London afternoon: Banks slide on tax fears

7th Dec 2009 14:39

Leading shares recouped some of their losses over the lunchtime trading session but the Footsie remains in negative territory, largely due to the weakness of banks and miners.Rumours of a windfall tax in Wednesday's pre-Budget report has rattled the banks. Royal Bank of Scotland, Lloyds Banking, Barclays and HSBC are in arrears on suggestions that the Chancellor of the Exchequer, frustrated at his inability to stop banks paying mega-bonuses, may hit the banks' profits with a tax raid.Miners are also under pressure with the improvement in the dollar. Better than expected US non-farm payroll figures last week have sparked speculation that the US could start to tighten monetary policy sooner than predicted. Xstrata, ENRC and Fresnillo are the worst hit. BHP Billiton and Rio Tinto, the two giants of the sector, are doing all right, however, after signing a binding joint venture agreement covering the entirety of both companies' Western Australian iron ore assets at Pilbara. The deal, which was flagged in June, still has to be approved by the European Commission and the Australian Competition and Consumer Commission.In the FTSE 250, Shanks Group has soared ahead after private equity group Carlyle made an approach for the waste management specialist. The original offer of 135p cash per share has been rejected with board apparently holding out for at least 150p. Electricity provider Scottish & Southern Energy blasted the final price control proposals from industry regulator Ofgem. The company said it will have to reassess its appetite for further investment in electricity distribution and transmission assets after digesting the final proposals for the electricity distribution price control for the five years from 1 April 2010. Ofgem will alow prices to rise by 5.6% per year, £4.30, on average.Cadbury said it will publish its formal response to the unwelcome bid from Kraft Foods on 14 December. The defence is likely to highlight the value of its brands. Engineer Renishaw said it expects first half and full year results to remain unchanged from previous guidance in October as the group's performance continues to improve. The group, which sells high-end engineering products such as calibration and neurological equipment, confirmed in September that a surge in orders meant that it could relax the 20% voluntary reduction in salaries that had been brought in at the start of 2009.Property company Great Portland Estates said its buildings at 18/19 Hanover Square in London's West End have been compulsorily purchased under the Crossrail Act of 2008.VT Group has reached financial close on the initial phase of the Council Borough's Building Schools for the Future programme.Serica Energy is selling some of its assets in Indonesia and all of them in Vietnam to Singapore-based KrisEnergy for $98.6m (£60.1m) in cash.The share price of AIM-listed oil and gas company Petroceltic spouted higher after a successful well test in Algeria. The well test on AT-2 in the in Tsila Field, Isarene permit, resulted in gas flow rates in line with expectations.