London afternoon: Stocks stabilise

15th Mar 2011 14:27

Leading shares remain deep in the red and the best that can be said is that the situation did not get materially worse over the lunch time session.A third explosion at the Fukushima Daiichi nuclear power plant in Japan has raised concerns of a major radiation leak and sparked panic selling on the Tokyo stock market overnight. Traders in London have not hit the panic button yet but the first two hours of trading today were hectic and characterised by heavy losses for stocks expected to suffer as a result of the Japanese tragedy. Miners are prominent among the big fallers, with Eurasian Natural Resources Corp, Fresnillo, Lonmin and Antofagasta the hardest hit.Mining giant Rio Tinto is also in the red. The Financial Reporting Review Panel of the Financial Reporting Council (FRC) has had Rio's accounts under review but it says it "regards its enquiries as concluded" after the mining giant added more information on environmental and social issues to its 2010 annual review. A complaint had been made in July 2010 about the lack of this information in the 2008 accounts of Rio Tinto.Luxury goods maker Burberry is taking another hammering, though RBS thinks the share price fall is an over-reaction. While Japanese consumers have accounted for as much as 40-50% of domestic and international related luxury goods demand over the past decade, Burberry's 2011 regional sales exposure is around 5-6%, compared with French company Hermes which has the highest exposure of 19%, according to the broker.Holiday firm TUI Travel and airline IAG are also suffering as consumers wonder which parts of the world are safe to visit. Earthquakes in Asia Pacific and civil unrest in Africa and the Middle East may well encourage holidaymakers to take the perceived safe option and stay at home.Japan's heavy consumption of electronic gadgetry is hitting the computer chip companies. In mainland Europe chip makers Infineon and ST Microelectronics are among the biggest fallers while in the UK chip designer ARM is being given the elbow.Shares in Renishaw have taken a sharp dive. More than 10% of the engineer's revenues come from Japan. Car parts maker GKN has warned it may have to cut component manufacturing in response to declining demand from Japan, though its losses today are not so severe. Also suffering from the Japanese effect is insurer Prudential, which is pinning a lot of its hopes for rapid future growth on Asia.Retailers are among the handful of stocks performing well, with Next, JD Sports and Debenhams making moderate gains.Sales fell at department store Debenhams in the first half, though by a little less than forecast, and headline profit at the department store is expected to beat last year's effort and meet estimates. Like for like sales for the 26 weeks to 26 February fell 1.5% excluding VAT, but were flat including the tax.The shares are in positive territory, however, and have taken clothing retailer Next - the only Footsie constituent up on the day - along with them.However, sportswear retailer JJB Sports is unwanted after it confirmed it intends to raise £65m through a new share placing but only if its landlords agree to a new company voluntary agreement.Royal Dutch Shell is lower despite saying it made "good progress" in 2010. The group also said that 2011 has started well, and it is on track to hit its strategic targets by next year. Shell, which hosts its annual Investor Day in London today, is one year in to a three-year strategic plan and should increase cashflow from operations 2009-2012..Security firm G4S notched up its sixth successive year of underlying revenue, profit and dividend growth since the group took on its current incarnation in 2004. Nevertheless investors joined the trend and took profits.Social housing provider Mears posted a 27% rise in annual operating profit following a string of contract wins and a good performance in its social housing and care home division. Total group revenue increased to £523.9m from £470.1m previously.Home entertainment products supplier MBL has lost 50% of its value after confirming that Morrisons is terminating two supply agreements in September. MBL has put itself up for sale.Uranium miner Berkeley Resources could hardly have chosen a worse day to release results that show a sharp increase in losses. The loss for the half year surged to $11.7m from $5.0m a year earlier, after exploration costs associated with the company's Spanish uranium projects jumped to $9.3m from $3.4m in the latter part of 2009.