London close: Footsie lower on rollercoaster day
London ended a rollercoaster day in the red as reassuring statements from a number of heavyweights were overshadowed by a late dip by the miners.
Northern Rock led the way for most of the day. It upped its interim dividend by 30% after first half underlying profits rose by 27% to £347m. The mortgage lender echoed its recent profit warning by stating that higher interest rates were squeezing margins and would hit the full year figures, but analysts suggested the recent fall in the shares had gone far enough.
Merrill Lynch repeated 'buy' advice and 1,130p price target as it says the company offers a mix of earnings delivery, yield and valuation attractions.
GlaxoSmithKline also picked up as it unveiled a £12bn share buyback alongside a second quarter pre-tax profit of £1.9bn, unchanged from last year's equivalent, on turnover down 2% to £5.67bn. Sales in the US dropped 2% to £2.3bn, hurt by continued generic competition and a decline in sales of diabetes drug Avandia. AstraZeneca piggy backed higher.
News that Rolls-Royce has signed a 10-year submarine support contract with the UK Ministry of Defence worth £1bn sent shares in the aero-engine giant north Wednesday.
Household good giant Reckitt Benckiser succumbed despite another superb set of quarterly figures prompting it to raise its forecasts again for the full year. Net income rose by a third to £216m in the three months to June, well above forecasts. Half year net income jumped 30% to £395m.
In M&A news, life insurers Friends Provident and Resolution have agreed the terms of a recommended all-share merger to create Friends Financial, valuing the combined business at £8.6bn. Fund management arm F&C will maintain a separate listing.
Index heavyweight Vodafone is enjoying gains, a day after successfully fending off an attempt by rebel shareholders to force it to spin off its $50bn stake in Verizon Wireless.
HSBC has also improved following recent heavy falls on concerns about its exposure to the troubled US sub-prime mortgage market.
Meanwhile, miners fell back after a mild attempt at a rally.Antofagasta, Rio Tinto and Xstrata were all off colour.
Nuclear power supplier British Energy was the biggest faller as Goldman Sachs cut its price target on the shares.
Down a division, electricals retailer Kesa has acquired EMH, a Spanish specialist electrical retailer, from funds controlled by Impala Capital Partners and the Perez family for €100m cash together with the assumption of net debt. EMH reported revenue of €271m and underlying earnings of €17m in the year to March.
Engineering firm Renishaw posted a big slide in underlying profits last year as currencies and difficulties in the CMM market combined, but a forecast of 10% sales growth rallied the shares.
Wireless bluetooth group CSR tumbled as it predicted a weaker than expected increase in third quarter revenues followed by a dip in the final three month period.
Wallpaper group Walker Greenbank says trading in the first half of the year has been materially ahead of internal projections, with all key business units performing strongly. "We enter the second half of the financial year with a high degree of confidence," it added.
FTSE 100 - Risers
GlaxoSmithKline (GSK) 1,275.00p +2.33%
Northern Rock (NRK) 817.00p +1.87%
BT Group (BT.A) 328.25p +1.78%
British American Tobacco (BATS) 1,643.00p +1.36%
Reuters Group (RTR) 635.00p +1.28%
BAE Systems (BA.) 435.25p +1.10%
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FTSE 100 - Fallers
British Energy Group (BGY) 482.50p -5.21%
Rio Tinto (RIO) 3,590.00p -3.65%
Home Retail Group (HOME) 411.75p -3.63%
Whitbread (WTB) 1,750.00p -3.58%
Antofagasta (ANTO) 723.00p -3.47%
Barclays (BARC) 715.00p -3.18%
FTSE 250 - Risers
Renishaw (RSW) 684.00p +14.00%
Sports Direct International (SPD) 154.00p +4.76%
Carphone Warehouse Group (CPW) 353.00p +4.05%
International Personal Finance (IPF) 245.00p +2.83%
Close Brothers Group (CBG) 845.00p +2.05%
Autonomy Corporation (AU.) 843.00p +1.32%
FTSE 250 - Fallers
CSR (CSR) 770.50p -11.28%
Daejan Holdings (DJAN) 3,886.00p -5.75%
SThree (STHR) 451.75p -5.44%
Michael Page International (MPI) 543.00p -5.24%
Collins Stewart (CLST) 219.00p -5.19%
EMI Group (EMI) 247.75p -5.17%
