LONDON Market Open Report (11.11. 2009, 10:18 )

London open: Stocks advance early on

Buyers have piled into mining heavyweights again as metal prices continue to surge, while trading updates and results give International Power and Sainsbury’s a boost.

Sainsbury’s has posted a healthy rise in profits in the 28 weeks to October 3, but repeated a warning that lower food price inflation will affect growth in the second half. Pre-tax profits rose to Ł342m from Ł258m, ahead of expectations, while like-for-like sales excluding fuel climbed 5.7%, up from 3.9% a year ago.

Miners are behind much of the move. Randgold has had positive press comment following yesterday’s results, while rising metal prices have helped Kazakhmys, Rio Tinto and BHP Billiton.

Power generator International Power is going well on news it expects earnings to be “broadly” in line with last year, as a better than expected performance in Europe and Australia offsets weakness in the US.

But electricity provider Scottish & Southern Energy has fallen back despite posting a 36% increase in half-year adjusted pre-tax profit to Ł410.5m as revenue fell 12.5% to Ł8.04bn.

Reed Elsevier is also unloved. Chief executive Ian Smith has resigned as the publisher says its key professional information businesses have not escaped the downturn, while advertising and promotion markets are badly hit.

Tullow Oil is still performing “strongly” though. The oil and gas group said it’s trading in line with expectations and has maintained production guidance for the year of 58,000 barrels of oil equivalent per day.

Among the mid-caps, Micro Focus’s two recent acquisitions, Borland and Compuware, have performed much better than expected and the legacy software specialist has upped its forecasts for both interim sales and underlying profits. After a “strong close to the first half” the group now expects to report total revenues of approximately $195m, up from $135.6m, while underlying profits will also be above expectations.

Bus and train group National Express has slumped though as it confirmed plans to raise Ł360m from a fully underwritten rights issue at 105p a share in an effort to slash its debt burden. Shareholders will get the chance to buy 7 new share for every 3 shares held at the rights price, a 69% discount to last night’s closing price.

Recruitment group Hays reports early signs of “stability” in the United Kingdom and broader signs of stability in Asia Pacific, but no indications of recovery in either market, while Europe continues to decline, albeit more slowly than before.

Bus group Stagecoach has been ordered to divest its Preston Bus business after the Competition Commission decided this was the best way to safeguard local passenger interests.

Johnston Press, which publishes local and regional newspapers including the Scotsman and the Yorkshire Post, said trends in the advertising market were continuing to improve following a sharp downturn. In the last 10 weeks ad revenues fell 19.1%, meaning that the first 18 weeks of the second half of the year saw a total advertising decline of 22.1%. This compares with a fall of 32.7% in the first half.

Aviation and distribution group John Menzies said it expects full-year results to now be "well above" current market expectations, despite continued tough trading conditions.