Pre-Market Report - LONDON

Aviva cuts divi as profits fall

London open

City sources predict FTSE 100 will open up 27 points from its previous close of 4,647.

Stocks to watch


Insurer Aviva has cut its interim dividend by 31% and announced plans for a partial IPO of its Dutch business following a 14% drop in half year operating profit. IFRS operating profit fell to Ł1.05bn for the six months ended 30 June 2009 from Ł1.2bn in 2008, although profit after tax swung to a Ł747m profit from an Ł84m loss a year ago.

Broadcaster ITV posted a fall in revenues and continued losses in the six months to June 30 as advertising revenues slumped. Pre-tax profits for the period totalled Ł105m, compared with Ł1.53bn over the same period the previous year as revenue slipped to Ł909m from Ł1.03bn.

Food and household goods giant Unilever posted a fall in earnings as recession-hit shoppers cut back on branded products. While turnover at the maker of Surf washing powder and Knorr soups in the second quarter of 2009 climbed to €10.46bn from €10.37bn over the same period a year previously, pre-tax profits slipped to €1.20bn from €1.35bn.

Non-life insurer RSA said it continues to deliver “robust results” in challenging conditions as it saw net written premiums rise slightly in the half year. But although net written premiums rose 4% to Ł3.5bn, it fell 2% in constant exchange rates. Operating result was also down 11% to Ł392m, while pre-tax profit slumped to Ł301m from Ł395m before.



In the Press

ITV is set to sell Friends Reunited to DC Thomson, the Dundee-based publisher, for Ł25m – less than four years after the broadcaster bought the social network for Ł170m, reports the FT.

The worst of the recession is over, The National Institute for Economic and Social Research (NIESR) has said. NIESR said it hoped May would prove to be the trough of economic activity. “Output is stabilising and, in the absence of further shocks, the period of sharp recession is over,” writes the Telegraph.

A remarkable turnaround in the housing market and the wider economy appears to be under way. The Royal Institution of Chartered Surveyors (RICS) is now predicting that property prices will end 2009 higher than they started, and the Halifax house price index registered a rise of 1.1 per cent in July, a slight upward trend confirmed in other data from the Nationwide and the department of Communities and Local Government, reports the Independent.

Goldman Sachs traders made more than $100m in revenues on each of a record 46 days during the second quarter, while losing money on just two days, the bank said on Wednesday, in a filing that underscored the strength of its trading operations, reports the FT.

Newspaper tips

While a number of punters may wish to wait to see how Shire performs in the longer term, we would be encouraged that a number of analysts see the share price making substantial gains in the next year. Those at UBS, for example, say the stock will reach 1040p, while the company itself argues it is aiming for mid-teens growth for the next few years. Buy, says the Independent.

International Ferro Metals shares are trading on a June 2010 earnings multiple of 48 times, but this falls to just 6.7 in the following year. The share pays no dividend, so it is not suitable for investors focusing on income, but it offers great long-term growth prospects. This is one share to buy and tuck away, says the Telegraph.

It is impossible to argue that Patsystems is not doing well, and with more growth expected in the emerging markets and Asia, we would expect the full-year results in six months' time to be equally good. True, the shares are not cheap, but even if the stock stagnates in the coming months, the dividend will more than compensate. Buy, reports the Independent.

US close

US stocks closed down as some negative economic data prompted investors to pocket recent profits, but the mood improved a little in the afternoon and indices finished well above their lows for the day.

Across the markets, the Dow Jones closed down 39 at 9,280 with the Nasdaq sliding 18 points to 1,993. The S&P 500 was 2 points lower at 1,002.

Investors mulled two reports on the jobs market. Paycheck processor ADP, widely seen as a good front runner for the monthly non-farm payrolls number, showed a drop in the number of lay-offs to 371,000 in July, which was worse than a predicted. Earlier, outplacement firm Challenger said companies' planned job cuts rose 31% in July.

In other economic news, the Institute for Supply Management said business at service companies fell to 46.4 from 47 in June, while the Commerce Department said factory orders rose in June by 0.4% after a 1.1% increase in May.

In company news, US food and household goods giant Procter & Gamble posted lower profits in the three months to June 30 as cash-strapped consumers cut back on branded products such as Pringles crisps and Pampers nappies.

Sector Risers

Name	Value	% Change
Industrial Metals	4,839.34	+5.7%
Real Estate	1,863.82	+4.9%
Life Insurance	3,223.83	+2.4%
Travel & Leisure	3,540.66	+1.8%
Banks	4,634.87	+1.6%

Sector Fallers

Name	Value	% Change
Automobiles & Parts	2,571.87	-3.3%
Oil & Gas Producers	6,885.81	-2.7%
Household Goods	5,684.54	-2.0%
Electricity	6,069.28	-1.5%
Beverages	6,553.46	-1.4%