London afternoon: Decline picks up pace

21st May 2009 14:36

The Footsie is nursing a triple-digit fall as investors bail out of equities, spooked by fears that the UK may lose its triple-A credit rating. Credit-rating agency Standard & Poor's said: 'We have revised the outlook on the UK to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100 percent of gross domestic product and remain near that level in the medium term."Mining stocks are among the big losers on concerns that the recovery of the US economy may be slower than previously anticipated. Minutes from the late April meeting of the US Federal Reserve's Federal Open Market Committee (FOMC) revealed that the committee foresees a longer and deeper recession than previously forecast in January, with a 9% unemployment rate set to last through to the end of 2009.Credit Suisse has dealt the sector a further blow, downgrading it from 'overweight' to 'benchmark', but platinum miner Lonmin idefies the trend after Citigroup increased its price target for the stock from 859p to 1385p.The day's big company results have not brought much cheer to the market, either.Full-year profit from Cable & Wireless was roughly in line with expectations, with the telecom group forecasting EBITDA of more than £1bn for the current year. The shares fell, however, on rumours of that broker Cazenove is placing some shares owned by C&W directors.British Land said its net asset value (NAV) per share slumped 64% last year, while its property portfolio lost almost two-thirds in value. Meanwhile, £3.24bn of markdowns led to a widened full-year net loss of £3.88bn compared with a loss of £1.56bn last time. Underlying pre-tax profits came to £268m. The shares fall sharply, dragging Land Securities and Liberty International down with them.Pub group Mitchells & Butlers has parted company with chief executive Tim Clarke after reporting a 48% slump in half year pre-tax profit. Profit before tax and exceptional items for the 28 weeks ended 11 April tumbled to £44m from £84m a year ago on revenue up nearly 3% to £1.02bn. Utility company Scottish & Southern Energy (SSE) has hiked its final dividend by 9% to 46.2p and said it plans an increase of at least 4% more than inflation for 2009/10. Lloyds Banking Group is taking the low road after announcing more job losses. The part-nationalised lender said a further 211 full-time jobs will go by January 2010, as a result of the merger of the Lloyds and HBOS telephone and online banking services. Earlier this week, Lloyds said 625 British jobs would be lost due to the combination of the corporate and small-business lending units, part of the wholesale banking business.Inter-dealer broker ICAP is sharply lower after yesterday's after-hours announcement that Michael Spencer, the founder and chief executive of the company, has reduced his stake in the business to 19% from about 21%.Sports shop chain JJB Sports fell heavily into losses in the year to 25 January after an extremely difficult period for the group that was compounded by the economic downturn. Newspaper publisher Daily Mail and General Trust saw profits fall by nearly half after feeling the impact of a severe advertising downturn. The group, which publishes the Daily Mail as well as local papers and business titles, said pre-tax profits in the six months to March 29 fell to £77m from £144m over the same period the previous year as revenues fell to £1.08bn from £1.168bn. A US court has granted AstraZeneca a preliminary injunction preventing Apotex from launching a generic version of Astra's asthma treatment for children, Pulmicort Respules, in the US. High military spending in the UK and US helped defence group QinetiQ post a sharp rise in revenues and underlying pre-tax profits. The company also announced the appointment of former IBM senior manager Mark Elliott as an independent non-executive director and chairman-designate. Elliott will join the board on 1 June 2009 and is scheduled to replace Sir John Chisholm as chairman when Chisholm steps down in August 2010.South African banking group Investec saw full year profit tumble 22% following a sharp decline at its investment banking and private banking businesses. Operating profit before tax for the year ended 31 March 2009 fell to £396.8m from £508.7m a year ago, but slumped by 61% at the investment banking unit to £28.2m.Engineering and construction group Balfour Beatty gained after it said its US building business has won work totalling up to $560m. Yesterday, a Balfour Beatty-led consortium has secured a £6.2bn contract to widen and maintain London's M25 motorway. Clinton Cards said its Birthdays greeting card chain has been placed into administration as prospects of it generating a profit in the near future faded. In contrast, shares in International Greetings are hotly sought after the greetings card group said it has achieved significant progress in the second half of the year, with full year sales up by over 10% against the prior year at £217m.Merchant bank Close Brothers said it continues to face difficult conditions in its asset management and banking divisions but is confident that it will continue to deliver a 'satisfactory' performance in the current markets.Parcel delivery firm Business Post saw profits and revenues climb in the year to March 31 as it continued to take up market share.Pre-tax profit at telecoms billing software firm Intec Telecom surged after its business emerged from harsh global economic conditions relatively unscathed. The group, whose clients include AT&T, Cable & Wireless, said adjusted profit before tax jumped to £11.1m in the first half of the year from £2.2m the same time a year earlier. Among second liners Stagecoach gets a lift from Merrill Lynch issuing a 'buy' recommendation for the stock, with a price target of 190p, up from 130p previously. Shares in Connemara jumped more than 50% after the AIM listed Irish zinc explorer said it has found zinc at its Castlemaine Licence block in County Kerry.