London open
City sources predict FTSE 100 will open down 5 points from its previous close of 5,045.
Stocks to watch
Royal Bank of Scotland is close to an agreement with the government over its proposed participation in the toxic asset protection scheme (APS) and also confirmed weekend reports it will have to divest some of its businesses to meet EU rules. The 70% state-owned bank said " It expects the agreement on the APS to reflect market improvements since February and RBS's ongoing recovery whilst giving protection against future potential stressed case losses".
Irish budget airline Ryanair warned that it may cancel existing orders if it does not agree a deal on new aircraft from Boeing as it reported an 80% increase in half year net profits. The group said talks with Boeing on an order for 200 aircraft for delivery between 2013 and 2016 had made ‘little progress’, adding it could end its relationship with the aircraft maker if talks are not completed before the year end.
Support services firm Babcock has bought nuclear site management UKAEA from the United Kingdom Atomic Energy Authority. Babcock has paid Ł38m for UKAEA, a company which generated Ł32m of revenue in the year to 31 March 2009.
Power solutions provider Chloride saw pre-tax profit in the year to 30 September tumble 41% to Ł10.4m from Ł17.6m a year earlier, on sales that edged up to Ł152.7m from Ł152.3m.
Data centre provider Telecity said revenue has been in line with management expectations in the second half of the year. All parts of the group are contributing to revenue growth, resulting in strong operating profit improvement, given that Telecity’s cost base is largely fixed.
In the Press
Lloyds Banking will on Tuesday unveil twin sweeteners to persuade existing bondholders to exchange their bonds for riskier investments that could convert into equity – the most innovative, and closely guarded, element of the part-nationalised bank’s Ł25bn recapitalisation programme, the FT writes. Alongside plans to raise up to Ł13.5bn in a deeply discounted rights issue to be revealed on Tuesday, Lloyds is aiming to raise Ł7.5bn of so-called contingent convertibles, or “Cocos”. These are bond financing that would count towards core tier one capital and convert into equity in a “stress scenario”.
The Times adds that the future of high street banking will change for ever this week as the Chancellor bows to pressure from Brussels and agrees to break up banks that are supported by the taxpayer. Alistair Darling is expected to announce tomorrow that Lloyds Banking Group and RBS will be stripped down and various parts sold to new owners, creating as many as three new institutions on the high street.
Reductions in food subsidies are among savings being sought by British Airways as part of a cost-cutting drive that could result in the airline being grounded by a cabin crew strike. The 20pc cutback is one of 16 changes in working terms and conditions for its 14,000-strong cabin crew being made by Britain's flag-carrier to save a further Ł140m as it prepares to post a record half-year, pre-tax loss estimated at around Ł250m, the Telegraph reports.
Newspaper tips (Sunday)
Topps Tiles shares were worth 300p in 2007. Now they are 82.25p. Brokers do not expect a dividend this year, but with so much stock in the hands of the two founding shareholders the company is likely to resume paying dividends as soon as practically possible. Topps is lean, well run and in a long-term growth sector. Buy and hold, says the Mail on Sunday.
It has been a good recession for H&T, the UK's leading pawnbroker chain. The group has been trading robustly, boosted in particular by a new line of business - small retail units in shopping malls where customers can sell gold jewellery for cash. Following reports of merger talks it may be worth holding more of the stock, says the Mail on Sunday.
Software group Autonomy may well buy another company this quarter or next, giving the shares another short-term boost, but that will not be proof of any long-term, sustainable growth. Sell says the Sunday Telegraph.
US close
Not a single blue chip could boast gains at the end of Friday’s session as indiscriminate selling knocked almost 250 points off the leading index.
The Dow Jones ended the day at 9,712, down 249 on the previous close, erasing all Thursday’s 199-point gain. The Nasdaq Composite tumbled 52 to 2,045 and the broader S&P 500 fell 29 points, or 2.8%, to 1,036.
Many experts think the much-talked about correction of as much as 15% could well be underway following a rally of more than 50% from March’s lows.
Financials, including Bank of America, JP Morgan Chase and American Express, were among the biggest fallers, while aluminium supplier Alcoa saw Thursday's improvement on the back of a potential Chinese deal reversed.
Sector RisersName Value % Change
Technology Hardware & Equipment 328.19 +1.1%
Forestry & Paper 3,633.18 +0.3%
Personal Goods 9,536.76 +0.2%
Electronic & Electrical Equipment 1,487.14 +0.2%
Beverages 7,395.92 +0.2%
Sector FallersName Value % Change
Mining 17,624.76 -4.6%
Oil Equipment & Services 15,411.22 -3.2%
Mobile Telecommunications 3,089.17 -3.1%
Life Insurance 3,702.69 -2.7%
Oil & Gas Producers 7,819.06 -2.7%
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