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London Market Reports
Footsie falls as retailers suffer

Shares are slightly lower in early dealings after updates from the retail sector were given a frosty reception.

Supermarket Morrisons falls back even though it posted profits broadly in line with expectations for the six months to August 1. It also unveiled a move into the convenience store market as new chief executive Dalton Philips makes his mark on the company.

Retailer Home Retail Group disappointed the market with its prediction that unless Christmas is a cracker this year profits are likely to be in the bottom half of the range of analysts’ estimates. In a trading update the group said things are getting worse more slowly at Argos while Homebase beat expectations over the summer months.

Music and DVD retailer HMV fell sharply, albeit after strong gains yesterday as it posted a 10.6% decline in first quarter sales as potential customers were distracted by the World Cup. The group, which is struggling to compete with internet rivals and supermarkets, said UK & Ireland like for like sales in the 19 weeks ended 4 September 2010 fell 14.9%.

The spat between Kazakh mining giant Eurasian Natural Resources (ENRC) and Canadian miner First Quantum Minerals (FQM) over ENRC’s acquisition of a majority interest in Camrose Resources is getting tetchier. ENRC has sent a letter to FQM complaining about recent statements made by the Canadian company which ENRC believes are an attempt to interfere with the Kazakh company’s rights to develop the Camrose joint venture and the Kolwezi tailings project.

Higher house prices helped home builder Redrow move back into profit in the year to June 30, but the outlook remains uncertain. The company posted a pre-tax profit of £0.7m against a loss of £44.2m the previous year, as revenues jumped to £396.9m from £301.8m.

Electronic and industrial components supplier Premier Farnell said underlying pre-tax profit more than doubled after strong sales, particularly in the US, but remains cautious about the economic backdrop. Underlying pre-tax profit rose to £23.8m during the second quarter ended 1 August 2010 from £10.7m the same time a year earlier. Revenue during the period increased 30% to £252.1m.

Spread-betting firm IG Group saw higher revenues in the three months to August 31, but said that volumes were subdued in the second half of that period and warned that future trends remain difficult to predict. Revenues were up to £79m from £68m in the same period the previous year.



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UK Event Calendar for today
INTERIMS
DataCash Group, Globus Maritime, Morrison Wm., Premier Farnell, Tikit

INTERIM DIVIDEND PAYMENT DATE
Development Securities, F&C Inv Trust, New Europe Property Investments, Rio Tinto

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (US) (13:30)
Consumer Price Index (GER) (07:00)
Continuing Claims (US) (13:30)
ECB Report (EU) (09:00)
Initial Jobless Claims (US) (13:30)
Consumer Confidence (JPN)

Q2
Premier Farnell

GMS
Character Group, Western Coal Corp.

FINALS
Alumasc Group

IMSS
HMV Group, IG Group Holdings

EGMS
Naya Bharat Property Company

AGMS
Assura Group, Atkins (WS), Carpetright, Falkland Islands Holdings, Hartest Holdings, HMV Group, Invista Foundation Property Trust, Matrix Income & Growth 2 VCT, Matrix Income & Growth 2 VCT 'C' Shares, Naya Bharat Property Company, Northgate, PHSC, Polar Capital Holdings, Provexis, Southern Bear, Thames River Multi Hedge PCC Ltd. Realisation Shares, Western Coal Corp., Zoo Digital

TRADING ANNOUNCEMENTS
Home Retail Group

UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (09:30)
BoE Interest Rate Decision (12:00)

FINAL DIVIDEND PAYMENT DATE
Carclo

Q1
Ocean Power Technologies


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Forex Market Reports
Euro gains after bond auction

The euro rose against the dollar and yen after a successful Portuguese bond auction soothed nerves about European banks and increased risk appeitte.

The bond aution also calmed worries earlier in the week about the European bank stress tests which had not fully disclosed some of the bank’s exposure to sovereign debt.

The dollar managed to reduce losses agains the euro after the Fed warned that economic growth is slowing.

The Federal Reserve's Beige Book, which gives a snapshot of economic conditions, suggested the US economy continued to grow between July to the end of August, but with "widespread signs of a deceleration".

The greenback recovered from a 15-year low against the yen with ongoing speculation that the Japanese government might intervention in the yen’s rise if the dollar moves closer to 80 yen.

Sterling recovered from a six-week low against the dollar after positive housing data encouraged a round of buying. House prices creeped higher in August, according to data from mortgage lender Halifax, confounding expectations of a decline.

Commodities

Oil gains slip on growth concerns

Crude oil futures pulled away from earlier highs after the Fed said economic growth is slowing. The Federal Reserve's Beige Book, which gives a snapshot of economic conditions, suggested the US economy continued to grow between July to the end of August, but with "widespread signs of a deceleration".

Crude oil for October delivery pared bigger gains to close 58 cents higher at $74.67 a barrel on the New York Mercantile Exchange.

Oil prices had risen to a session high of $75.39 a barrel after a Portuguese bond auction calmed nerves about European banks. However expectations that stockpiles will increase as demand deteriorates also capped bigger gains.

Oil and and fuel products are at the highest levels in 27 years and data from US Energy Department's Energy Information Administration are expected to show a 1m barrel rise in crude oil inventories in the last week.

