London close: Footsie down on the day, up on the week
London's leading shares had a torrid day as credit problems continued to perturb the market, but a mid-morning turnaround on Wall Street helped spark a rally in London that saw the Footsie recover enough to show a gain on the week.
Northern Rock crumbled by over 30% or so today as it issued a profit warning after having to seek emergency funding from the Bank of England last night.
The mortgage lender now expects an underlying 2007 pretax profit of £500m to £540m compared with previous estimates of about £650m. Northern Rock also cautioned it expected "consequential impact" on 2008 profit "given the slowing of asset growth resulting from the credit and liquidity turmoil." Alliance & Leicester, HBOS and Woolwich owner Barclays were all down in sympathy, though Alliance & Leicester's losses were trimmed just before the close as it disclosed that it is far less reliant on the financial markets for its funds than many of its peers.
At its EGM, Barclays boss John Varley moved to soothe fears about the bank's performance during the current credit market turmoil and its proposed €60bn acquisition of ABN Amro.
Damage limitation was also the name of the game at mortgage lender Paragon, At one point it was down nearly 25% but chief executive Nigel Terrington tried to reassure investors, in the wake of Northern Rock's profit warning, by saying that it was funded until the end of the year and did not need to go to the Bank of England. The shares responded to reduce the loss to around 17%.
The potential knock-on impact of higher mortgage rates and a funding crisis also spread to retailers and house-builders. Home Retail and Next were sharply lower on consumer spending worries while Barratt Developments, Taylor Wimpey, Persimmon and Bovis all got marked down severely.
Cadbury Schweppes could not buck the trend even though the FT reported it has turned down a second offer worth £6.4bn-£6.9bn from a private equity consortium for its drinks arm, making it likely the confectionery group will demerge its beverages business.
The share price of Scottish & Southern Energy fell, having started higher, as the energy company announced it is to invest up to £2.7m to acquire up to 40% of InSource Energy, a bio-waste to energy business created by the Carbon Trust.
Reed Elsevier was firm throughout the day, following an upgrade from Merrill Lynch based on the possibility of a merger with Wolters Kluwer.
Tour operator Holidaybreak said it expects to achieve a satisfactory outcome for the full year to 30 September. The group said it continues to perform well and expects to again deliver industry-leading margins.
Construction firm Costain has launched a 3-4 rights issue to raise £60m to enable it to capitalise on the opportunities available to it.
Set-top box maker Pace Micro reckons the outcome for the shortened 2007 year will be significantly ahead of its existing expectations, although 2008 revenues may not match 2007.
Vimto maker Nichols said discussion in relation to a possible offer have been terminated, adding that the group continues to trade well.
FTSE 100 - Risers
Reckitt Benckiser (RB.) 2,799.00p +1.49%
Reed Elsevier (REL) 608.00p +1.08%
Smiths Group (SMIN) 1,009.00p +0.60%
3i Group (III) 1,004.00p +0.30%
Kingfisher (KGF) 196.60p +0.20%
Rolls-Royce Group (RR.) 501.50p +0.20%
HSBC Holdings (HSBA) 888.00p +0.17%
Antofagasta (ANTO) 711.00p +0.14%
FTSE 100 - Fallers
Northern Rock (NRK) 438.00p -31.46%
Shire (SHP) 1,154.00p -7.38%
Alliance & Leicester (AL.) 873.00p -6.88%
Persimmon (PSN) 1,016.00p -6.62%
Barratt Developments (BDEV) 829.50p -4.71%
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Next (NXT) 1,920.00p -4.00%
Mitchells & Butlers (MAB) 619.00p -3.88%
Wolseley (WOS) 921.00p -3.86%
Schroders Nv (SDRC) 1,153.00p -3.84%
Land Securities Group (LAND) 1,669.00p -3.75%
FTSE 250 - Risers
Hochschild Mining (HOC) 345.25p +3.83%
Axon Group (AXO) 868.00p +2.54%
JKX Oil & Gas (JKX) 397.75p +2.25%
Dana Petroleum (DNX) 1,000.00p +1.94%
Tr Property Investment Sigma Shares (TRYS) 98.75p +1.80%
Burren Energy (BUR) 853.00p +1.79%
Shanks Group (SKS) 229.50p +1.55%
PZ Cussons (PZC) 165.00p +1.38%
Premier Oil (PMO) 1,006.00p +1.21%
Benfield Group (BFD) 280.75p +1.08%
FTSE 250 - Fallers
Paragon Group Of Companies (PAG) 298.00p -16.76%
Bradford & Bingley (BB.) 329.75p -7.70%
Bellway (BWY) 1,067.00p -7.54%
Galiform (GFRM) 126.25p -7.34%
Pendragon (PDG) 64.25p -7.22%
Michael Page International (MPI) 408.25p -6.95%
PartyGaming (PRTY) 24.50p -6.67%
Brown (N.) Group (BWNG) 256.25p -6.14%
SThree (STHR) 304.25p -5.95%
Rightmove (RMV) 550.00p -5.82%
