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London Market Reports
Rising streak under threat

Market Movers
FTSE 100 5,400.41 -0.71%
techMARK 1,689.16 -0.53%
FTSE 250 10,186.27 -0.53%

London’s seven-day run of gains is under threat as blue chips are struggling in the early exchanges.

Barclays is lower after it confirmed Bob Diamond, head of its investment banking arm, Barclays Capital, will take over as chief executive when John Varley steps down at the end of March next year. Diamond, who’s been running the division since 1997 when it was BZW, becomes president and deputy group chief executive at the beginning of next month.

Tullow Oil is going well again after the vague bid talk yesterday that mentioned a £20 per share price. British Airways is also in demand as investors seemingly approve chief Willie Walsh's world domination plan.

Costa Coffee and Premier Inns owner Whitbread said like for like (LFL) sales growth has accelerated since June. Year on year sales growth in the 24 weeks to 19 August was 7.9%, up from 7.6% in the 13 weeks to 3 June.

Good sales of food through its managed outlets are keeping pub operator and brewer Greene King on track. After 18 weeks to 5 September, like-for-like sales at Greene King Retail were up by 4.4% and sales at Scottish arm Belhaven 3.3% ahead.

Online grocery distributor Ocado's first figures since its troubled listing in July showed strong growth with gross sales up 29.5% to £126.5m for the 12 weeks to 8 August, though the size of the average order declined again.

Equipment rental group Ashtead trumped the market’s profit expectations handsomely in the first quarter of its financial year. Underlying profit before tax in the three months ended 31 July was £11.9m, up 35% (18% at constant exchange rates) from £8.8m in the company’s first quarter of 2009. That figure beat the most optimistic broker forecast of £7.4m.

Struggling social housing maintenance group Connaught has asked that its shares be suspended as its financial situation becomes ever more precarious. It doesn’t think it will be able to prise additional funds from its lenders and, although it’s still talking to other parties, admits “the ability to provide an adequate solution to the funding issues the group faces has become increasingly uncertain”.

Legacy software specialist Micro Focus has appointed former Morse chief executive Mike Phillips as its new Chief Financial Officer. Phillips replaces Nick Bray and starts at Micro Focus on 4 October.

Office products wholesaler DS Smith has been trading in line with expectations in its new financial year with volume growth seen throughout the group. Reporting on trading since 1 May, the first quarter of the company’s financial year, the company said volume growth has been led by its Fast Moving Consumer Goods section.

Gem Diamonds has pulled another huge rough diamond from its Letšeng mine in Lesotho. The 196 carat rough white diamond was recovered on 24 August 2010. It is expected to achieve a substantial price per carat as preliminary examinations indicate it could produce top colour and top clarity polished diamonds, Gem said.


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UK Event Calendar for today
INTERIMS
Charlemagne Capital, Globaltrans Investment GDR (Reg S), Hydro International, Metalrax Group, Ocado

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ABC Consumer Confidence (US) (22:00)
Factory Orders (GER) (11:00)
Target Interest Rate (JPN)

GMS
Framlington Innovative Growth Trust

FINALS
Abcam, Dechra Pharmaceuticals

AGMS
Ashtead Group, Daisy Group, DS Smith, Greene King, Hampson Industries, Midas Income & Growth Trust, Quintain Estates & Development, Sports Direct International

UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:01)

Q1
Ashtead Group


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Forex Market Reports
Swiss Franc Mixed Amid Switzerland's Unemployment Report

The Swiss franc showed mixed trading against its major counterparts in early European trading on Tuesday. While the franc edged lower against the yen due to across the board rallying of the latter, it held steady versus the rest of majors.

Switzerland's unemployment rate was unchanged at 3.6% in August as expected, while the number of unemployed persons increased modestly, official figures showed today.

The State Secretariat for Economic Affairs said around 142,900 were registered unemployed at the end of August, nearly 550 more than July. Compared to the same month a year ago, the number of unemployed had fallen by around 8,000 persons.

The Swiss franc that rose to a 4-day high of 83.43 against the Japanese yen earlier in the Asian session reversed direction in late trading and hit as low as 82.90 before snapping back again around 3:30 am ET. The franc-yen pair is presently quoted at 83.10.

The policy board of the Bank of Japan, led by Governor Masaaki Shirakawa decided to leave the uncollateralized overnight call rate unchanged at 0.10% and pledged to maintain an extremely accommodative financial environment. Rates have been frozen at their record low since December 2008.

Japan's leading indicator declined in July after rising in June, preliminary data from the Cabinet Office showed today. The corresponding index fell to 98.2 from 99 in June. The reading came in line with economists' expectations.

Meanwhile, the coincident index rose to 101.8 from 101.3 in June. The coincident index reading also came in line with consensus forecast. At the same time, the lagging index came in at 85.7, up from 83.5 in June.

