LONDON Midday Report(Tuesday, November 10, 2009)

London midday: Mixed fortunes for banks Despite a slew of company results to pick over the market continues to lack direction, though a good reception to results from index heavyweight HSBC helps underpin the FTSE 100’s positive showing. Banking titan HSBC said underlying third quarter profit was “significantly” ahead of the same time last year. It’s also seeing some stabilisation in its bad debts picture, especially in the US. In contrast, sector peer Barclays falls back even though it remains on course for a record-breaking year after third quarter profits came in close to market forecasts. For the three months to September, profits fell from Ł2.84bn to Ł1.56bn giving a nine-month total of Ł4.54bn (2008: Ł5,595m), a decrease year on year of 19% (Ł1,053m). Expectations about the performance of the high flying investment banking arm of Barclays may have been too high, however, and the shares are among the biggest fallers among Footsie constituents. Also on the slide is rescue case Lloyds Banking Group, which announced this morning that it is turfing another 5,000 workers on to the dole queue. The bank's insurance, retail mortgage and back office functions will bear the brunt of the latest cutbacks, with about 2,600 permanent jobs to go alongside temporary and contracting positions. Gold miner Randgold Resources is the biggest faller, however, after gold sales in the third quarter showed little or no increase from those seen in the second quarter. Sales of $103.5m were up 32% in the third quarter of last year. Profit for the quarter was $13.6m, down from $18.9m in the second quarter but a turnaround from last year when the third quarter saw a loss of $0.68m. The rest of the mining sector is not faring much better with Lonmin, Kazakhmys, Antofagasta, Xstrata and Fresnillo all looking battered. ENRC is another big faller after declaring its bid for Africa-focused miner CAMEC unconditional as to acceptance. Schroders is wanted following a smaller than expected 19% drop in third quarter profit. The fund manager made a profit before tax and exceptional items rose to Ł57.8m in the three months to 30 September. Funds under management were up 23% from the end of June to Ł138.9bn as net inflows hit Ł7bn. Imperial Tobacco is burning brighter after it boosted full-year profit before tax by 52% thanks to the acquisition of Franco-Spanish rival Altadis. The cigarette maker has also announced the departure of its CEO. Pre-tax profit for the 12 months ended 30 September jumped to Ł945m from Ł621m in 2008 on revenue up 29% to Ł26.52bn, reported the firm, best known for its Lambert & Butler cigarettes. Mobile phone network Vodafone is also lower, even after saying it traded in line with expectations during the first half of its fiscal year, raising revenue by over 9% and adjusted operating profit by 2.4%. It expects full-year profit to be between Ł11-11.8bn, but the shares are under pressure early on. International hotels group InterContinental Hotels continued to see revenue per available room (revPAR) slide in the third quarter. RevPAR in the third quarter of 2009 fell 15.2% at constant currency rates. ‘The trading environment remains challenging. We see signs of occupancy stabilising, but rate is still under considerable pressure across the board,’ said Andrew Cosslett, chief executive of the group. There are big gains for Yellow Pages group Yell. The mid-cap is raising Ł660m through the issue of 1.572bn new shares at 42p, much more than it originally indicated. Half of the money, Ł330m, will be raised through a firm placing while the remainder will come from a 1 for 1 placing and open offer. Engineer and ceramics group Cookson is also pushing higher. It expects trading profit this year will be at the upper end of market forecasts and near to Ł110m after a stronger than anticipated rally in sales over the past three months. Morgan Sindall is another riser. The forward order book has fallen slightly at the construction and regeneration group but it remains on track to hit 2009 targets. Northern Foods said like-for-like sales increased 2.9% in the half year, led by strong growth in its Chilled and Bakery division. In the 26 weeks ended 26 September 2009 profit from operations at the biscuits, pizzas and Christmas puddings maker rose 2% to Ł20.5m while total sales slipped to Ł466.9m from Ł468.6m the same period last year, reflecting 'mothballing of Fenland last year.' Sticking with the FTSE 250 stocks, Babcock International is in the doghouse after interim results came up short of expectations. The group, which maintains Britain’s submarine fleet, said pre-tax profit rose to Ł66.1m in the six months ended 30 September 2009 from Ł50.9m the previous year while revenue slipped to Ł923.0m from Ł940.6m. Online poker group 888 Holdings remains confident of hitting its target after third quarter operating income remain steady at second quarter levels. Total operating income in the third quarter was $61m, unchanged from the second quarter but down 10% from the third quarter of last year. FTSE 100 - Risers HSBC Holdings (HSBA) 722.20p +4.33% Imperial Tobacco Group (IMT) 1,894.00p +3.61% Diageo (DGE) 1,038.00p +2.77% Schroders NV (SDRC) 958.50p +2.73% Schroders (SDR) 1,175.00p +2.09% FTSE 100 - Fallers Randgold Resources (RRS) 4,525.00p -5.31% Lonmin (LMI) 1,564.00p -3.46% Barclays (BARC) 331.00p -3.46% Vodafone Group (VOD) 133.60p -3.15% Kazakhmys (KAZ) 1,246.00p -3.11%