Sector movers: Bearish outlook for banks
Banks are under pressure again today ahead of this week's interest rate decision, with sentiment soured by a bearish update on the sector by broker Morgan Stanley.
Northern Rock leads the banks down on reports that Treasury and Bank of England officials are drawing up contingency plans to pay Northern Rock's depositors their money if the stricken lender has to be put into administration. The plan would see the central bank buying Northern Rock's deposits and swiftly paying the balances back to customers.
Meanwhile Royal Bank of Scotland is markedly lower ahead of its eagerly awaited trading statement due later this week. Broker Morgan Stanley has initiated coverage of the stock with a price target of 420p, and recommends its clients be underweight in the stock.
Morgan Stanley is also down on Lloyds TSB, where it has a 495p price target, and Bradford & Bingley, where the price target has been cut to 345p from 385p.
In the mobile telecommunications sector Avanti Communications is holding on to yesterday's sharp gains which were secured on the back of the award of a 15-year contract to provide satellite capacity for IP networking solutions provider STM Group.
Avanti has sold STM 54 megahertz (Mhz) of satellite capacity on its HYLAS satellite which is due to be launched in 2009.
The contract is worth £8.75m and prices HYLAS capacity at €1.2m per transponder equivalent (2.5% of HYLAS capacity) or £900 per Mhz per month.
"'I am pleased to report that, as expected, we are converting our sales pipeline into a backlog of committed revenues in advance of the launch of HYLAS," said David Williams, Avanti's chief executive.
"We have growing confidence in our market and in the value of our satellite capacity, which we expect to reinforce with further contract wins soon," he added.
The shares have increased in value by more than a quarter in the last week.
Top performing sectors so far today
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Industrial Metals 6,876.30 +2.08%
Oil & Gas Producers 8,019.60 +0.26%
Mobile Telecommunications 4,124.90 +0.11%
Forestry & Paper 4,133.50 +0.07%
Gas, Water & Multiutilities 5,097.70 +0.05%
Bottom performing sectors so far today
Automobiles & Parts 4,686.80 -3.96%
Banks 8,819.50 -3.34%
Industrial Engineering 3,139.70 -3.07%
Electronic & Electrical Equipment 1,802.40 -2.99%
Technology Hardware & Equipment 271.70 -2.79%
