London open City sources predict FTSE 100 will open up 34 points from its previous close of 4,806.
Stocks to watch
London-listed mining heavyweights BHP Billiton, Rio Tinto and Xstrata are “encouraged” by the Australian government’s decision to replace the controversial Resources ‘Super Tax’ with a more moderate alternative. In a joint statement, the trio welcomed a new Mineral Resource Rent Tax (MRRT) that would only apply to iron ore and coal resources from 1 July 2012.
The battle for ownership of Chloride looks set to come to an end after the electrical plugs and peripherals maker recommended a 375 pence per share bid by US giant Emerson. With Emerson's offer, shareholders also get to keep the 3.3 pence final dividend.
Builders' merchant Travis Perkins has seen a strong rebound in trading since March. The Wickes owner now expects its first half will beat its expectations while dividends will resume again with a 5p interim. Group revenue for the six months ended 30 June was up by 4.7%, with like-for-like sales up 3.4%. Like-for-like turnover in the last two months was 10.3% ahead in Merchanting and in the last 9 weeks 1.6% ahead in Retail.
In the Press
Fears of an economic relapse across the world have begun to stalk markets again after pending homes sales in the US crashed by a third and a slew of weak data from China and Japan sent bourses tumbling across Asia, the Telegraph reports. The credit system is once again flashing warnings of extreme fragility, with the yield on 10-year US Treasuries plummeting back to crisis-levels of 2.89%. Japan's 10-year bond dropped to 1.06%, the lowest since the country's deflation battle seven years ago. Tokyo's Nikkei stock index tumbled to the lowest level since 2005 as safe-haven flight into the yen surged to levels that leave many Japanese exporters underwater.
China could swoop on $9bn of BP's assets in South America, as the oil giant looks to raise money to pay for its giant Gulf of Mexico oil spill.The British energy major, whose share price rose 3pc yesterday, is understood to be in talks with the state-owned China National Offshore Oil Corporation (CNOOC) about selling its 60% stake in Pan America. BP is looking to sell $10bn of non-core exploration and production assets, so this potential disposal would mean it would almost hit this target in a single transaction, the Telegraph reports.
KNOC, South Korea’s national oil company, is exploring a Ł1.5bn takeover offer for the UK-listed oil explorer Dana Petroleum as it seeks foreign acquisitions to bolster its oil production. KNOC has made preliminary contact with Dana’s management with the aim of arranging an agreed purchase, according to people familiar with the situation, the FT reports.
Newspaper tips
BT, the former state-owned telecoms monopoly, which has previously shown little aggression, attempted to nutmeg BSkyB by dramatically undercutting the price its rival charges consumers to watch Sky Sports. BT, which is trading on a price to earnings ratio of 7.6 and has a dividend yield of 5.7%, is demonstrating the aggression it needs to return to near the top of the league. Buy says the Telegraph.
Forth Ports looks well-placed with good earnings certainty, increased new business, a big surplus land bank and a fledgling but exciting renewables business. Acquisition or not, Forth Ports looks strong and notwithstanding a forecast multiple of 21.1 times 2010 earnings, buy says the Independent.
Wellstream issued its trading update yesterday and the oil services group, which specialises in flexible pipes, was not involved in the Gulf of Mexico spill. But while there's no question of a direct hit, the Deepwater Horizon explosion has triggered uncertainty throughout the industry, not just in the Gulf – something which was plainly acknowledged by the company.With the shares trading on 12 times forecast earnings for 2011, this is not a sell. But, given the issues, it isn't a buy either. Hold says the Independent. US close
US shares recovered after an early slide on disappointing economic figures, but still closed in the red. Across the markets, Dow Jones fell 41 points to 9,732. Nasdaq shed 7 points to 2,101 and the S&P 500 was 3 points lower at 1,027.
Manufacturing figures were below expectations and home sales and jobless data also had a negative effect on the market.
The Institute for Supply Management’s manufacturing index fell from 59.7 in May to 56.2 in June. As the figure is above 50 it still represents growth but the figure is at its lowest level since October 2009.
The removal of the homebuyer tax credit led to a 30% slump in sales of existing homes in the US. The National Association of Realtors says its Pending Home Sales Index fell from 110.9 in April to 77.6 in May. A fall was expected but not one that sharp.
The Labor Department said initial jobless claims rose to 472,000 last week, which was unexpected as economists forecast a drop to 452,000. The non-farm payroll figures will be published tomorrow.
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