London close: Rates optimism quickly fades
A rally sparked by a quarter point cut in interest rates quickly fizzled out to leave Footsie down by the close with housebuilders and consumer groups the worst affected.
Interest rate cuts should be good for the housing sector, but housebuilder Persimmon closed the day as the worst performer. Barratt was another in the red as both reacted to rival Bellway's gloomy statement about prospects for 2008.
It says demand is now being affected by a lack of consumer confidence and the economy generally. Since 16 October reservations have fallen below last year's levels and for the four months ended 30 November were 7% lower than the same period last year.
DIY retailers and miners were also under the cosh. B&Q owners Kingfisher, Home Retail, owner of Argos and Homebase, slipped as investors reckoned it will take more than a quarter point cut to galvanise the UK housing market.
Weaker metal prices depressed miners, with Rio Tinto and Vedanta Resources among the biggest losers.
The banking sector was cheered by a trading update from Royal Bank of Scotland which revealed write-downs as a result of exposure to US sub-prime montages totalled only £1.25bn. Many analysts had forecast much larger write-downs, with some having talked of a figure nearer £2bn.
The company also said operating profit, excluding the net positive impact of the write-downs and gains, is still expected to be comfortably ahead of the consensus forecast of £9.78bn.
New Footsie entrant LSE was another gainer, while Northern Rock stopped the rot of the last few days and rallied a few pence on talk that the PM is keen to see the troubled bank sold off rather than become state-owned.
Rolls-Royce has received another order for its Trent 700 engines from Cathay Pacific to power an additional eight Airbus A330 twinjets.
Elsewhere, a surge in online sales in the US helped components distributor Premier Farnell lift third quarter profits by 10% to a better than expected £17.1m, with more progress forecast for the remainder of the year.
Insurer Hiscox has agreed to sell its third party fund management arm, Hiscox Investment Management Ltd, to management, creating an independent investment management company.
Fashion retailer Alexon has warned slowing sales will mean it misses profit forecasts for the full year. Pre-tax profits are now forecast in a range between £11.5m to £12.5m. Like-for-like sales in the eighteen weeks ended 1 December 2007 are 7% down on the prior year with a sharp downturn recently. Gross margins in the period were 1.7% higher than last year.
European online casino and poker group Gaming VC reckons full year profits will beat forecasts thanks to additional sportsbook revenue since the Maltese operation was launched in August. Meanwhile, computer games retailer Game Group continues to benefit from yesterday's clearance of its bid for Game Station.
Shares in IT services firm RDF Group lost almost a quarter of their value on Thursday morning as interim results proved worse than feared, but losses have since been substantially trimmed.
Legacy software specialist Micro Focus loses ground, even though it lifted underlying interim profits by 31% to $41.7m to October, boosted by organic growth and acquisitions. Revenue is up 38% to $108.9m and the group expects second half revenues to be broadly similar to those of the first half.
Sector peer Computerland is also lower after its results. The IT support services saw profits growth constrained by lingering problems in its hardware maintenance business.
Shares in Bionostics surged after the medical diagnostics group said it had recommended a 30p per share offer from NAV LLP.
Sanderson Group edged ahead after the software and IT services provider posted a 6% increase in full year adjusted operating profit and said it has made a good start to the new financial year.
Adept Telecom advanced despite announcing reduced interim pre-tax profits of £0.22m, down from £0.42m, with investors preferring to focus on the company's three-year agreement with The Carphone Warehouse Group to migrate AdEPT customers on to the 21st Century Network of Opal Telecom, the business to business division of Carphone Warehouse.
Business software provider Touchstone Group was punished after announcing a slide in first half pre-tax profits from £1.1m to £0.77m.
FTSE 100 - Risers
London Stock Exchange Group (LSE) 1,870.00p +3.72%
Friends Provident (FP.) 163.30p +3.68%
Smith & Nephew (SN.) 589.00p +3.51%
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Northern Rock (NRK) 103.00p +3.00%
Punch Taverns (PUB) 816.00p +2.77%
Royal Bank of Scotland Group (RBS) 478.50p +2.74%
FTSE 100 - Fallers
Persimmon (PSN) 750.50p -5.72%
Kingfisher (KGF) 151.10p -4.55%
Barratt Developments (BDEV) 448.25p -4.17%
Home Retail Group (HOME) 350.75p -3.51%
DSG International (DSGI) 111.50p -3.46%
Experian Group (EXPN) 413.00p -3.28%
FTSE 250 - Risers
eaga (EAGA) 178.50p +14.79%
PV Crystalox Solar (PVCS) 135.75p +6.89%
Game Group (GMG) 222.50p +6.46%
Rank Group (RNK) 105.25p +5.25%
Brit Insurance Holding (BRE) 243.75p +5.06%
Mondi (MNDI) 417.75p +5.03%
FTSE 250 - Fallers
COLT Telecom Group S.A. (COLT) 185.25p -10.07%
Berkeley Group Holdings Units (BKG) 1,251.00p -6.50%
Micro Focus International Plc (MCRO) 283.50p -5.50%
Debenhams (DEB) 85.00p -4.76%
Johnston Press (JPR) 246.00p -4.09%
TUI Travel (TT.) 255.50p -3.86%
