LONDON -Pre-Market Report

RBS makes small profit

London open

City sources predict FTSE 100 will open 17 points lower from yesterday's close of 4,690.

Stocks to watch

RBS has turned last year’s big half-year pre-tax loss into a small profit, although bad debts rocketed to Ł7.5bn. Profit before tax, excluding the write-down of goodwill and other intangible assets came in at Ł15m versus a Ł726m loss a year ago. Boss Stephen Hester called the results “poor” following a jump in losses attributable to shareholders to Ł1.04bn from Ł827m in 2008.

Logica saw profits surge 85% in the first half and said its cost saving programme will ensure it maintains margin for the year. Lower exceptional items and finance costs helped pre-tax profit for the six months to rise to Ł24m against Ł13m before. Group revenue was in line with guidance at Ł1,876m, up 6% on a reported basis, but down 2% proforma.

Sports Direct's acquisition of 31 stores from rival JJB is to be investigated by the Competition Commission after the sportswear group failed to sell five stores identified by the Office of Fair Trading as a competition concern.

In the Press

Energy companies have been called on by Ofgem, the regulator, to explain why their retail prices have not fallen further, given the steep drop in wholesale gas and electricity prices over the past year. Ofgem on Thursday published a letter from Alistair Buchanan, its chief executive, to the heads of the 'big six' energy suppliers, including British Gas, Eon and EDF, warning them that 'in a strong competitive market, we would expect prices to respond to such falls,' the FT reports.

Hank Greenberg, the former chairman of American International Group, on Thursday agreed to pay $15m to settle the US Securities and Exchange Commission’s investigation into his role in accounting fraud at the company from 2000 to 2005. The settlement focuses on Mr Greenberg’s alleged involvement in “numerous improper accounting transactions” that inflated AIG’s results, the FT reports.

The most senior British executive at TNK-BP, the British oil group’s Russian joint venture, is set to leave this autumn for personal reasons, the company announced yesterday. Timothy Summers, TNK-BP’s chief operating officer and a former employee of BP, will step down in mid-October. He will be replaced at the joint venture by Bill Schrader, president of BP Azerbaijan, the Times reports.

Newspaper tips

The long-term case for Unilever is that it has the highest emerging market exposure of its peers — about 50% of sales — and so will benefit as deodorant, detergent and salad dressings become staples for more of the world’s population. Yesterday’s numbers show recovery from years of underperformance has farther to run. At Ł16.29, or 13 times 2010 earnings, buy says the Times.

Although Gem Diamonds is likely to be loss-making in 2009 and the outlook for the rest of the year is far from certain, it appears that the market really has now bottomed out. Most of its Ellendale mine is on care and maintenance, but the real reason to own the shares is Letseng. The shares are now just 13pc below their initial recommendation price and improving prospects means the shares are now a buy, up from hold says the Telegraph.

Schroders, the investment management group, was founded in 1804 and in that time has had its fair share of ups and downs. The message coming from current chief executive Michael Dobson is that the dark days of February and March are behind the group, and as long as market conditions keep gradually improving, Schroders is in for a fine time. Caution is still needed, but the Independent would now be a backer of Schroders stock. Buy.

US close

US stocks stayed subdued throughout the day despite better news on US jobs, with fewer people than expected claiming unemployment benefits for the first time last week.

Across the markets, the Dow Jones was down 24 points to 9,256 with Nasdaq 19 points lower at 1,973. The S&P 500 was down 5 points at 997.

Labor Department figures showed initial jobless claims at 550,000 in the week ended 1 August, 38,000 less than the previous week’s upwardly revised 588,000.

Sector Risers

Name	Value	% Change
Banks	4,879.15	+5.3%
Real Estate	1,943.42	+4.3%
Food Producers	4,024.67	+3.6%
Industrial Transportation	1,780.05	+3.1%
Industrial Engineering	3,114.90	+2.4%

Sector Fallers

Name	Value	% Change
Forestry & Paper	2,898.57	-1.4%
Gas, Water & Multiutilities	3,392.95	-1.2%
Mining	16,313.24	-1.0%
Electricity	6,020.63	-0.8%
Software & Computer Services	499.40	-0.6%