London afternoon: Downward drift continues

9th Mar 2011 14:16

Blue-chip shares drifted lower still over the lunchtime session though a number of bright spots can be found, particularly among second liners. Insurer Prudential is in demand after saying it made 20% more in 2010 than it did the year before as Asia raced ahead of the US as the UK company's biggest earner. Group operating profit before tax on a European Embedded Value (EEV) basis jumped to £3.70bn in 2010 from £3.09bn the year before.Africa-focused oil company Tullow Oil ramped up profits in 2010, broadly in line with City expectations, as oil prices jumped by almost a third, but the shares are lower today. Profit before tax soared to $152m from $33m in 2009 and rose 137% to $73m after taxes. Sales revenue was 19% better at $1.09bn. Broker finnCap, which rates Tullow's shares as a "sell", was sceptical about the results. "Despite an upbeat message, we believe there are few positives to take away from Tullow's full year results and that the company has delivered a disappointing financial performance. The bulls may point to an active drilling programme planned for 2011, but political risks in a number of countries operated in could see this significantly curtailed, while we also believe the materiality of the vast majority of the wells is limited. This view is backed up by the market reaction to recent positive news flow from its drilling operations in Ghana," finnCap analyst Will Arnstein said. Elsewhere in the oil sector Heritage Oil continues to benefit from the bid rumours that were circulating about the company yesterday.Banks are never far from the headlines and after bonus payments to Barclays' Bob Diamond and yesterday's disclosure of RBS chief Stephen Hester's incentives for 2010, Lloyds is in the spotlight today. Chief executive António Horta-Osório has stamped his authority with a shake-up of the retail bank and insurance divisions and the departure of two senior directors.Daimler and Rolls-Royce have confirmed they intend to take over German-listed engineer Tognum through a tender offer by a joint venture company. Daimler and Rolls-Royce will offer Tognum shareholders €24 per share in cash representing a total consideration of approximately €3.2bn, about 30% above Friday's closing price. Daimler currently owns 28.4% of Tognum. Acquisitive engineering conglomerate Halma has its cheque book out again, and is buying Swiss company Medicel, a designer and manufacturer of single-use injector devices for Intra Ocular Lenses (IOL) used for cataract surgery. Initial consideration is £46.6m, with a further £20m payable, depending on performance of the acquired company.Investors have an appetite for The Restaurant Group after today's update. Tourists flocking to its Garfunkel's outlets in Central London helped it come through the weather, ash clouds and recession last year in decent shape. Profits in 2010 rose by 17% to £56.5m, from £48.3m, on revenues up 7% at £466m. Like-for-like sales fell by 1%.A rise in profits from Yule Catto failed to spark a rise in the speciality chemicals group's share price. Underlying pre-tax profits rose by 19% from the previous year to £47m and revenues rose to £626.8m from £516.7m the previous year.Looking ahead, Yule said it anticipates "several years of low growth in Western markets with global growth generally driven by emerging markets."Sportswear retailer Sports Direct said that the Serious Fraud Office is no longer investigating any individuals employed by the firm in respect of alleged price fixing activities back in 2009.Stockbroker Hargreaves Lansdown is wanted ahead of this evening's reshuffling of the FTSE 100 constituents. The finance house is in the running to join the big league, along with returnees ITV and Wood Group .Electronics manufacturing group Stadium posted a sharp rise in profits from continuing activities in the year to 31 December, but is cautious about economic conditions in the UK.