The franc that advanced to more than a 20-month high of 1.5508 against the pound earlier in the Asian session showed choppy in early European trading. The pound-franc pair moved in a range-between 1.56 and 1.55 mostly in the session and the pair is presently quoted at 1.5556.

U.K.'s retail sales were up 1% compared to the same period a year ago on a like-for-like basis in August, the British Retail Consortium said today. Total sales increased 2.8%.

The Swiss franc that soared to a 6-day high of 1.2910 against the euro in late trading moved in a holding pattern in early European trading on Tuesday. At present, the euro-franc pair is quoted at 1.2920.

Earlier, the euro lost ground after a report from the Association of German Banks estimated that Germany's ten biggest lenders, including Deutsche Bank AG and Commerzbank AG, will need an additional EUR 105 billion in fresh capital to meet estimated new Tier 1 capital ratios.

The Swiss franc that climbed to a 6-day high of 1.0088 against the US dollar around 1:00 am ET lacked a clear direction thereafter. The greenback-franc pair is presently quoted at 1.0101.

Looking ahead, Germany's Federal Ministry of Economics and Technology is expected to release factory orders data for July at 6:00 am ET.

There are no major economic data due out from the North American session today.


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US Market Reports
Obama to plough $50bn into road, rail and air scheme

US president Barack Obama has unveiled plans to pump $50bn (£32.5bn) into America’s roads, railways and airports in an effort to inject some pace into the slow moving economy.

Facing a big defeat at the upcoming midterm elections, Obama knows he needs something spectacular to give the Democrats at a fighting chance in November.

Obama wants to build a staggering 150,000 miles of roads, build and maintain 4,000 miles of railways, mend 150 miles of airport runways, and upgrade the air traffic control system.

The news comes on the Labor Day holiday, which marks the end of summer in America and usually the beginning of the congressional election campaign.

But the economy is looking sluggish after a promising start to its recovery from the recession.

Last Friday’s monthly jobs report was better than expected, but 54,000 jobs were still lost in August and the unemployment rate increased a fraction to 9.6%.

A new infrastructure bank has also been proposed that will coordinate the massive programme of spending.

America’s infrastructure network is often criticised for being poorly maintained and “unsafe”, according to a 2009 report from the American Society of Civil Engineers.

That estimated the cost of repairing its roads, public transport and other basic services at $2.2tn (£1.5tn).


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Tuesday newspaper round-up:
Barclays, Oracle, Henderson...

Barclays risks a confrontation with the Government today when it confirms that Bob Diamond, Britain’s best-paid banker, is to become its chief executive.

The Times has learnt that the bank will announce Mr Diamond, an American who has amassed an estimated fortune of £100m, as successor to John Varley next March. Mr Diamond currently heads the group’s investment banking arm, Barclays Capital, and his new appointment is likely to prove explosive.

Mark Hurd, ousted as chief executive of Hewlett-Packard last month, has made a dramatic return to corporate America at rival Oracle. Mr Hurd will become a president of the company and a member of the board, reporting into Oracle's chief executive, Larry Ellison. Charles Phillips resigned as a president of Oracle and as a member of the board. "Mark did a brilliant job at HP and I expect he'll do an even better job at Oracle," said Mr Ellison, the Telegraph reports.

National Health Service employment increased in every part of the UK in the first three months of the year, according to figures released yesterday. The largest gains were in the East Midlands and the East of England, where headcounts rose about 7% year-on-year, the Office for National Statistics said. That contrasts with other public sector areas, which suffered reductions over the period, the Times reports.

Henderson, one of the City’s top investment houses, has been given a two-week ultimatum to pay compensation to pension funds responsible for the retirement incomes of hundreds of thousands of people after a seemingly low-risk investment vehicle went badly wrong. A group of 30 pension funds has written to Henderson Group demanding compensation after they lost about £350m in the ill-fated infrastructure fund, the Times reports.

The resignation of a star trader from Gartmore has put its role as a fund manager of a coveted investment trust in jeopardy. Gartmore Growth Opportunities was one of three investment trusts managed by Gervais Williams, the veteran trader who unveiled plans last week to quit Gartmore after 17 years, the Times reports.

The Treasury has angrily dismissed calls from the European Union for Britain's EU Budget rebate to be abolished. A spokesman for the Chancellor said: "The UK abatement remains fully justified. It's a matter of fairness." "Without the rebate, the UK's net contribution as a percentage of national income would be twice as big as France's, and one-and-a-half times bigger than Germany's."This is because of expenditure distortions from policies such as the Common Agricultural Policy (CAP), which still accounts for more than 40% of the EU budget," the Independent reports.

Employers expect a “static” rate of recruitment for the remainder of this year, according to new research, underlining concerns about the momentum of economic recovery. The survey of 2,100 employers by Manpower, the recruitment company, is likely to intensify debate on whether the private sector can create enough jobs to offset those that will be lost in the public sector over the coming years, the FT reports.