London afternoon: Blue chips stage recovery
An early three figure rally in the US following a better than expected inflation report has helped drag London out of a post-lunch trough, with miners still the pick of the bunch.
Comments by BHP Billiton's chief executive that he has not ruled out an increased bid for rival miner Rio Tinto sparked buying across the mining sector.
Speaking in an interview on the CNBC television network, BHP's chief executive Marius Kloppers said "we can't rule out anything" when asked whether the company would consider adding cash to its all-share offer for Rio Tinto. Anglo American, Vedanta Resources and Antofagasta are all up in sympathy.
Eurasian Natural Resource is top of the pile though after the Kazakh-based natural resources firm said it has seen a very significant increase in first quarter revenue. HSBC started coverage with a 'neutral' stance and 1,300p price target.
But banks are limiting the recovery, with mortgage lender Bradford & Bingley confirming it is to raise around £300m, net of expenses, in a 16 for 25 rights issue at 82p. This represents a 36% discount to the theoretical ex-rights price and a 48% discount to the closing price last night.
HBOS, Alliance & Leicester and Barclays are amongst the major fallers. Elsewhere, RBS chairman Tom McKillop told shareholders at the meeting to vote on its proposed record £12bn rights issue that it should be able to afford a dividend equal to 45% of earnings going forward.
Supermarket giant J Sainsbury reported a 28% rise in full-year pre-tax profits, but said it expects the market to remain "intensely competitive".
Rail and bus outfit FirstGroup is to raise up to £260m with the issue of 43.7m shares, 10% of those currently in issue. The final price has yet to set. Adjusted operating profit for the year to March was up nearly 40% at £360m.
Contract caterer Compass beat broker forecasts with a 29% rise in first-half profit to £289m. "Balance sheet efficiency remains a priority and looking forward, we are confident about the second half of the year and the future potential for the business," it said.
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Land Securities swung to a full-year pre-tax loss after a revaluation deficit on its investment properties of £888.8m in the year ended 31 March, Basic net asset value per share fell 10.3% to 2067p. The group's investment portfolio valuation is down 8.8%.
A sharp drop in sales has slashed almost half a billion pounds off the forward order book of Barratt Developments. Its forward order book currently stands at about £1.56bn versus £2.1bn a year ago following a 7.6% slide in revenues to £825m during the 19 weeks to 11 May. It admitted that cancellation rates have increased over the last six weeks. Sector peer Persimmon fell in sympathy.
Software group LogicaCMG's first quarter revenue rose 3.6% on a pro forma basis to £856m (2007: £826m), with March impacted by the effect of an earlier Easter. For the first four months of 2008, revenue was up 6.0% on a pro forma constant currency basis.
Local newspaper publisher Johnston Press is to raise £212m through a deep discount right issue and share subscription by Malaysian group Usaha Tegas after a slump in advertising revenues in the past four months.
WPP said it is disappointed that market research group Taylor Nelson (TNS) has rejected the advertising giant's revised 164p per share offer.
Shares in sofa retailer ScS Upholstery plunged after it warned that continued difficult market conditions will result in full year earnings being below current market forecast
Absolute Capital rallied strongly Wednesday as the hedge fund manager disclosed details of the demerger of its Argo business.
Allergy Therapeutics soared by a quarter in early trading after the hay fever treatment group said phase III trials revealed Pollinex Quattro has statistically significant clinical benefits over a placebo.
South African based IT services and solutions provider Dimension Data revealed a 58.6% hike in first half pre-tax profit as demand for its services booms.
