Wall Street rode to the rescue of London equities today as a strong morning session in the US revived spirits in London to the extent that, once the effect of ex-dividend stocks was stripped out, the UK blue-chip index closed little changed.There was nothing the strong showing on Wall Street could do to help banks, however, which remained out of favour. Lloydsand Royal Bank of Scotland were hard hit after JP Morgan suggested that the government may announce plans to sell of its stakes in the part-nationalised banks when it holds its first Budget on 22 June.
Barclays was also lower after it said its TAV unit has made a recommended cash offer to buy Stockholm-listed carbon developer Tricorona for about Ł98m. The deal, which is expected to complete in the third quarter of 2010, would be accretive to Barclays earnings within one year from completion.
BP mirrored the market and virtually wiped out the losses of the morning. The UK company, which has seen over Ł40bn wiped off its value since mid-April, is facing increasing anger over the spill, the biggest in American history.
US Attorney-General Eric Holder said last night the FBI and other federal agencies will conduct a criminal and civil investigation into the environmental catastrophe that threatens the livelihoods of thousands along the Gulf coast.
Other oil related stocks remained under a cloud as investors worried over the prospect of oil companies coming under increased constraints on where they can drill. Oilfield support services firms such as AMEC and Petrofac both took a dive.
Prudential is facing calls for a clear-out of its senior management after it scrapped its contentious plans to buy AIG's Asian arm (AIA). In a statement, chairman Harvey McGrath said the Pru took the decision to withdraw after failing to negotiate a cut in the $35.5bn purchase price for AIA. The Pru's $21bn right issue to finance the deal will now also be scrapped.
Analysts said it could spark a break-up bid for Prudential, especially with the uncertainty over the management situation.
Drugs makers enjoyed some attention from risk averse investors, especially Glaxo, which has been upgraded to “buy” from “hold” by Jeffries. Elsewhere, broker comment also gives a boost to sweeteners giant Tate & Lyle, which has been rated a “buy” by RBS.
Scottish soft drinks maker AG Barr said it has made a good start to the year, thanks to strong performances by its Irn Bru and Rubicon brands. Total revenue for the period from 31 January to 29 May on a like for like basis increased by 17.9% compared with last year. Overall operating margins continue to be in line with expectations, the group added.
Water company Northumbrian Water has pumped up full-year profits by 11.5% and says it will not need to raise any new debt before the end of 2011. Profit before tax for the year ended 31 March increased to Ł170.2m from Ł152.7m on revenue up 1.5% to Ł704.7m, mainly due to the uplift in tariffs to support ongoing high capital investment.
Oil and gas services provider Hamworthy reported a decline in pre-tax profit but said, despite short term market uncertainties, it looks forward with confidence. Pre-tax profit fell to Ł20.7m for the year ended 31 March 2010 from Ł22.3m the same time a year before. Revenue decreased by 15.2% to Ł214.3m.
Vector Capital and Trafficmaster have agreed the terms of the recommended takeover by Vector of the UK satnav systems supplier for about Ł73.27m.Infrastructure maintenance specialist May Gurney posted its eleventh year of record sales and profits as councils and utilities continued to outsource. The group's order book is also at record levels.
Sales at specialist flooring retailer Topps Tiles have started falling again after a brief respite in the half year to end March. Since the start of April sales overall are down by 5% with like-for-like sales 4.3% lower.
Filtration and environmental technologies group Porvair said it had started 2010 well and expects to report interim results well ahead of 2009.
Clean energy products Acta is shining after it sealed a €32.2m deal with SPF Energy to install 10.6 megawatts (MW) of photovoltaic park capacity in Italy.
There was also excitement at Caza Oil & Gas after it successfully farmed out part of its 65% working interest in the Bongo prospect to two partners, Australian-based investment company Verus Investments and Singular Oil & Gas.
Central China Goldfields says an independent structural study of the Bullabulling gold project in Western Australia suggests it could “potentially be a very large deposit”.
Africa-focused oil explorer Afren started the morning in demand on speculation that BG Group is stalking it but ended it in arrears after announcing a bid for Toronto-listed Black Marlin Energy.
FTSE 100 - Risers
Compass Group (CPG) 561.00p +4.47%
Imperial Tobacco Group (IMT) 1,892.00p +2.83%
Shire Plc (SHP) 1,446.00p +2.77%
Burberry Group (BRBY) 723.50p +2.77%
Aggreko (AGK) 1,313.00p +2.74%
GlaxoSmithKline (GSK) 1,181.50p +1.99%
Cable & Wireless Worldwide (CW.) 83.05p +1.90%
Hammerson (HMSO) 371.70p +1.78%
Fresnillo (FRES) 920.50p +1.66%
International Power (IPR) 295.90p +1.58%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 45.14p -3.55%
National Grid (NG.) 487.50p -3.08%
Legal & General Group (LGEN) 79.65p -2.69%
Lloyds Banking Group (LLOY) 55.89p -2.65%
Prudential (PRU) 561.00p -2.52%
Marks & Spencer Group (MKS) 347.70p -2.52%
Vodafone Group (VOD) 135.10p -2.45%
BG Group (BG.) 1,063.00p -2.34%
Barclays (BARC) 296.50p -2.24%
Anglo American (AAL) 2,591.50p -2.12%
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