London Pre-Market Report

National Grid in £3.2bn cash call

London open

City sources predict FTSE 100 will open up 2 points from yesterday's close of 5,158.

Stocks to watch

National Grid has announced a 2 for 5 rights issue to raise around Ł3.2bn. The new shares are being issued at 335p. The cash call accompanied full year results that showed a 12% increase in pre-tax profit to Ł1,974m from Ł1,770m the year before.

South African brewer SABMiller reported improved full-year figures with Latin America driving growth in the company’s profits. EBITDA increased to $4,381m in the 12 months to 31 March from $4,129m on revenue of $26,350m, up from $25,302m.

International specialist bank and asset manager Investec announced improved earnings and substantially higher assets under management for the year to 31 March. Operating profit before tax rose 8.9% to Ł432.3m from Ł396.8m the year before while earnings attributable to shareholders climbed 15% to Ł309.7m from Ł269.2m.

In the Press

Final coalition agreement may include phasing a cut in the headline rate and alternatives to a sharp cut in the rate of capital allowances originally proposed by the Tories, reports the FT.

Chancellor wants most competitive corporate tax regime in G20 by cutting rates and reforming rules driving firms abroad, says the Telegraph.

The Times says the chancellor is expected to honour a Tory manifesto pledge to reduce the rate from 28 to 25 per cent in the Budget next month.

The chief executive of BP moved to reassure staff that their jobs, pensions and future were still safe yesterday as a new threat loomed over the company — the possible shutdown of another field in the Gulf of Mexico, writes the Times.

Fresh questions have been raised about Eric Daniels' position as chief executive of Lloyds Banking Group after it emerged that his chairman Sir Win Bischoff recently sounded out Lord Davies of Abersoch, previously the Government's trade minister and a former boss of Standard Chartered, for the role, reports the Telegraph.
Newspaper tips

The slow but steady nature of Caledonia’s returns will appeal to the very long-term investor, as will its record on dividends — that payout was raised yesterday, by 4.4 per cent, the 43rd year of successive advance. However, given the stock market’s recent slide, there are better bargains available elsewhere. Pass, says the Times.

Trading on a 2011 multiple of about of 8.5 times, Spectris is in line with its peer group, while the dividend yield, at an estimated 2.9 per cent this year, is solid but not incredible. We reckon that Spectris is a good company, but the best is probably over. So hold, recommends the Independent.

AngloPac offers low-risk exposure to a range of commodities, principally coking coal, gold and uranium in Australia, Canada and Brazil. It also books all its sales in US dollars, carries no debt and pays out a slug of its royalties in dividends, says the Times. At 247žp, or a 19 per cent discount to net assets, and providing a solid 3.6 per cent yield, tuck away.

US close

After early attempts to move into positive territory US stocks closed lower though there was an attempt at a rally near the close.

Worries about the global economy continued to dog the US indices after German chancellor Angela Merkel’s comments that Europe is facing its greatest crisis in decades and could see a possible collapse of the euro.

Dow Jones closed 66 points lower at 10,444. Nasdaq fell 18 points at 2,298. The S&P 500 was down 5 points to 1,115.

Merkel's comments followed a shock move last night by the German financial regulator BaFin to impose a ban on short-selling of European bonds, credit default swaps and ten of Germany’s biggest financial groups. The ban will run until 31 March 2011.

Exporters, such as Caterpillar, 3M and Boeing, are lower on concerns about global demand.

UBS says that Visa and Mastercard have been oversold following last week’s US Senate vote to curb debit card fees.