London afternoon: Copper-bottomed advance

1st Mar 2010 14:15

Gains on mining stocks are more than offsetting losses in an insurance sector that has been rocked by the prospect of a huge rights call from Prudential.Confirmation that Pru may pay $35bn (£23bn) for the Asian business of troubled US insurer AIG has unsettled the insurers. Any deal would need to be funded by a cash call many estimate as high as £15bn.Speculation that Pru would sell its UK life assurance operations to Resolution to raise money for the Asian acquisition were quashed when the Clive Cowdery's investment vehicle said today it is not in discussions with Prudential.Fellow insurers Aviva, Legal and General, RSA Insurance Group and Standard Life are among today's heavy fallers and are joined by part-nationalised lenders Lloyds Banking and Royal Bank of Scotland plus Asia-focused bank Standard Chartered after disappointing figures from HSBC. HSBC is lower after releasing worse than expected profits of $7.1bn. Underlying profits were $13.3bn but loan impairments rose again.Miners are in demand following a rise in copper prices following the earthquake in Chile, the world's number one producer of the red metal.The earthquake shut down up to a fifth of the South American country's copper mining operations, but mines have already resumed operations.Kazakhmys, Fresnillo, Xstrata and Chile-focused copper miner ENRC are all going well. Rio Tinto is also on the upturn after spending C$244.7m to up its stake in Canadian mining firm Ivanhoe to 22.4% from 19.7%.Educational and financial information publisher Pearson bumped up sales and profits in 2009 helped by favourable exchange rate movements. Sales in 2009 at £5,624m were 17% higher than 2008's £4,811m but were up just 4% at constant exchange rates. Adjusted pre-tax profit also rose 13%, to £761m from £674m. Market expectations were for a pre-tax profit of around £725.68m.Shares in Shire moved up after the speciality drugs group said the US Food and Drug Administration granted marketing approval for VPRIV, a treatment Gaucher disease. 'The FDA designated VPRIV for Priority Review and granted marketing approval in just 6 months,' Shire said.Engineer Tomkins moved modestly back into profit last year, but cautioned that conditions remain challenging and any sustained recovery will be towards the latter half of the year. The group posted a pre-tax profit of $38.4m in 2009 against a loss of $8.1m the previous year, but remained in deficit after tax with a net loss of $15.6m against $64.6m. Sales tumbled from $5.52bn to $41.28bn.Underwriter Amlin enjoyed a bumper 2009 with profits rising by more than 300% as low claims combined with a record performance from its investment arm.A pre-tax profit of £509.1m "blew away" the consensus estimate of £454m, says KBC Peel Hunt. "Amlin rightly trades at a premium to the sector and, given the extent and consistency of the returns, it deserves to trade substantially above its current 1.20x 2010E NTA."The winning streak of Aggreko on major sporting events continued as the temporary power supplier announced a contract to provide temporary power and temperature control for broadcast and technical services for the 2010 FIFA World Cup.Defence industry supplier Ultra Electronics returned to the black in 2009 boosted by acquisitions and the weak pound. The group, which supplies pneumatic compressors for weapons release and missile cooling, reported a pre-tax profit of £107.9m for the year ended 31 December 2009 compared with a loss of £2.9m a year earlier. Revenue rose to £651.0m during the year from £515.3m before.Engineer Senior reported a 'resilient performance' with strong cash flows and a £72m reduction in net debt while 2010 results are expected to be broadly in line with 2009 figures.Engineering consultant WSP said annual pre-tax profit halved after restructuring charges and as the economic slowdown created a 'particularly testing year.' Profit before tax fell to £25.4m for the year ended 31 December 2009 from £52.1m the year before. Revenue declined to £723.3m from £755.2m in 2008.