London afternoon: ARM gives Footsie a hand

9th Sep 2010 14:44

Mining stocks continue to drive the market's advance, despite metal prices falling back as concerns grow about the Chinese authorities' determination to cool off the economy, with the latest report from the People's Republic suggesting that the government is set to introduce measures to curb property price inflation. Xstrata, Vedanta, Rio Tinto, BHP Billiton and Lonmin are the stand-outs in the sector. None of them can match the gains of chip designer ARM, however, which rises sharply for the second day in succession on rumours that Korean manufacturing giant Samsung's new Orion chip uses ARM's Mali graphics processing unit (GPU) rather than intellectual property developed by Imagination Technologies. "Our checks indicate Samsung has designed ARM's GPU into its new mobile processor chip. This is a strategic win for ARM," said Didier Scemama, head of European technology research at Royal Bank of Scotland (RBS).Samsung LSI's Orion chip is expected to replace the Hummingbird chip, which is used in Samsung's Galaxy smartphones and tablet, according to broker KBC Peel Hunt. "Samsung's mobile device business is, however, separate from LSI and can purchase chips from a number of sources. Earlier this year, Samsung LSI announced it had licensed ARM's Mali graphics architecture, whereas it had previously exclusively used IMG's [Imagination's] PowerVR. Although most commentators seem to assume that Orion uses PowerVR, RBS thinks it is a Mali implementation, which is quite possible," the broker said.Investec has bumped up its price target for ARM from 340p to 360p in response to the release of a new processor design from ARM, which has already been licensed by US chip giant Texas Instruments. It has not been a great day for retailers, so far, with Morrisons, Home Retail and HMV all in the doghouse after trading updates.Supermarket Morrisons posted profits broadly in line with expectations for the six months to August. It also unveiled a move into the convenience store market as new chief executive Dalton Philips makes his mark on the company. The shares fell back in early dealings, but have trimmed losses after new chief executive Dalton Philips impressed analysts at the results presentation.Home products retailer Home Retail Group disappointed the market with its prediction that unless Christmas is a cracker this year profits are likely to be in the bottom half of the range of analysts' estimates. In a trading update the group said things are getting worse more slowly at Argos while Homebase beat expectations over the summer months.Music and DVD retailer HMV fell sharply, albeit after strong gains yesterday as it posted a 10.6% decline in first quarter sales as potential customers were distracted by the World Cup. The group, which is struggling to compete with internet rivals and supermarkets, said UK & Ireland like for like sales in the 19 weeks ended 4 September 2010 fell 14.9%. Fellow computer games seller Game Group falls in sympathy.The spat between Kazakh mining giant Eurasian Natural Resources (ENRC) and Canadian miner First Quantum Minerals (FQM) over ENRC's acquisition of a majority interest in Camrose Resources is getting tetchier. ENRC has sent a letter to FQM complaining about recent statements made by the Canadian company which ENRC believes are an attempt to interfere with the Kazakh company's rights to develop the Camrose joint venture and the Kolwezi tailings project.Precision engineer Renishaw is motoring ahead after it said trading in the first two months of the new financial year has been very positive after particularly strong demand from Japan and the rest of Asia.Higher house prices helped home builder Redrow move back into profit in the year to June 30, but the outlook remains uncertain. The company posted a pre-tax profit of £0.7m against a loss of £44.2m the previous year, as revenues jumped to £396.9m from £301.8m.Electronic and industrial components supplier Premier Farnell said underlying pre-tax profit more than doubled after strong sales, particularly in the US, but remains cautious about the economic backdrop. The performance has lifted the share price of Electrocomponents as well. Spread-betting firm IG Group saw higher revenues in the three months to August 31, but added volumes were subdued in the second half of that period and warned that future trends remain difficult to predict.Enthusiasm for shares in infection and contamination control products supplier Tristel is catching after the group said it is seeing strong growth across the group. Biopharmaceutical group Reliance GeneMedix posts a healthy rise after it saw losses narrow in the year to March 31 due to lower expenditure on drug development.