London open City sources predict FTSE
Stock to watch
Builders merchant Travis Perkins is in advanced discussions with BSS Group which could lead to a cash and shares offer for the distributor of equipment for plumbers worth £553m. The indicative offer is made up of 232.91p in cash, 0.2608 new Travis Perkins shares per BSS share and the payment of BSS's final dividend for the year to 31 March 2010 of 6.09p a share.
Water group Severn Trent lifted its full year dividend by 7.4% after an uplift in revenues and cost-cutting measures brought about a sharp rise in profits in the year to March 31. Underlying pre-tax profits rose to £338.4m from £273.5m the previous year, on revenues that climbed to £1.704bn from £1.642bn.
BP says it won’t know if the ‘top kill’ procedure to plug the oil leak in the Gulf of Mexico has worked for another 24 to 48 hours, but in the meantime the costs keep rising, up to $930m (£639m) so far. The oil company started the top kill option, which involves pumping massive amounts of mud and cement into the well at high pressure, on Wednesday night.
In the Press
Prudential was frantically renegotiating its $35bn bid for AIA last night in the face of growing shareholder opposition to the deal. The UK’s biggest insurer is thought to be trying to cut the price it must pay for AIG’s Asian arm to less than $30bn. Tidjane Thiam, the Pru’s chief executive who has been wooing American investors, is believed to be directly involved in the talks, the Times reports.
The FT added that the AIG board and the US government had yet to decide whether to accept a reduced price or scrap the deal and revert to their original plan of listing AIA in Hong Kong. “It is a close call,” a person familiar with the US Treasury’s thinking said. “There is less than a 50/50 chance that the deal with Pru gets done. It is easy for us to go forward with an initial public offering when market conditions permit."
President Obama launched a ferocious attack on BP and the oil industry yesterday as what is now officially the worst spill in US history threatened to derail his presidency. Obama cancelled or suspended dozens of offshore drilling projects and condemned a “scandalously close relationship” between oil companies and government regulators. "“As far as I’m concerned, BP is responsible for this horrific disaster, and we will hold them fully accountable on behalf of the United States as well as the people and communities victimised by this tragedy, he said,” the Times reports.
Newspaper tips
Man, the hedge fund group which recently announced plans to acquire US peer GLG Partners, lured the bulls with an impressive set of full-year results yesterday. The shares surged by more than 10% per cent on news that funds under management, despite being hit by the weakness in the euro, were broadly unchanged from the levels seen at the end of March. The fear is that if Europe's problems escalate, financials of all stripes could be caught in the crossfire as investors flee to safe havens. So, hold for now says the Independent.
In the words of its new chief executive, Keith Jones, yesterday, JJB "faced a fight for survival" last year, although a series of restructuring measures safeguarded its future. But JJB has restocked its shelves, including its World Cup and seasonal ranges. In addition to next month's football extravaganza in South Africa, JJB will also receive a huge boost from the 2012 Olympics. JJB is worth backing. Buy says the Independent. The Times adds it's a buy for flag wavers.
Instead of focusing on volatile sugar, in future Tate & Lyle will be focusing on its value-added ingredients business, prices of which are less exposed to sharp moves in commodity markets. This gives more reliable – and hopefully larger – margins over the next few years. The shares are trading on a March 2011 earnings multiple of 10 times, falling to 9.1 in 2012. The shares remain a hold for the yield says the Telegraph.US close
Wall Street built on its early strength to close with good gains as investors breathed a sigh of relief at China’s reassurance that it will continue to invest in Europe despite the troubles plaguing the continent.
The Labor Department's weekly report showed initial claims for unemployment benefits fell 14,000 to 460,000, down from 471,000 the previous week.
That provided some cheer as economic growth was shown to be weaker than expected. The government's revised reading on first-quarter gross domestic product came in at 3%, below expectations of 3.3%. The first reading was 3.2%.
Investors focused on a statement on the web site of China’s State Administration of Foreign Exchange, which reaffirmed the country’s commitment to investing in Europe.
Across the markets, the Dow
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