LONDON (SHARECAST) - -Footsie trade within narrow range, edges 0.2% higher.
-GKN, Whitbread, Serco disappoint after results/updates.
-Persimmon jumps 13% after announcing cash return.
London's FTSE 100 index held on to moderate gains by lunchtime, after having traded within a narrow range of just 19 points in the morning session. European markets in general lacked direction ahead of tomorrow's long-term refinancing operation by the European Central Bank (ECB). Meanwhile, US stock futures were pointing to a positive start on Wall Street.
GERMANY APPROVES GREEK BAILOUT
The German parliament approved the second €130bn Greek bailout package on Monday afternoon. It was passed by a wide majority with 496 votes in favour and only 90 opposed, although Merkel's coalition fell short of obtaining the so-called "Chancellor's majority." German Chancellor Angela Merkel also reiterated the importance of quickly implementing the fiscal pact to return confidence to the euro. At the same time, she repeated her opposition to boosting the European Financial Stability Facility (EFSF) and European Stability Mechanism's (ESM’s) capacity.
Today, the ECB announced that it has temporarily suspended the right to use Greek bonds as collateral in its Eurosystem monetary policy operations. The monetary authority has explained that the decision is based on the Hellenic Republic’s credit rating and the recent private sector involvement offer.
The decision by the ECB comes just after Standard & Poor's (last night) cut Greece’s 'CC' long-term and 'C' short-term sovereign credit ratings to ‘selective default’ due to the passing of the collective action clauses (CACs) that bind all bondholders to take a 'voluntary' haircut of 53.5% on Greek debt holdings.
GKN, WHITBREAD FALL AFTER FULL-YEAR RESULTS
Automotive and aerospace engineer GKN dropped despite hiking its total dividend by a fifth after seeing double-digit growth in both sales and profits in 2011. The group did report a subdued performance in GKN Aerospace as it has struggled with governments' defence spending remaining under pressure. However, stronger growth in its Driveline, Powder Metallurgy and Land Systems divisions meant that group sales rose by 13%.
To be had in account, comment analysts at Digital Look, the sharp run-up recently in the company's share price (to technical resistance). A possible catalyst for today's selling may be the remarks from the company's chief executive officer regarding the technical "challenges" which Airbus's A350 poses.
Whitbread was a heavy faller after seeing both reported sales and like-for-like (LFL) sales slow down in the 11 weeks to February 16th, as strong growth at its Costa coffee shop chain was met with a more subdued performance at its hotels and restaurants.
Outsourcing giant Serco was also out of favour despite saying 2011 was a year of "solid operational performance and contract awards across the portfolio", reflected in a 7.4% increase in revenue to £4,646m from £4,327m in 2011.
Irish building materials group CRH rose after profits beat consensus estimates and its own forecasts in 2011. Having indicated to the market back in November that profit before tax and impairment charges for 2011 would fall somewhere between €678m and €708m, the final figure was €743m, well ahead of market consensus of €656m.
Essar Energy has rebounded after seeing a steep fall in its share price yesterday as its reported a sharp drop in profits in the 12 months ended December 31st. Shares were up over 4% by lunchtime. Other notable performers included mining peers Evraz, Vedanta Resources and Rio Tinto, who were tracking metals prices higher.
UK banks failed to follow their European peers higher today. HSBC was being weighed down by reports that it could face criminal or civil charges as a result of an investigation into its links to allegedly illegal money transactions, according to Reuters.
Meanwhile, Barclays is to pay back half a billion pounds worth of tax which it had done its best to avoid, the BBC reports. The lender was accused by HM Revenue and Customs of avoiding the £500m in tax by creating and implementing two schemes which have now been closed and must now allegedly pay back the entire sum under new retrospective legislation introduced by the government to put a stop to the "aggressive tax avoidance".
PERSIMMON SURGES ON THE FTSE 250
While house-builder Persimmon's results appeared to be broadly in line with expectations, shares surged on Tuesday on new of a cash return worth £1.9bn over the next nine and a half years, something that Peel Hunt has called a 'game-changer'. Meanwhile, underlying pre-tax profits increased 55% to £148.1m, higher than market expectations of £141.1m.
Heading the other way was AZ Electronic Materials. The group, which produces speciality chemical materials to technological manufacturers, saw strong growth in profits in 2011, but warned that it expects "the more challenging trading conditions that we experienced towards the end of 2011 to continue into the first half of 2012."
FTSE 100 - Risers
Essar Energy (ESSR) 112.20p +4.28%
Capita (CPI) 758.00p +2.50%
Evraz (EVR) 410.20p +1.86%
Hammerson (HMSO) 405.00p +1.55%
Vedanta Resources (VED) 1,499.00p +1.49%
IMI (IMI) 988.00p +1.44%
Capital Shopping Centres Group (CSCG) 340.50p +1.31%
Antofagasta (ANTO) 1,357.00p +1.27%
Land Securities Group (LAND) 687.00p +1.25%
Old Mutual (OML) 161.90p +1.25%