| CATEGORY: MARKET REPORT - AFTERNOON SECTOR: FINANCIAL SERVICES |
London afternoon: Footsie fights to stay ahead |
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Tue 20 Nov 2007
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Market Movers
techMARK 1,491.91 -0.69%
FTSE 100 6,141.00 +0.33%
FTSE 250 10,385.50 -0.18%
LONDON (SHARECAST) - The leading index has seen gains trimmed as the banking sector relinquishes a little of its advantage, while Wall Street’s start looks like being less spectacular than initially expected.
Investors continue to shrug off credit crunch fears, which had resurfaced after buy-to-let mortgage specialist Paragon revealed it has run into funding difficulties.
The troubled firm saw its shares almost halve after it put in place facilities for an underwritten rights issue to raise £280m because terms offered to renew a debt facility were "not attractive." Dividends have been suspended until the funding issue is settled.
Paragon’s problems pale into virtual insignificance compared with the scale of Northern Rock's difficulties, so it was little surprise when Paragon’s announcement sparked more selling of Northern Rock. Dealers are sceptical about the benefits for shareholders of any rescue bid for the Newcastle-based bank. Barclays, Royal Bank of Scotland and HSBC.
Bradford & Bingley is spared the treatment being dished out to the rest of the banking sector after it agreed to sell its entire housing association book to Dexia. The book comprises £2.2bn of assets and is being sold for cash proceeds. It contributed around £21m to group profits in 2006.
Inter-dealer broker ICAP is top of the pile as it predicted full-year profits would be slightly higher than consensus forecasts despite the impact of the weak dollar as it benefits from higher volatility in the interest rate, foreign exchange, energy, emerging and credit markets. Underlying profit rose by 34% in the six month to 30 September to £161.5m on revenue up by 15% to £626.2m.
Elsewhere, Scottish & Newcastle has again rejected the bid approach from Carlsberg and Heineken and forecast good growth in Russia and an improvement in its core Western European markets in 2008. It also announced a deal to sell a large proportion of its wholly-owned French on-trade distribution businesses for around £85m and cut costs. But brokers were mixed and investors unimpressed, forcing the shares lower.
Pub group Enterprise Inns has had its plans to convert into a REIT blocked by Revenue & Customs, which says it does not meet the qualifying criteria for admission.
Enterprise added it is exploring an internal restructuring of the group's activities to overcome the hurdles. Underlying profits last year rose slightly to £526m, below forecasts. "The new financial year has started well, but we remain cautious about consumer confidence and the impact through the coming winter of the smoking ban," it said.
Rolls-Royce cruises ahead after announcing plans to invest in two new aero engine facilities in Singapore and in the Commonwealth of Virginia in the United States.
In the papers, Rio Tinto is considering joint ventures with BHP Billiton as a way of heading off its bid interest according to the Telegraph this morning.
On the FTSE 250, budget airline easyJet saw full year pre-tax profits jump by 48% and said it expects an increase in underlying pre-tax profit of around 20% in the current financial year. Pre-tax profit rose to £191.3m in the year to 30 September compared to £129.2m last time on revenue up by 11% to £1,797.2m.
Greetings card retailer Clinton Cards has seen a slowdown in sales, but remains confident about the all important Christmas trading period. “Reasonably good sales in that period did not continue into October which mirrors the experience of other retailers on the High Street,” said the group.
Business education and training specialist ILX is wanted after half-yearly results saw pre-tax profits almost double.
Property support services firm Erinaceous is in the red after its executive deputy chairman and chief operating officer agreed to resign with immediate effect. The two had been put on extended gardening leave, after activist hedge fund Fursa Alternative Strategists had requisitioned an EGM calling for their removal. Fursa has now withdrawn its request for an EGM. The shares are down by about 95% on the year.
Outdoor clothing retailer Black’s Leisure is under the weather, despite unveiling Neil Gillis as its new chief executive officer.
Paper manufacturer James Cropper sees its share price trimmed after saying it expects the profitability of its Speciality Papers division to be affected in the second half by the strong upward trend in energy prices and pulp costs.
International precision engineering firm Hampson Industries dips lower despite reporting organic revenue growth of 18% and resuming dividend payments.
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