London close: Retreat moves into ninth day

24th Nov 2011 17:12

After once again showing signs in the morning session of bringing the losing streak to an end, Footsie once again relapsed in the afternoon session, as investors took fright at German Chancellor Angela Merkel once again banging on about what a bad idea it would be to have common interest rates for all Eurozone sovereign debt issuers. Following a meeting in Strasbourg of the leaders of the three main Eurozone economies (Germany, France 7 Italy), Merkel insisted that the region needs to move towards fiscal union and that bank recapitalisation needs to be applied soon, but she drew the line at so-called "Stability Bonds": bonds issued under the umbrella of the European Union rather than a sovereign state. Chilean miner Antofagasta limped higher in an otherwise buoyant mining sector, after nine-month results got a lukewarm reception.Group earnings before interest, tax, depreciation and amortisation (EBITDA) surged 28.0% to $2,505.5m from $1,957.3m the year before. The number would have been $390.3m higher but for negative mark-to-market adjustments of provisional sales at the period end.ON FURTHER REVIEW ...Elsewhere in the FTSE 100, there was a reappraisal of Scottish engineer Weir's acquisition of Texan hydraulic fracturing specialist, Seaboard, announced yesterday.Initial reaction yesterday was negative, but a number of brokers seem pleased with the deal today. Panmure Gordon has raised its full-year earnings estimates, though it leaves its target price of 2215p unchanged "for now".Panmure Gordon says the company has probably overpaid based on projected earnings for the current year but at least it has invested "in the right space" and the earnings multiple drops from a forecast 13.7 to a more reasonable projection of 10.7 in fiscal 2012."Following the acquisition of Seaboard Holdings Inc we raise 2012E and 2013E EPS [earnings per share] estimates by 5.0% and 3.6%, respectively," the broker said.Peel Hunt, meanwhile, upgrades the stock from "hold" to "buy". It is of a similar mind to Panmure Gordon, conceding the "valuation looks full" while noting that the acquisition is highly complementary to Weir's existing SPM and Mesa units. "We are upgrading our FY2012E [fiscal 2012] adjusted profit before tax by 6% to £446.5m (EPS 151.5p) and move to a Buy recommendation as the shares have de-rated," writes Peel Hunt analyst Thomas Rands.Contract caterer Compass Group edged higher after Panmure Gordon updated its earnings forecasts and bumped up its price target following the company's results yesterday. The new target price is 658p, up from 643p. The broker rates the shares as a "buy".THOMAS COOK COOKINGThe big movers were to be found among the FTSE 250 area, where cash-strapped package tour firm Thomas Cook continued to claw back some of the massive losses seen on Tuesday when it revealed it was once again in emergency talks with its bankers.TUI Travel, which was taken down by its rival's woes, fell back, however.Other companies on the recovery trail after taking recent big hits include trendy fashion firm Supergroup, telecoms outfit Cable & Wireless Worldwide and repair services provider Homeserve. Bid rumours were the reason why C&W Worldwide attracted buying interest, with Liberum Capital suggesting the share price slump could have brought the company into the price range of the likes of mobile phone operators such as O2 or Vodafone.Dixons, the struggling electrical retailer, appears to be stemming losses as it seeks to transform itself into a service-led company. Like-for-like sales between July and October were down 3% on the same period of 2010. However, this was an improvement on the previous quarter when like-for-like sales were down 7%. Shares jumped 10%."Interim losses came in £5m better than feared after a slightly better Q2 [second quarter], including back-to-school in the UK and after good cost control," notes Singer Capital Markets. "Management remain cautious about H2 [second half] prospects, and we highlight an increased threat from Tesco in particular but it is clear the transformation plan is winning share back," the broker added. The shares were sharply higher today, but it is worth remembering that they dived 11% or so yesterday. Nevertheless, the trading update has also given a boost to sector peer Kesa Electricals, which owns the Darty consumer electricals chain.Residential landlord Grainger posted pre-tax profit of £26.1m in the year ended 30 September 2011 compared with a loss of £20.8m the same time a year earlier.Property firm London and Stamford Property was down in the dumps, though, after it reported a first half loss compared to a profit a year earlier and said it remains cautious about future trading. Net asset value per share fell to 118.3p for the six months ended 30 September 2011 from 120.7p a year ago. The company posted a loss before tax of £3.42m compared to the previous year's £23.20m profit.Water group Pennon fell despite seeing pre-tax profits rise 11.6% in the first half. However, the firm said "customer demand has fallen by 2.3% on the same period last year, with general economic conditions impacting industrial and commercial customer demand."FTSE 100 - RisersIMI (IMI) 719.00p +5.50%Investec (INVP) 332.80p +4.52%Fresnillo (FRES) 1,605.00p +4.42%International Consolidated Airlines Group SA (IAG) 139.70p +4.41%Royal Bank of Scotland Group (RBS) 17.97p +3.63%ICAP (IAP) 322.70p +3.56%Weir Group (WEIR) 1,777.00p +3.37%Barclays (BARC) 152.50p +3.11%Vedanta Resources (VED) 955.00p +2.80%Lloyds Banking Group (LLOY) 22.41p +2.59%FTSE 100 - FallersShire Plc (SHP) 1,962.00p -2.39%BAE Systems (BA.) 251.40p -2.03%Inmarsat (ISAT) 389.30p -1.96%National Grid (NG.) 620.00p -1.90%Royal Dutch Shell 'B' (RDSB) 2,138.50p -1.86%Unilever (ULVR) 1,977.00p -1.79%GlaxoSmithKline (GSK) 1,329.00p -1.74%Royal Dutch Shell 'A' (RDSA) 2,070.00p -1.69%Severn Trent (SVT) 1,523.00p -1.68%Tate & Lyle (TATE) 659.00p -1.42%FTSE 250 - RisersThomas Cook Group (TCG) 16.35p +47.03%Mothercare (MTC) 149.60p +14.99%Supergroup (SGP) 475.00p +9.15%Dixons Retail (DXNS) 10.02p +7.05%Kenmare Resources (KMR) 33.33p +6.55%Kesa Electricals (KESA) 84.85p +5.80%Grainger (GRI) 92.95p +5.62%FTSE 250 - FallersCOLT Group SA (COLT) 85.00p -7.10%Heritage Oil (HOIL) 160.40p -5.65%PZ Cussons (PZC) 332.00p -5.41%Anglo Pacific Group (APF) 267.10p -4.61%Cape (CIU) 295.00p -3.63%Pennon Group (PNN) 673.50p -3.37%TUI Travel (TT.) 148.90p -3.31%London & Stamford Property Ltd. (LSP) 114.90p -3.20%--jh