LONDON Market Open Report(Monday, November 16, 2009)

London open: Winning start to week

Mining heavyweights head the pack Monday, notching up strong gains on record gold prices and demand for other metals.

Randgold is top of the pile after gold hit a new record high. Rio Tinto, Xstrata and Kazakhmys are also riding high. EvenLonmin is better despite reporting a full-year loss.

The South African platinum miner fell into the red in the year to September 30 as prices for the precious metal slumped in line with the global economic downturn. The firm reported a pre-tax loss of $272m for the period, compared with a profit of $779m a year ago, as revenue fell to $1,062m from $2,231m. It will not pay a final dividend.

Anglo American, another riser, has strengthened its management team again, with the appointment of former Barrick Gold vice chairman Jack Thompson as a non-executive director. The 59-year-old was vice chairman at Barrick, the world’s largest pure gold mining company, from 2001 to 2005, and also worked for Newmont Mining. He joins RBS chairman Sir Philip Hampton, appointed as a non-exec at Anglo last week.

Part-nationalised banks Lloyds and RBS are the biggest fallers. Investors have also sold supermarkets Sainsbury’s andTesco on news that smaller rivals are stealing market share.

But Rolls-Royce is attracting attention after it won orders for its Trent engines from Air China and Ethiopian Airlines worth a combined $2bn (Ł1.2bn). Its Trent 700 engines will power 20 Air China Airbus A330 planes, bringing in $1.5bn to Rolls. Ethiopian Airlines has ordered Trent XWB engines worth $480m to power 12 Airbus A350s.

United Utilities has agreed the disposal of its 15% investment in Northern Gas Networks Holdings to its other owners for a cash consideration of Ł85.75m. Completion of the transaction is expected by the end of 2009.

Leading housebuilder Persimmon has started to buy sizeable parcels of land again as sales have recovered to the point where it is fully sold this year, while orders for 2010 are up 50%. Since August 2009, trading activity levels have continued ahead of last year and the buiilder expects to legally complete 9,000 homes in 2009. It remains concerned about the potential impact of any significant increase in unemployment, but overall trading has improved.

Domino's Pizza is to return Ł19m cash that is surplus to requirement back to shareholders though a tender offer for 6m shares at 317p. Four directors will take part in the tender in respect of their own shareholdings. They include chief executive Stephen Hemsley; Colin Halpern; Christopher Moore; and Nigel Wray. Brokers Numis and Altium are handling the tender offer.

Aim-listed wine retailer Majestic Wine served up a 9% increase in half year pre-tax profit while like for like sales rose 5.4%. Pre-tax profit rose to Ł6.1m for the 26 weeks ended 28 September 2009 from Ł5.6m. Total sales were up Ł12.6m to Ł106.7m after including Ł6m from Lay & Wheeler, the fine wine specialist, which it bought in March 2009.

Pork products supplier Cranswick posted a sharp rise in profits in the half year to September 30, helped by its acquisition of the pork processing activities of food group Bowes of Norfolk and organic growth. Pre-tax profits from continued operations before exceptional costs climbed to Ł21.3m from Ł17.5 m as revenues jumped to Ł355.6m from Ł298.7m. The Bowes acquisition accounted for 7% of the 19% rise in turnover.

Interserve, the services, maintenance and building group, has traded in line with expectations since the end of June and just won a place on the Ł4bn Partnerships for Schools (PfS) national Contractors' Framework.

Profits growth slowed sharply over the past six months at online fashion retailer ASOS, though sales continued to bound ahead. Pre-tax profits to September came in at Ł4.4m, up 9%, on sales 47% higher at Ł96.5m. ASOS blamed the reduction in margins to 44.6% (from 48.3% in H1 2008/09) on increased sourcing costs, an extra sale period during the first half and a change in the branded product/own-label mix.

An absence of major catastrophe claims and rising premiums contributed to an 'outstanding' quarter for underwriter Amlinwith the group on course for an 'excellent' year. Performance in the first ten months of the year has been excellent, Amlin said, with profitability enhanced by a 52% increase in premium to Ł1.37bn, low claims incidence, further run off profits from reserves and a strong investment performance.