Gasoline stocks are expected to have dropped 800,000 barrels while distillates, which include heating oil and diesel fuel, are expected to rise by 500,000 barrels. The data is out a day later than usual due to Monday’s holiday.

The American Petroleum Institute said on Wednesday that crude stockpiles fell by 7.3m barrels, gasoline stockpiles increased by 654,000 barrels and distillates rose by 1.3m barrels. Gold for December fell $1.80 at $1257.50 an ounce as demand for its safe haven qualities waned.


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US Market Reports
Gains clipped by close

Wall Street got off to a strong start today but eased back as as worries about the financial stability of European banks wouldn't go away even though the Portuguese government completed a successful debt offer.

Banks, such as JPMorgan Chase and Bank of America, are recovering and a lower dollar is helping resources companies.

The Dow Jones finished 46 ahead at 10,387. The S&P 500 was 7 higher at 1,098 and the Nasdaq added 19 at 2,228. The Nasdaq had been the strongest index in the latter part of the morning.

Oil giant BP blamed partners Halliburton and Transocean for contributing to the oil spill in the Gulf of Mexico earlier this year. The share prices of all three companies are rising.

Hewlett-Packard has slapped a lawsuit on Oracle in order to stop it employing Mark Hurd, HP’s former chief executive. However, a downgrade by UBS from neutral to buy is uppermost in the minds of investors.

Goldman Sachs has been fined £20m by the UK regulator the FSA for failing to tell it about the US fraud investigation earlier this year.

More routinely, the broker raised office supplies retailer Staples from neutral to buy. Rising steel prices are helping US Steel. JA Solar has announced supply agreements totalling 500MW of solar cells.

S&P 500 - Risers
New York Times Co. (NYT) $8.38 +7.99%
Priceline.Com Inc. (PCLN) $328.43 +5.42%
Huntington Bancshares Inc. (HBAN) $5.77 +5.29%
Regions Financial Corp. (RF) $6.88 +4.72%

S&P 500 - Fallers
Visa Inc. (V) $68.55 -4.13%
NiSource Inc. (NI) $16.93 -3.86%
Teradyne Inc. (TER) $9.30 -3.53%
Baxter International Inc. (BAX) $42.97 -3.18%

Dow Jones I.A - Risers
JP Morgan Chase & Co. (JPM) $39.12 +2.19%
Alcoa Inc. (AA) $11.07 +1.93%
Boeing Co. (BA) $64.50 +1.70%
General Electric Co. (GE) $15.69 +1.62%

Dow Jones I.A - Fallers
Hewlett-Packard Co. (HPQ) $38.81 -2.78%
Intel Corp. (INTC) $17.88 -1.32%
Travelers Company Inc. (TRV) $49.86 -0.54%
Microsoft Corp. (MSFT) $23.92 -0.17%


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Thursday newspaper round-up:
Barclays, Vodafone, BP

John Varley, Barclays’ outgoing chief executive, has shot to the top of the City’s wishlist for some of the biggest jobs in corporate Britain just a day after announcing that he will hand over to his deputy Bob Diamond in March. Prudential is seen as the most likely option for Mr Varley but Vodafone and BP are also possibilities, says the Times.

An Indian court has thrown out Vodafone's challenge to a tax ruling that could leave the mobile phone giant 120bn rupees (£1.7bn) out of pocket. The dispute centres on whether the British company owes tax to the Indian authorities following its $11.1bn acquisition of a controlling share in the local mobile network operator, Hutchison Essar, three years ago, reports the Independent.

The Herald reports on the reaction of companies that were working alongside BP at the Deepwater Horizon well in the Gulf of Mexico to the oil giant’s claim that they were also to blame for the explosion that resulted in 11 deaths and a huge oil spill. Transocean criticised BP’s report as “self-serving” and an attempt to conceal fatal flaws in BP’s well design and a number of mistakes in key decisions. Halliburton said in a statement that it found a number of omissions and inaccuracies in the report and was confident the work it did on the well met BP’s specifications.

Ireland is to break up the nationalised lender Anglo Irish Bank, hoping to end a disastrous saga that has shattered confidence in Irish finance and left taxpayers with daunting debt. The move came after yields on Irish 10-year bonds rose above 6pc for the first time since the launch of the euro, reports the Telegraph.

Foster's, the Australian brewer which is splitting up its wine and beer businesses, has rejected a A$2.7bn (£1.6bn) bid for the wine division as too low, sparking speculation a better offer will come in. The shares jumped on the news, as investors welcomed the fact that the struggling wine business had attracted the attention of a private equity firm, reports the Telegraph.

City firms are stepping up their efforts to block moves to break up Britain's high street banks as the appointment of Bob Diamond to take control of Barclays bank propelled banking reform back to the top of the political agenda. The Guardian says it has learned that industry leaders are furiously lobbying the Treasury and regulators not to break up the banks because of fears it would force them to move overseas.

The European Union risks prolonging the global economic downturn if its largest members insist on using austerity measures to cut their budget deficits, a leading economist has warned. Joseph Stiglitz, who won the Nobel Prize for Economics in 2001, said the use of deep spending cuts was a "disaster" adding that Europe was heading towards more economic difficulties if politicians cut back spending rather than calm down the financial markets, the Telegraph reports.