London afternoon: Shares still drifting

24th Nov 2009 14:31

London continues to lack direction, with Bank of England governor Mervyn King's comments to the House of Commons Treasury select committee on the state of the economy having more of an effect on sterling than on share prices.With sterling dipping after King's comments, package holiday firms Thomas Cook and TUI Travel feature among the Footsie's worst performers.Lloyds Banking Group is the top performer as investors sniff a bargain in the form of its world record £13.5bn rights issue, which will offer existing shareholders new shares at 37p each, a discount of 59.5% to last night's closing price. Britain's third-largest lender will offer shareholders the chance to buy a total of 36.5bn shares on the basis of 1.34 new shares for every 1 share held. The cash call represents a discount of 38.6% to the theoretical ex-rights price (TERP) based on Monday's closing price, in line with previous indications.Other banks fare less well, with Standard Chartered, HSBC and Royal Bank of Scotland all lower after ratings agency Standard & Poor's said that nearly all of the world's big banks are weakly capitalised. Barclays makes headway, however, Elsewhere in the financial sector, hedge fund manager Man Group is dented by a broker downgrade from Credit Suisse. Water supplier Severn Trent posted a rise in turnover and profits in the six months to September 30 and lifted its dividend ahead of the regulator's final decision on how much it can charge customers over the next five years. Sticking with utilities, energy provider International Power receives a boost from Evolution Securities reiterating its 'buy' recommendation.Among retailers, Marks & Spencer and Home Retail get a lift from positive comment from Nomura Securities, which also likes HMV and KESA in the sector.Tile and flooring specialist Topps Tiles is to shore up its balance sheet with a placing of up to 17.1m new of shares, approximately 10% of its issued ordinary share capital. Investment company Alliance Trust beefed up its exposure to equities to 90.6% during the quarter ending 31 October, with particular focus on stocks that will benefit from an upturn in economic activity.Housebuilder Bovis announced that its finance director Neil Cooper will leave the company to take the same job at bookmaker William Hill. Home maintenance specialist Homeserve is wanted after predicting a year of "strong growth", after its core business did well at the half way stage. Petrofac, the oil & gas facilities service provider, said it has established a joint venture agreement with Zamil to create and operate a new service centre facility in Saudi Arabia. Condom and footcare products supplier SSL is the best performer in the FTSE 250 after it posted a sharp rise in profits in the six months to September 30, as strong growth in emerging markets helped drive sales higher. Pre-tax profits totalled £51.9m compared with £32.5m.Intermediate Capital, an investor in and manager of buyout debt, is higher after it saw profits plunge 80% in the six months to 30 September, but was more upbeat about prospects. Profit before tax for the period was £8.1m, down from £39.8m a year ago. It includes a £7.6m positive impact of fair value movements on derivatives held for hedging purposes. 'We are encouraged by early signs of stabilisation in the wider economy but remain extremely cautious as to the pace and nature of a broad economic recovery," said chairman John Manser.Lloyds List publisher Informa confirmed reports it is in discussions over the possible acquisition of German publisher Springer. In a statement, Informa said it has been given access to Springer's books and will make a proposal to its shareholders, though it added no agreement on price has been reached yet. The shares have fallen back on fears that any bid for Springer will require the company to issue more shares so soon after its May £242m rights issue.One-off charges lowered first half profits at banknote printer and cash handling machines specialist De La Rue, but currency translation benefits and good banknote demand meant a strong underlying performance.Specialist mortgage lender Paragon is considering increasing its lending book again after bad debts stabilised in the second half and wholesale funding markets picked up.Andor Technology reported a 67% rise in half-year profits but the digital camera maker said it remains cautious about the economic outlook.Security lighting group Eruma has placed 4.3m shares with two suppliers and two directors of the company. The suppliers have taken equity for services in lieu of fees, while the directors, Wayne Money and Alan Davis, have subscribed for shares worth abut £26,000 in total.Lupus Capital is sharply higher after announcing the appointment of ex-Foseco chief executive Jamie Pike as non-executive chairman with immediate effect. Michael Jackson, who became non-executive chairman on 1 July 2009, will revert to being a non-executive director.