draft business plan to Ofwat in August 2008,” it said.

Rentokil Initial was sharply lower after it said its internal forecast for full year adjusted pre-tax profit is now £35m lower than at the time of its first quarter trading update. The group said problems with the restructuring of its UK washrooms business and the integration of its washrooms and pest control acquisitions in Australia have continued throughout the second quarter. In addition, trading has deteriorated in the textiles & washrooms division during the period.

Pub group Mitchells & Butlers reported same outlet like-for-like sales growth of 1.1% in the 10 weeks to 19 July, reflecting continued strong demand for food in its pubs and pub restaurants and a resilient performance in a declining on-trade drinks market. Same outlet like-for-like sales growth in the first 42 weeks of the year remains at 0.8%.

Soft-drinks maker Britvic reported revenues for the 40 weeks to July rose 29.9% but warned of increasing input and energy costs. Revenue for the period came in at £690.0m, which included a first time contribution from Britvic Ireland of £147.2m for the 9 months to 30th June 2008.

US hedge fund Harbinger Capital said today it may bid for satellite communication outfit Inmarsat and merge it with SkyTerra Communications, in which it has a big stake. Before it can decide whether to bid Harbinger needs to get regulatory approvals, which could take 12-18 months to secure.

Lloyds-based underwriter Beazley said it achieved a creditable result after posting lower profits for the half year as it tackled the difficult market conditions. Pre-tax profit fell to £45m, in the six months ended 30 June, down from £60.2m the year before.

IT hardware group Morse has announced plans to start a cost cutting programme straight away following chief executive Kevin Alcock’s resignation earlier this month.

Care home group Southern Cross Healthcare said it has extended its loan facilities and added that overall trading remains in line with expectations.

Hull-based telecoms group KCOM slumps after warning of “revenue weakness” at its Integration & Managed Services business in what is expected to remain a challenging market.

FTSE 100 - Risers
BG Group (BG.) 1,103.00p +3.28%
Tullow Oil (TLW) 741.00p +2.21%
BP (BP.) 522.75p +2.00%
Cairn Energy (CNE) 2,664.00p +1.80%
Royal Dutch Shell 'B' (RDSB) 1,820.00p +1.68%
John Wood Group (WG.) 403.50p +1.57%
Drax Group (DRX) 720.00p +1.55%
Royal Dutch Shell 'A' (RDSA) 1,843.00p +1.38%
Xstrata (XTA) 3,256.00p +1.28%
AstraZeneca (AZN) 2,372.00p +1.11%

FTSE 100 - Fallers
Legal & General Group (LGEN) 97.80p -7.47%
London Stock Exchange Group (LSE) 793.50p -6.54%
RSA Insurance Group (RSA) 126.50p -6.50%
Hammerson (HMSO) 910.50p -6.28%
Aviva (AV.) 479.50p -6.26%
Kingfisher (KGF) 116.90p -5.95%
Standard Life (SL.) 215.00p -5.70%
Schroders (SDR) 957.50p -5.67%
Schroders NV (SDRC) 867.00p -5.50%
Marks & Spencer Group (MKS) 245.50p -5.39%

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