London afternoon: Banks help index advance

9th Dec 2010 14:42

A mostly better banking sector, gains for some of the mining heavyweights and a decent start on Wall Street are offsetting losses among the big retailers.Lloyds, Royal Bank of Scotland and Barclays are going well following a good session in overseas markets, though Asia-focused Standard Chartered is missing out.It's propping up the leading index after warning that cost growth will exceed income growth as the bank invests in its businesses, opens new branches and hires new staff. Increasing competition for workers and higher compliance and regulatory costs have also hurt.Platinum specialist Lonmin and copper miners Antofagasta, Kazakhmys and ENRC are in demand. The red metal has been hitting record levels recently amid concerns over production shortages.BG Group predicts "very low" technical costs for the initial phase of development at its Tupi and Guará fields in the Santos Basin, offshore Brazil, where the company expects its share of the spoils to be 600 million barrels of oil equivalent (boe).High street chains Next and Marks & Spencer are finding the going tough though. It's a similar story at mid-cap retailers Kesa, WH Smith and Debenhams.Ashtead is another strong performer after growth in North America lifted second quarter sales at the equipment hire firm. Shares in packaging group DS Smith are up after higher revenues and profits in the first half despite rising input costs. Pre-tax profits in the six months to 31 October climbed by 17.5% from the same period the previous year to £40.2m. Revenues by 15.3% to £1.17bn. Premier Farnell is today's laggard even after the electronic and industrial components supplier posted another surge in profit. Underlying profit before tax jumped 70% to £23.6m in the three months ended 31 October, taking the nine-month figure to £69.6m, up 85%. Revenue rose 23% to £251.3m for the quarter and up 24% to £748.3m for the six months.Also lower is Misys, the financial software specialist, which has had a pretty flat first half, held back by delays to some large orders, now expected to close in the second half. Estimated revenue for the six months ending 30 November is £160-162m compared with £160.6m a year ago, while adjusted operating profit is put at £20-23m versus £21.6m in 2009. As expected, "extremely difficult" market conditions and a bigger than expected first half loss have forced CD and DVD retailer HMV to slash the interim dividend. The shares are down 25%. The owner of book chain Waterstone's lost £41.3m before tax in the 26 weeks ended 23 October, up from £24.9m last year and worse than the City had predicted. And things haven't gone well at the start of the key Christmas trading period, with the snow "significantly" affecting consumer footfall.Men's outfitter Moss Bros says the positive trend experienced earlier in the year has continued as the company heads into the crucial Christmas period. Like-for-like sales were up by 8.3% in the first 18 weeks of the second half. "We enter this key trading period in the best shape we have been in for some time," says boss Brian Brick.Casino and bingo hall operator Rank sees full-year earnings coming in at the top end of analysts' expectations of between 9.5p and 9.8p after a strong performance from Grosvenor Casinos. Across the group, like-for-like revenues in the nine weeks to 5 December were up by 3% while total revenues climbed 4%.