LONDON Pre-Market Report 13th May

London open

City sources predict FTSE 100 will open up 46 points from previous close of 5,383.

Stocks to Watch

Supermarket Sainsbury’s posted a rise in sales and profits in the year to March 20 and said it was confident of further progress despite expectations of a challenging consumer spending environment. Underlying pre-tax profit of Ł610m was slightly ahead of expectations and up from Ł519m a year ago. Sales rose to Ł21.4bn from Ł20.4bn and grew 4.3% on a like-for-like basis excluding fuel.

Telecoms giant BT returned to the black in the last quarter and the full year and reported a 6% rise in the dividend. Pre-tax profit hit Ł1.01bn in the year to 31 March versus a loss of Ł244m before. In the final quarter, pre-tax profit came to Ł251m compared with a loss of Ł1.31bn previously. FY revenue fell slightly to Ł20.91bn. For 2010/11, revenue is seen at around Ł20bn and operating cost savings of around Ł900m.

Chiefs at ENRC are pleased with the Kazak miner’s progress during the first quarter and say the recovery in demand, especially in China, continue to give it confidence for 2010. Revenue for the three months to 31 March “increased significantly” on the year before, reflecting higher production and sales volumes in the ferroalloys and iron ore divisions and the addition of copper and cobalt sales.

In the Press Prudential hopes to launch its delayed $21bn (Ł14bn) rights issue early next week after agreeing to changes to the financing of its propoosed $35.5bn takeover of AIA, the Asian businesses of the stricken US insurer AIG, according to the FT. Britain's giant lenders are facing the threat of extinction after the new coalition Government pledged to establish an independent commission to decide whether to break up the banks. The commission was the centrepiece of the Conservative and Liberal Democrat agreement on banking reform, which included a pledge to introduce an extra tax on the industry and "robust action to tackle unacceptable bonuses", says the Telegraph. The European Commission hopes that a radical shake-up of the rules governing the eurozone will be enough to prevent the single currency area facing further Greek-style debt crises in the future. Under proposals submitted yesterday by Mr Barroso, and Olli Rehn, the EU's monetary affairs commissioner, governments of eurozone countries would have to submit their budgets for inspection each year, writes the Independent. Newspaper Tips Competition for land in the South — towards which Barratt Developments has tilted its axis — is getting fierce, and the impact of deficit-reduction measures in a country in which one in five works for the State is unclear. At 123źp, up 6žp, there should be better times to buy, according to the Times. The betting must be that there are few people who can claim to have ever met a farmer who says business is booming, but an update yesterday from animal breeding outfit Genus would suggest otherwise. The company said that it had traded in line with expectations during the first four months of the year, and that in some markets, particularly Latin America and China, sales of products such as dairy semen, of all things, was booming. The Independent would argue that Genus has been somewhat overlooked by the market and that the recent high marks from analysts will boost the stock. Buy. Full-year gas production at Centrica is expected to be about 300bn cubic feet equivalent. Gas and oil volumes produced in the first quarter were 59pc higher than in 2009, reflecting the output form the purchase of Venture. The company is also a solid yield play. The current prospective yield for this is year is 4.7pc, rising to 5pc in 2011. This is well worth having. Trading on a December 2010 earnings multiple of 12.4 times, falling to 11.4 next year, the shares are a buy, says the Telegraph. US close US stocks made good progress on optimism that European governments will be able to handle the region’s debt problems, lowering the threat of a crisis spreading to the global economy. Spain has become the latest eurozone country to unveil drastic new measures to cut its deficit and ease concerns that the problems afflicting Greece may spread. Spain’s Prime Minister Jose Luis Rodriguez Zapatero on Wednesday announced cuts in civil service wages, pensions, social welfare spending and investment. Under the new measures, civil service pay will be slashed by 5% this year and frozen in 2011, while an earlier decision to increase pensions next year has been reversed. Subsidies for new parents will be scrapped and public investment will be reduced by €6bn between 2010 and 2011. The new steps are designed to lower the deficit to 9.3% of GDP this year and to 6.5% in 2011, down from 11.2% in 2009. After the bell, internet hardware group Cisco Systems posted a 63% rise in fiscal third-quarter profit to $2.2bn from a year earlier. Underlying earnings were 42c per share, beating analyst estimates of 39c per share. Sales climbed 27% to $10.4bn and also topped analysts' expectations.

Sector Risers

Name	Value	% Change
Industrial Metals & Mining	5,855.85	+4.6%
Personal Goods	12,509.57	+3.7%
Life Insurance	3,623.72	+3.5%
Construction & Materials	3,653.34	+3.5%
Aerospace & Defence	3,370.92	+3.3%

Sector Fallers

Name	Value	% Change
Food Producers	4,931.86	-0.5%