London afternoon: Resource stocks a drag

12th Oct 2010 14:09

Equity prices continued to recover over the lunch time session though the blue-chip index remains in the red, largely thanks to the weakness of resource stocks.Xstrata, Lonmin, and Antofagasta are the worst hit of the miners, though the whole sector is lower. Metals prices have fallen back as the dollar has made a comeback, providing traders with the catalyst they needed to bank recent profits.The price of oil is also on the wane ahead of Thursday's meeting of OPEC - the Organisation of Petroleum Exporting Countries. Cairn Energy is the big faller among the heavy hitters but mid-cap constituent Soco is the real casualty after a disappointing update on its drilling its Vietnam.Also in the FTSE 250, pub owner Punch Taverns has fallen heavily after it served up full-year results in line with expectations and announced plans to sell another 1,300 pubs to help pay off its huge debts. In his first set of numbers as chief executive, Ian Dyson reported a drop in pre-tax profit to £131m compared with £160m in 2009. Like for like sales at the managed estate were down 2% on last year, but things picked up in the second half, especially in the final quarter. Like sales for the last 12 weeks rose 2.6%.Elsewhere in drinks, Magners owner C&C lifted cider volumes in Britain for the first time since 2007, but poor demand in Ireland knocked cider sales overall in the first half of 2010Bid rumours are driving up the price of Standard Chartered with JPMorgan Chase said to be pondering pouncing for the emerging markets focused bank.Also on the up are water companies Severn Trent and Pennon after HSBC put in a good word for them. The bank has lifted its rating on Severn from "underweight" to "neutral" while Pennon is upgraded to "overweight" from "neutral". The target price of the former is raised to 1370p from 1270p while the latter's price target is bumped up to 670p from 620p.Internet and catalogue home shopping company N Brown said total revenue in the 26 weeks to 28 August rose 3.2% to £349.7m from £338.7m a year earlier, more or less what the market had been forecasting. Like-for-like sales grew by 0.6%. Profit before tax rose to £42.3m from £33.3m.Engineering software firm Aveva said performance in the first half of its financial year was in line with the board's expectations. "Our strong base of recurring revenue, together with good growth in developing markets, continues to help mitigate the impact of economic uncertainty," said Richard Longdon, chief executive of Aveva.Better than expected sales in Europe and Asia mean that components supplier Dewhurst will report significantly higher than expected profit for the year to September 2010.Construction and regeneration group Morgan Sindall has won an £18.5m contract to deliver a regeneration project in Stockbridge Village, Merseyside.