London afternoon: Downward drift continues

8th Jul 2009 15:36

The majority of blue-chip stocks remain lower on the day, though heavily weighted miners are limiting the extent of the fall on Footsie after positive broker comment this morning. Investec has upgraded Rio Tinto and BHP Billiton, advising its clients to take advantage of recent share price weakness to buy the stocks. US bank Citigroup sings a similar tune and now rates BHP Billiton a "buy".Outside of miners, defensive stocks are about the only other stocks in favour with utilities such as Scottish & Southern Energy, Severn Trent and Pennon, tobacco stocks IMPs and BATs plus pharmaceutical giant GlaxoSmithKline defying the weaker trend.In contrast, the retreat by global stock markets is hurting the big life assurance stocks such as Aviva and Legal & General. The former is the subject of market rumours that it will cut its dividend at its next set of results. The company resisted advice to cut its dividend at the time of its full-year results in March and saw its share price hammered as a result.Shareholders at Marks & Spencer are expected to vent their frustration at executive pay and Sir Stuart Rose's dual role as chairman and chief executive at the food and clothes retailer's annual meeting this afternoon.Oil stocks are weak as the price of crude retreats on fears the US economy may be turning down again. Tullow Oil is a prominent faller. An update today stated that it expects annual production to average 58,000 barrels of oil equivalent per day (boepd) following a 16% drop in output during the first half. Struggling private equity group 3i halved its debt in the three months to June, largely due to its £732m rights issue. Realisation proceeds outweighed new investment as it stopped putting money into its portfolio companies. Net debt at end June was £961m, compared with £1.91bn at March 2009.Support services group Carillion remains on track to deliver 'materially enhanced' earnings for the full year after good performances across its divisions.The support services division continues to make the largest contribution to operating profit, the firm said.Oil and gas firm Melrose Resources is proceeding as expected at its oil and gas fields in Egypt, although recent government elections have held things up in Bulgaria. Production averaged approximately 16,000 barrels of oil equivalent per day (boepd) on a net entitlement basis versus current guidance of 15,700 boepd.Facilities and energy management solutions provider GSH Group warns that larger than expected non-recurring costs will leave full-year profit even further below forecasts. The company, which also confirmed it will de-list its shares on 10 August, said closure costs linked to a restructuring would likely double to £3m.Pure Circle, the maker of high intensity sweeteners used in a range of well known soft drinks, expects to report an 85% jump in sales in 2009 after gaining several high profile customers.Cash and carry group Booker said profits and net debt remain in line with expectations after seeing total sales rise by 7.8% in the 12 weeks to 19 June.