Pre-Market Report - LONDON

BHP says demand for commodities mixed London open City sources predict FTSE 100 will open up 7 points from yesterday's close of 4,481. Stocks to watch The underlying trend for metals demand is still being masked by restocking activity, according to BHP Billiton, and demand for commodities generally is mixed as China has rebuilt its stocks. "The 2009 financial year proved to be very challenging, with significant demand contraction exacerbated by dramatic movements in inventory levels," the miner said in its latest annual production update. Engineer GKN has received the backing of 95.4% of shareholders for its Ł423m fundraising. Over 807m of the shares available through the fully underwritten 6 for 5 rights issue at 50p were taken up. JP Morgan Cazenove and UBS will now seek a home for the 39m unwanted shares. Just over 91% of shareholders at Marston’s have backed the brewer and pub owner’s Ł176m fully underwritten 11 for 10 cash call at 59p. The firm has been criticised for earmarking the money to finance expansion rather than reduce its Ł1.2bn debt pile. In the Press The cash eaten up by interest payments on Government debt will more than double in the next four years as investors take fright at Britain's ballooning budget deficit, the country's leading independent forecaster has warned. Within four years, almost 9p in every pound of tax paid by British individuals and companies will be spent directly on servicing the Government's debt, rather than on services. The National Institute of Economic and Social Research said that costs of servicing government debt will rise from Ł25.6bn this fiscal year to Ł50.7bn in 2013/14, reports the Telegraph. Sir David Jones, the executive chairman of JJB Sports, held sensitive talks about company business with Mike Ashley, his rival, when his secret Ł1.5m personal loan from Mr Ashley could have been called in. Sir David met Mr Ashley, the Sports Direct founder, in late February to discuss the severance package of Chris Ronnie, JJB’s suspended chief executive, who is a close friend and former employee of Mr Ashley, the Times has learnt. Barclays and Royal Bank of Scotland will have to find billions of pounds more capital if they are to continue growing their investment banks under new rules designed to protect against the higher risks of "casino" banking. According to JP Morgan, Barclays will need to find another Ł12.8bn and RBS Ł8.5bn to meet new capital rules under a reformed regulatory regime. Officials hope to implement the changes from the end of 2010, though Carla Antunes da Silva, banks analyst at JP Morgan, said the date may be delayed if the economy is not in recovery, the Telegraph reports. Newspaper tips Increasing unemployment could be a real problem for the high street and Next. Chief executive Simon Wolfson disagrees, arguing that the rate of joblessness is not increasing and neither unemployment, nor concerns about swine flu, has had any affect on the group's sales season. Even so, hold for now says the Independent. If Britain still has an industrial bellwether, Brammer is probably as close as it gets. This small-cap company distributes components used to maintain production lines — bearings, belts, clutches and couplings — and, as such, remains a closely tracked barometer of factory output. At 113˝p, or six times earnings, and yielding 6.8%, the gloom is largely priced in. A speculative buy says the Times. Rolls-Royce is the UK's largest exporter and should continue to benefit from a re-rating of the pound to a lower level compared with other currencies. The shares are trading on a December 2009 earnings multiple of 11.4 and yielding 3.8%, which does not appear to be overstretched. The stance on the shares remains buy at these levels says the Telegraph. US close Better than expected earnings from a host of big names outweighed cautious comments from Federal Reserve chairman Ben Bernanke to leave blue chips up again. Across the markets, the Dow Jones closed up 67 at 8,915, while the broad-based S&P 500 added 3 at 954 and the tech-stacked Nasdaq Composite gained 6 at 1,916. After hours, Apple improved the mood further by posting record third quarter results. The iPhone maker's earnings jumped to $1.23 per share on revenue 12% higher at $8.34bn. Both totals were well ahead of market estimates. Other numbers were also impressive. The group sold 2.6m Macs, up by 4%, 5.24m iPhones, up 626%, though iPod sales fell 7% to 10.2m. Margins also rose overall. Apple added it expects revenue of between $8.7 and $8.9bn and EPS between $1.18 and $1.23 in the current three months. In his testimony on America's economic outlook and monetary policy, Bernanke warned that unemployment would remain higher than preferred levels into 2012. "I want to be clear we have a very long haul here," he said. "Unemployment will stay high for quite some time. It's not going to feel like a very strong economy." “Financial conditions remain stressed, and many households and businesses are finding credit difficult to obtain,” added Bernanke.

Sector Risers

Name	Value	% Change
Automobiles & Parts	2,069.19	+7.3%
Mining	15,205.37	+2.8%
Food & Drug Retailers	4,364.65	+2.7%
Personal Goods	8,027.08	+2.6%
Life Insurance	3,060.50	+2.2%

Sector Fallers

Name	Value	% Change
Electricity	6,124.48	-1.3%
Banks	4,090.62	-0.7%
General Retailers	1,513.92	-0.5%
Fixed Line Telecommunications	1,672.06	-0.4%
Gas, Water & Multiutilities	3,585.13	-0.4%