LONDON London midday: Morning's gains melt away

Date: Friday 04 Jun 2010

Leading shares are now mixed as the gains seen in the first couple of hours of trading have fizzled out. Investors are adopting a wait and see posture ahead of the US non-farm payrolls data due out this afternoon.

The BP revival continues, however, as more optimistic reports emerge from the Gulf of Mexico on its attempts to curb the oil spillage.

The oil giant says it has placed a LMRP cap on the leak, but added that it is too early to say if the next part of the plan, to syphon the oil up to the surface, would work.

Elsewhere in the oil sector, shares in Rockhopper Exploration have leapt again after the North Falkland Basin oil and gas exploration company gave an update on well 14/10-2 on its Sea Lion prospect. Independent evaluator RPS Energy has revised its best estimate of the well’s recoverable reserves from 170m barrels to 242m barrels, with significant upside potential.

Tidjane Thiam and Harvey McGrath, the management duo responsible for Prudential's failed attempt to buy AIG's Asian business, have dismissed suggestions they should step down, claiming they have the full backing of the board and most shareholders. The claim may be put to the test at next week’s annual general meeting.

In economic news, new car registrations rose 13.5% in May to 153,095 vehicles compared with the same month a year ago, figures from the Society of Motor Manufacturers and Traders (SMMT) showed.

House prices fell again in May, according to the Halifax, as rising unemployment curbed demand for housing just as more homeowners gained the confidence to put their property on the market.The cost of a home dropped 0.4% last month to £167,570 following a 0.1% decline in April, but that still left the annual change at +6.9%, the largest increase since October 2007.

Budget airline easyJet flew 7.9% more passengers in May than it did the same time last year despite the impact of the volcanic ash clouds from Iceland. Almost 4.3m of us travelled with the carrier last month, up from just under 4m in May 2009, while the load factor, which measures how well the planes are filled, rose to 85.8% from 83.5%.

AstraZeneca has submitted a marketing authorisation application (MAA) to the European Union for its cardiovascular drug Axanum.

Scottish and Southern Energy (SSE) will pay almost $100m less for the North Sea natural gas and infrastructure assets of Hess it agreed to buy in April after some of Hess' existing partners exercised pre-emption rights. The UK utility had offered $423m for the assets, but will now pay $324m as it only has about 80% of the resources from the original package available to buy.

Recruitment and contract placement specialist SThree expects some improvement in all of its market in the second half of the year after a tough first six months. "The current deal pipeline indicates that the group is experiencing improvements across most markets." the firm said. Gross profit in the first half fell 19% to £74m.

On the downside, outplacement specialist and recruiter Penna warned the new government's freeze on recruitment will hit revenues hard this year and mean only a marginal first half profit.

Things are improving faster than expected at Low & Bonar, the performance materials groups focused on technical textiles, with like for like sales in the second quarter ahead of last year in all segments. The company said that the transport, leisure and carpet manufacturing markets had put in especially strong performances.

Hornby, the toy company that owns the Scalextric, Corgi and Airfix brands, said it is already seeing significant interest in its London Olympics product range from retailers and consumers. The announcement accompanied full year results in which the model train set maker’s underlying profit before tax came in bang on schedule at £5.7m, down from £6.1m the year before.

Fashion and homewares retailer Laura Ashley is on track to hit targets this year after a strong showing by its online business in the first four months.

Equity release firm Sovereign Reversions has accepted a bid from residential property owner Grainger worth 202p a share in cash, or about £34.6m. Grainger, which built up a warchest for acquisitions through a £238m rights issue in December, believes this is “an opportune time to invest in quality and complementary UK residential assets” in its core locations.

FTSE 100 - Risers
BP (BP.) 446.50p +3.30%
ICAP (IAP) 402.70p +2.91%
Cable & Wireless Worldwide (CW.) 88.35p +2.79%
Tullow Oil (TLW) 1,167.00p +1.66%
Inmarsat (ISAT) 797.50p +1.53%
Autonomy Corporation (AU.) 1,804.00p +1.29%
Vodafone Group (VOD) 139.55p +1.27%
ARM Holdings (ARM) 270.80p +1.08%
Amec (AMEC) 812.00p +1.06%
Petrofac Ltd. (PFC) 1,210.00p +0.92%

FTSE 100 - Fallers
Capital Shopping Centres Group (CSCG) 333.70p -2.40%
National Grid (NG.) 485.50p -2.02%
Kingfisher (KGF) 225.00p -2.00%
Royal Bank of Scotland Group (RBS) 45.12p -1.91%
Hammerson (HMSO) 369.30p -1.78%
Vedanta Resources (VED) 2,260.00p -1.53%
Standard Chartered (STAN) 1,660.50p -1.45%
Home Retail Group (HOME) 246.90p -1.40%
BHP Billiton (BLT) 1,815.50p -1.30%
London Stock Exchange Group (LSE) 634.00p -1.25%