London-Pre-Market Report

Miners take profit hit

London open

City sources predict FTSE 100 will open down 27 points from previous close of 4,685


Stocks to Watch

There are reports that Blackstone is in exclusive talks with British Land to take a 50% stake in Broadgate, the landmark Ł2.5bn office development in the heart of the City of London.

Venture Production saw half-year profits slip 7% to Ł105.2m despite a 14% hike in revenue to Ł274.7m as lower realised prices and higher costs weighed. A slump in demand for commodities and weaker prices also sent profits plunging at ENRC, down 63% to $751m in the first half of 2009. The dividend is cut in half.

Drinks industry high-flyer Richard Burrows is to be the new chairman of British American Tobacco when Jan du Plessis steps down from the position on 1 November to focus on his role as chairman of Rio Tinto. Burrows is currently a non-executive director of Carlsberg.

In the Press

It's official: the recovery has begun – although recovery will be unpredictable and protracted, according to the International Monetary Fund's chief economist, writes the Telegraph. "The recovery has started," claims Olivier Blanchard in a paper to be published by the IMF on Wednesday.

A large part of Arcandor’s 53 per cent stake in Thomas Cook, the UK travel group, could be sold to institutional investors as early as next month as creditor banks of the insolvent German retailer try to claw back their loans, reports the FT.

The London division of Nomura is being sued for up to Ł90 million by a City headhunting firm for allegedly failing to pay fees associated with attracting star talent from Lehman Brothers, the US bank, amid its collapse last year, writes the Times.

Newspaper Tips

The experts say buy Mears, but put their target price at 260p, below its current level. With momentum strongly behind the equity markets as confidence slowly returns, The Independent suggests it is the wrong time to buy Mears. If the economy takes a turn for the worst, fill your boots, but if the steady stream of more encouraging news continues, it is probably worth putting your money into something a little racier. Avoid.

Fresnillo argues that the twin drivers — fundamental demand from industry and speculative investment by hoarders — will keep silver’s price buoyant over the next year. However, a glance at the price shows that it has decoupled from gold and in recent months has been more influenced by base metals. If you believe industrial recovery is imminent, Fresnillo is a good bet. If not, wait for weakness, recommends the Times.

James Fisher is likely to continue to expand my making small bolt on purchases and the shares are a buy for future growth, says the Telegraph.

US close

The Dow broke back above 9,200 just before lunch and stayed there for the rest of the session as investors soaked up stronger than expected earnings from Home Depot and Target.

Home Depot’s second-quarter adjusted results beat Wall Street's expectations. It also lifted its guidance for the full-year.

Retailer Target Corp also pleased with a better than expected profit of $594m, or 79 cents per share.

But economic news wasn’t quite so good. The annual rate of housing starts fell to 581,000 in July from 587,000 a month earlier. Analysts wanted 598,000. Building permits dropped to an annual rate of 560,000 last month from 570,000 in June and versus predictions for 576,000.

Producer prices, unveiled before the market opened, were also lower in July, down a bigger than forecast 0.9%.