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London Market Reports
Footsie back above 6,000

UK blue chips have raced away this morning led by the banks as the government caved in on the issue of bonuses.

As a trade-off for no additional taxes on the expected £7bn of UK bonuses this year, the banks are in talks to raise their business lending by 10%, or £20bn, to £200bn. Shares in Barclays, HSBC, Lloyds and RBS are all sharply higher.

Marks and Spencer saw group sales rise 4% in the final quarter of 2010. Like for like (LFL) UK sales were up 2.8%, with general merchandise sales up 3.8% and food sales 1.8% higher. Marks estimates the snow trimmed about 1% off food sales and 3% off general merchandise. Earnings guidance for the current financial year remains unchanged. Market consensus is for £723m on sales of £9.77bn.

US shopping mall giant Simon Property has dropped its indicative bid for Capital Shopping Centres but will still vote against the 'deeply unattractive' acquisition of Manchester's Trafford Centre. Simon had proposed a bid of 425p per share for the shopping centre group, but this was conditional on being given access to the books. After the CSC board repeatedly refused this, Simon says it had no option but to withdraw. The Takeover Panel had given it a deadline of until 12 January to make an offer.

Arm Holdings is going well again after a bout of profit taking after its ground-breaking deal with Microsoft last week. Wolseley is also going well.

Property giant British Land is to purchase Marble Arch House in London’s West End. The company is paying the present owners, The Portman Estate, £18m for the development site, which currently consists of two mixed use five story buildings on the corner of Seymour Street and the Edgware Road.

Bedding and home furnishings retailer Dunelm had a tough time during the run up to Christmas, damaging sales and profits, while rising costs and consumer demand remain a concern. LFL sales for the 26 weeks to 1 January slipped 1.2% as a 4.2% tumble in the second quarter cancelled growth of 2.1% in the first three months of the financial year. It’s also cautious about the UK consumer environment and in its expectations for second half trading.

Having raised market expectations back in November, Howden Joinery did so again on Tuesday after it put in a strong finish to 2010. In the period from 4 October to 25 December, total sales of Howden Joinery UK depots were over 6% higher than in the corresponding period in 2009, if the benefit of an additional day's trading in the 2010 pre-Christmas week is excluded.

Support services and construction group Interserve said it is trading in line with expectations after a strong second half and announced it had won a series of contracts worth around £500m.

Bluetooth chip specialist CSR has agreed to pay $67.5m to settle with US firm Broadcom in the patent infringement case brought against its subsidiary SiRF. Terms of the settlement will see CSR pay an initial sum of $5m plus $12.5m for the next five years. CSR expects ongoing legal fees will be reduced by at least $10m per annum as a result of the settlement.

IT services provider Computacenter said pre-tax profit for 2010 is expected to be towards the top end of the range of market expectations as demand continues to pick up.

Hard pressed Gulf of Mexico-focused oil firm Leed Petroleum saw net attributable production tumble in the final quarter of 2010.

Market Movers
techMARK 1,879.10 +0.65%
FTSE 100 6,005.43 +0.82%
FTSE 250 11,639.61 +0.56%

FTSE 100 - Risers
ARM Holdings (ARM) 495.40p +6.54%
Wolseley (WOS) 2,151.00p +4.57%
Barclays (BARC) 286.60p +3.58%
Serco Group (SRP) 565.00p +2.73%
HSBC Holdings (HSBA) 687.60p +2.26%

FTSE 100 - Fallers
Capital Shopping Centres Group (CSCG) 378.00p -3.69%
Smith & Nephew (SN.) 689.50p -3.16%
Marks & Spencer Group (MKS) 379.40p -1.20%
GlaxoSmithKline (GSK) 1,227.00p -0.57%
National Grid (NG.) 562.00p -0.53%
Vodafone Group (VOD) 175.90p -0.51%
Kingfisher (KGF) 261.10p -0.42%
Severn Trent (SVT) 1,459.00p -0.14%
Standard Chartered (STAN) 1,713.00p -0.12%
International Power (IPR) 420.80p -0.05%

