LONDON Pre-Market Report

9th December 2009 London open City sources predict FTSE 100 will open down 14 points from yesterday’s close of 5,223. Stocks to watch BHP Billiton has sold its Ravensthorpe nickel mine in Western Australia to Canada’s First Quantum Minerals for US$340m. The London-listed company said it expects the sale of the $2bn mine, mothballed in January following a slump in the price of nickel and high cost of production, to be finalised in the first quarter of 2010. Philip Pascall, chairman and CEO of Toronto and London-listed First Quantum, said he is committed to re-starting Ravensthorpe “within a realistic timeframe”. Easyjet chief executive Andy Harrison is to stand down from the no-frills airline next June. In a statement, Easyjet said Harrison had indicated his desire to leave the company in order to seek new challenges. He joined Easyjet as chief executive on 1 December 2005 having previously been at Lex Service as chief executive. Pre-tax profits fell by more than a quarter at Stagecoach in the six months to October 31 after the rail and bus group was squeezed by reduced demand from recession hit travellers and high fuel costs. Profit before taxation fell to Ł75.5m from Ł105.2m the previous year as revenues edged up to Ł1.08m from Ł1.05m. Like-for-like revenues climbed by 4.4% in the UK bus division, but in North America fell by 6.5% excluding the company’s inter-city Megabus operations. In the Press Britain faces a "fiscal crisis" and is no longer "resistant" to the prospect of a humiliating and damaging debt downgrade, Moody's has warned. In an acutely embarrassing blow for Alistair Darling only hours before today's pre-Budget report, the ratings agency said that Britain faces the threat of a debt spiral unless drastic action is taken to rebuild the public finances. Within four years almost 10p in every pound of tax paid by British families and companies will go straight towards interest payments on the national debt, even in an optimistic scenario, the agency said, the Telegraph reports. Alistair Darling will admit today that Britain faces an era of deep spending cuts as he pledges to halve the Ł180bn budget deficit while protecting hospital, school and police services. In a surprise move he will disclose a Treasury “assessment” that has been conducted in recent weeks to determine the sums needed to safeguard the front line in health, schools and the Home Office, the Times reports. A handful of senior traders in a Royal Bank of Scotland joint venture are set to share a bonus pool of more than $40m (Ł25m) this year. Details of the payments are likely to provoke new anger about pay in the financial sector. The Government has been trying desperately to prevent a possible bumper bonus round this year and may use today’s Pre-Budget Report to announce a tax on bonuses, the Times reports. The credit downgrades of Dubai’s government-owned companies have triggered an accelerated payment clause on a $2bn debt issued by the emirate’s utilities provider. Dubai Electricity and Water Authority’s $2bn securitisation programme, Thor Asset Purchase Company, an instrument originally maturing in 2036, may have to be redeemed in full on December 14 – the day Dubai World’s property developer, Nakheel, is due to redeem a $4bn Islamic bond, or sukuk, the FT reports. Newspaper tips Tesco's UK like-for-like sales growth was not that impressive, but its overseas business is starting to take up the slack. Same-store sales in the UK increased by just 2.8%, with total group sales, excluding petrol, up 8.8%. After the shares recent strong run they could now pause for breath but, because of the longer-term prospects for its financial services business and international expansion, the stance remains buy and Tesco remains the Telegraph’s favoured UK supermarket play. Kazakhstan-based mining group Eurasian Natural Resources Corp (ENRC) is mainly a play on iron ore and ferrochrome, both of which are used in steel production. Chinese steel output is expected to rise next year, underpinning its markets. The mining sector has fallen sharply this week as the dollar strengthened, but this should be regarded as a buying opportunity. The outlook for the mining sector is positive and, with dollar weakness likely to continue next year, the outlook for commodity prices is upbeat. Trading on a December 2009 earnings multiple of 19, falling to 11.2 next year and just nine in 2011, shares in ENRC remain a buy says the Telegraph. Shares in van and car renter Northgate — which have more than doubled since July’s recapitalisation — are one of the more geared plays on the wider economy. However, the lack of a dividend and a still-high level of net debt (some Ł706m, more than twice Northgate’s stock market value) provide little incentive to pile in. At 237p, or 11 times earnings, avoid says the Times. US close US shares had a tough day on contagion concerns about the Greek and Dubai economies, which were amplified by poor company news. Dow Jones closed down 104 at 10,285. Nasdaq shed 16 at 2,172, while the S&P 500 gave up 11 at 1,091. Greece’s financial woes are taking centre stage. Ratings agency Fitch downgraded its outlook on Greece by one rating to 'negative'. Fitch cut Greece's debt to BBB+ with a negative outlook. ‘The downgrade reflects concerns over the medium-term outlook for public finances given the weak credibility of fiscal institutions and the policy framework in Greece, exacerbated by uncertainty over the prospects for a balanced and sustained economic recovery,’ it said. The news comes after fellow ratings agency Standard & Poor's warned the Mediterranean country last night that it may have its credit rating cut. S&P put the Greece's debt on notice for an imminent downgrade amid growing concerns about the government's ability to bring public finances under control. Fears about sovereign debt defaults re-emerged as the problems in Dubai burst into life again, while there was a weak manufacturing survey in Europe and Japan approved $81bn in a new attempt to stimulate its economy. Elsewhere, McDonald's was among the worst performers on the Dow following a 0.6% drop in like for like sales at American stores in November, the second consecutive monthly decline. Guidance that 2009 earnings will be between $4.50 and $4.55 a share had 3M on the slide as analysts wanted about $4.57 a share. It is also cautious about 2010. Supermarket chain Kroger reported worse than expected third quarter figures and dragged down the share price of fellow supermarket groups Safeway and Supervalu. These were the three worst performers in the S&P 500. Delivery firm FedEx has increased its second quarter earnings forecast from 95c to 110c.

Sector Risers

Name	Value	% Change
Technology Hardware & Equipment	335.63	+1.0%
Health Care Equipment & Services	3,336.53	+0.2%
Real Estate	1,958.11	+0.0%

Sector Fallers

Name	Value	% Change
Automobiles & Parts	2,527.45	-3.0%
Chemicals	4,341.25	-3.0%
Forestry & Paper	3,609.48	-2.9%
Mining	20,219.35	-2.8%
Banks	4,686.20	-2.7%