LONDON Market Open Report: Footsie up for second day

Date: Thursday 27 May 2010

China’s denial that it is cutting its holdings of euro zone sovereign debt has sent London’s leading index up over 1%, taking gains since Tuesday’s low of 4,898 to more than 200 points.

Just a handful of blue chips have turned red. Insurers Aviva and Prudential lead the way, followed by hedge fund manager Man Group, which published full-year results this morning.

Miners have also enjoyed a profitable start to the session. BHP Billiton, Vedanta Resources and Rio Tinto are ahead, as are oil giants BG, BP and Tullow.

In the news Thursday are sugar and sweeteners giant Tate & Lyle is to mothball its Fort Dodge plant in a move which put a £217m dent in full year profits, as the company announced a new focus on its Speciality Food ingredients business. Adjusted pre-tax profit eased to £229m in the year to 31 March from £247m the year before. Sales dipped to £3,506m from £3,553m while net debt was cut to £814m from £1,231m.

Hedge fund manager Man Group has confirmed plans to halve the dividend for the current financial year after reporting a 27% slump in profit for the year just ended. The company, which last week agreed to buy New York-listed rival GLG Partners for $1.6bn, posted a profit before tax of $541m for the year to 31 March, down from $743m in 2009.

BP confirmed this morning that "top kill" operations at its leaking MC252 well in the Gulf of Mexico began last night at 1900 BST and are ongoing. It should take two days to complete operations, but US politicians will want minute-by-minute updates.

Military researcher QinetiQ posted a pre-tax annual loss and suspended its dividend for twelve months after it was hit by a delay in orders. After what the group called a 'difficult year' with disappointing sales and weaker margins, new boss Leo Quinn said the group will undertake a two-year programme to restructure and reposition the business.

Telecoms firm Cable & Wireless said it has been a “challenging year” as it faced difficult condition in the Caribbean. The group, which split into two in March, posted pre-tax profits of $383m from $394m on revenues of $2.34bn against $2.44bn.

Sportswear retailer JJB Sports said like-for-like sales revenue in the first quarter was 7.5% higher than last year. The group also said John Clare, who has been the interim chairman since David Jones stepped down in January, will assume the role permanently, effective immediately. Total group revenue was 15% lower.

Iron ore producer Ferrexpo said sales demand this year has been very strong while the company has seen significant increases in average pellet prices. The company expects iron ore pellet prices will remain well above 2009 levels for the remainder of this year, while profitability should also be boosted by ongoing improvements in operating efficiency, notwithstanding higher cost pressures.

Payment services provider PayPoint said profit in 2010 declined 5.7% but is trading in line with company forecasts this financial year. The group, which bought payments by mobile phone company PayByPhone in March, said pre-tax profit declined to £32.6m in the year ended 28 March 2010 from £34.6m the year earlier. Revenue for the period dropped to £196.6m from £224.4m.

Media Square, the international marketing communications firm, slumped into losses for the year due to writedowns. The group posted pre-tax losses of £20.8m from profit of £1m the previous year after exceptional items of £19.1m. The group said because of the recession certain businesses could no longer justify their goodwill carrying value.

Engineer Weir Group and Mitsubishi Heavy Industries has signed a cooperation agreement to jointly develop activities in the UK nuclear new build market under the brand WEIR-MHI. Under the joint cooperation agreement, MHI will design and manufacture nuclear pumps for nuclear power generation and pumping equipment.