FTSE 250 - Risers
CSR (CSR) 392.50p +10.25%
Howden Joinery Group (HWDN) 115.00p +9.00%
DS Smith (SMDS) 214.60p +5.09%
Jupiter Fund Management (JUP) 317.20p +4.51%
Hochschild Mining (HOC) 577.50p +3.77%
Keller Group (KLR) 679.00p +3.74%
Ashtead Group (AHT) 172.60p +3.73%
Kenmare Resources (KMR) 29.95p +3.28%
Travis Perkins (TPK) 1,068.00p +2.99%
PartyGaming (PRTY) 210.80p +2.83%

FTSE 250 - Fallers
Dunelm Group (DNLM) 495.00p -6.16%
COLT Group SA (COLT) 130.80p -2.39%
Premier Farnell (PFL) 296.00p -1.89%
Michael Page International (MPI) 518.50p -1.71%
Mcbride (MCB) 161.50p -1.34%
Misys (MSY) 325.90p -1.24%
F&C Asset Management (FCAM) 87.80p -1.18%
F&C Commercial Property Trust Ltd. (FCPT) 102.30p -1.16%
TalkTalk Telecom Group (TALK) 160.10p -1.11%
Hargreaves Lansdown (HL.) 562.00p -1.06%

FTSE TechMARK - Risers
Optos (OPTS) 209.00p +8.85%
Oxford Biomedica (OXB) 5.70p +2.70%
Axis-Shield (ASD) 276.50p +2.41%
ProStrakan Group (PSK) 117.00p +1.52%
Kofax (KFX) 315.00p +1.37%
Sinclair Pharma (SPH) 41.00p +1.23%
Phytopharm (PYM) 8.79p +0.92%
Phoenix IT Group (PNX) 281.00p +0.90%
KCOM Group (KCOM) 59.00p +0.85%
Dialight (DIA) 563.00p +0.81%

FTSE TechMARK - Fallers
Asterand (ATD) 16.50p -1.49%
Alterian (ALN) 203.25p -0.85%
Wolfson Microelectronics (WLF) 294.25p -0.84%
CML Microsystems (CML) 166.50p -0.60%
Biocompatibles International (BII) 386.00p -0.13%
Corin Group (CRG) 53.50p 0.00%
Innovation Group (TIG) 15.00p 0.00%
Triad Group (TRD) 19.50p 0.00%
Parity Group (PTY) 18.25p 0.00%
Antisoma (ASM) 6.20p 0.00%


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UK Event Calendar
INTERIM DIVIDEND PAYMENT DATE
Dods Group , TR Property Inv Trust, TR Property Inv Trust Sigma Shares, Whitbread, Wincanton

QUARTERLY PAYMENT DATE
Africa Opportunity Fund Ltd.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Money Supply (JPN)
Current Account (JPN)
Trade Balance (JPN)
Bank of France Business Sentiment (FRA) (07:30)
NFIB Small Business Optimism (US) (12:30)
Wholesale Inventories (US) (15:00)
ABC Consumer Confidence (US) (22:00)

UK ECONOMIC ANNOUNCEMENTS
BRC Retail Sales Monitor (00:01)
RICS House Price Balance (00:01)

GMS
Asset Management Investment Co, Chrysalis, Davenham Group

FINALS
IDOX

EGMS
Foresight 4 VCT, Greenwich Loan Income Fund Ltd.

AGMS
Baronsmead VCT, Baronsmead VCT 2, Carr's Milling Industries, Debenhams, Topps Tiles

TRADING ANNOUNCEMENTS
Computacenter, Dunelm, Marks & Spencer, Signet Jewelers Ltd.

FINAL DIVIDEND PAYMENT DATE
RSM Tenon Group, Sportingbet, Waterman Group


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European Market Reports
Japan's bond support calms markets

The announcement by Japan’s Finance Minister Yoshihiko Noda that his country should play its part in boosting confidence in the bonds issued by the European Financial Stability Facility (EFSF) has alleviated fears about sovereign debt contagion, and lured investors back to equity markets.

A day after Portuguese bond yields hit new highs, Noda said Japan is contemplating “buying more than 20% of the amount" of EFSF securities to be issued in the initial round.

The news perked up the euro against the Japanese yen and brought some calm to stock markets, after US markets closed lower overnight following disappointing fourth quarter earnings from aluminium producer, Alcoa – traditionally the first blue-chip to report in the US earnings season.

The DAX index in Germany is up 18 at 6,875 and the CAC in France is 14 points better at 3,816. Spain’s IBEX rises 29 points to 9,467 but Portugal’s PSI General slides 44 points to 2,630.

In corporate news, Air Berlin said passenger traffic in December rose 3.3% to 2.29m from a year earlier.

Italian car giant Fiat has thrown its hat into the ring as a potential buyer of the stakes held by Volkswagen (VW) in MAN SE and Scania AB, should VW put the holdings up for sale.

Speaking at the Detroit auto show yesterday Fiat’s chief executive officer Sergio Marchionne said “we are potentially acquirers, if Volkswagen wants to divest its truck assets.”

Meanwhile, Daimler, the world’s biggest truck maker, has upped its stake in Mitsubishi Fuso Truck & Bus to 89.3% from 85%, at a cost of 30bn yen.

Europe’s largest engineering company, Siemens, is on track to hit its full year targets after profit in the final three months of 2010 – the first quarter of the company’s financial year – topped performance in the equivalent period of 2009.

German retailer Metro failed to meet market expectations with its fourth quarter sales update, but remains confident 2010 earnings will be on target.

Bad weather put a dent in sales, which rose 1.6% from a year earlier to €19.7bn in the final three months of 2010. Analysts had been expecting a figure north of €20bn.

Nivea skin cream maker Beiersdorf also underwhelmed the market with a trading update. Net income in 2010 fell 19% to about €308m from €380m in 2009, versus expectations of net income of €361m.

Excluding the costs of writedowns and reorganizing, profit rose 7.6 percent to about 409m. Revenue rose 7.7% to €6.19bn.

CAC 40 - Risers
Alstom (ALO) € 36.16 +3.31%
Saint Gobain (SGO) € 38.51 +2.39%
Accor (AC) € 34.53 +2.04%
Credit Agricole (ACA) € 9.57 +1.83%
EADS (EAD) € 19.49 +1.70%
ST Microelectronics (STM) € 8.39 +1.44%
Air Liquide (AI) € 92.27 +1.42%
Alcatel-Lucent (ALU) € 2.28 +1.24%
L'Oreal (OR) € 83.56 +1.16%
BNP Paribas (BNP) € 47.81 +1.05%

CAC 40 - Fallers
EDF (EDF) € 30.49 -1.12%
Cap Gemini (CAP) € 34.15 -1.07%
Unibail-Rodamco (UL) € 138.40 -0.90%
Technip (TEC) € 72.29 -0.45%
Carrefour (CA) € 31.92 -0.42%
Publicis Groupe Sa (PUB) € 37.26 -0.33%
Schneider Electric (SU) € 113.20 -0.31%
Suez Environnement Company (SEV) € 14.89 -0.27%
Sanofi-Aventis (SAN) € 48.79 -0.24%
France Telecom (FTE) € 15.65 -0.19%


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US Market Reports
Alcoa sets upbeat earnings tone

US stocks fell as Europe’s sovereign debt crisis reared its head again, with the attention now focused on Portugal and Belgium.

Portugal’s president Aníbal Cavaco Silva has been forced to deny the country is ready to accept an €80bn (£66bn) bail-out, though many think it’s only a matter of time.

The Dow Jones, which has fallen for the last two sessions, ended the day down 37 points at 11,637. Nasdaq Composite rose 4 at 2,707 while the broad-based S&P 500 shed 1 at 1,269.

After hours, aluminium producer Alcoa kicked off the fourth quarter results season with its highest quarterly earnings in more than two years.

Earnings per share came in at 24c on income of $258m. "We exceeded all of our targets and continued to build momentum," said Klaus Kleinfeld, Alcoa chairman and CEO. "We delivered all-time record cash from operations, record fourth-quarter free cash flow, improved earnings, grew revenue and paid down debt."

Alcoa's fourth-quarter revenue was $5.7bn, up 7% compared to the third quarter, attributed to higher alumina and aluminum prices. "In 2011, we see aluminum growing another 12% on top of last year's 13% improvement," Kleinfeld added.

Food giant Sara Lee edged ahead as talk does the rounds that a gaggle of private equity firms including Apollo Global Management are circling. Power company Duke Energy is paying $13.7bn in stock for Progress Energy, though both companies are nursing losses.

Chemicals giant DuPont is digging deep to finance the $5.8bn cash acquisition of Danish enzyme and food ingredients firm Danisco. Playboy Enterprises shot up after it emerged that its founder Hugh Hefner is taking the adult entertainment group private in a deal that values it at $177m.


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Newspaper Round-up
Bonuses, BSkyB, Goldman Sachs...

Downing Street pulled back yesterday from tough regulation of City bonuses and rejected a tax raid on banks in a move that will be seen as further blow to Vince Cable.

Bankers may be asked to be more open about their multimillion-pound bonuses but will not face a windfall tax or curbs on pay after the Conservative-led coalition decided to back the Square Mile. Ministers are resigned to weeks of embarrassment from the banking sector but stressed that there was very little political gain from fighting over every penny given in bonuses, the Times reports.

Senior executives of News Corp are seeking meetings with the ministry responsible for clearing or blocking its attempt to take full control of British Sky Broadcasting in the clearest indication so far that regulators have recommended a six-month investigation of the proposed bid. News Corp cancelled an appearance before MPs from the House of Commons select committee, due on Wednesday, because the company has received its copy of an initial report from Ofcom, the broadcasting regulator, according to documents seen by the Financial Times.

American money market funds have aggressively cut back their dealings with the eurozone’s financial services sector amid fears that the sovereign debt crisis could infect the region’s banking system. David Glocke, head of taxable money-market funds at Vanguard Group, said that his firm’s $109 billion prime fund was not directly exposed to banks in countries such as Germany, France, Italy and Spain after adjusting its strategy during the past year, the Times reports.

The eurozone's debt crisis is once again in danger of spiralling out of control after yields on Portuguese debt spiked to a post-EMU high and contagion hit Spain and Belgium. The European Central Bank (ECB) intervened heavily in the markets, buying Greek, Irish and Portuguese bonds to drive down yields again, but has yet to broaden its emergency purchases to a fresh set of countries. Germany's Bundesbank is vehemently opposed to policy "creep" that involves the ECB in fiscal rescues by the backdoor, the Telegraph reports.

PetroChina is to take a 50% stake in two of Europe’s biggest oil refineries in a joint venture with Ineos, the British chemicals group. The deal will give the state oil producer joint control of Ineos’s giant Grangemouth refinery in Scotland and another at Lavera in the South of France. As part of the deal, Ineos, Britain’s biggest private company by turnover, will receive a cash injection from PetroChina that will significantly cut its €7bn (£5.8bn) debt pile, the Times reports.

Goldman Sachs plans to disclose more than it has ever done about how it makes money in an effort to end the barrage of public criticism it has had since the financial crisis. The overhaul of how it reports its results is one of a series of changes the investment bank is making following an internal review by a committee headed by two of its most senior executives, the Telegraph reports.

Oil prices rose and BP shares fell last night amid nervousness about the leak that caused the shutdown of the Trans Alaska Pipeline, the supply route for more than 10 per cent of US crude oil. BP, which is still recovering from the fallout of the devastating Gulf of Mexico oil spill over the summer, is the biggest shareholder in Alyeska Pipeline Service Company, the operator of the 800-mile long system which carries oil from Alaska's Prudhoe Bay field, the Independent reports.