London midday: Blue chips turn lower

21st Oct 2009 12:03

Footsie's early drift has given way to more substantial falls as US futures point to a lower opening on Wall Street.Smiths Group and BSkyB are the highest profile stocks in the red as a result of trading in ex-dividend status today. Also on the downturn is London Stock Exchange, after Goldman Sachs expunged the shares from its 'conviction buy' list. Results are not helping. Home Retail reported a 3% rise in half year sales and said trading at both Argos and Homebase exceeded its expectations. Sales rose to £2,805m in the 26 weeks to 29 August from £2,736m, reflecting growth of 1.7% at Argos and 4.4% at Homebase. Like-for-like sales were down 2.1% at Argos and up 2.8% at Homebase.Elsewhere in the retail sector, speculation about a bid for Sainsbury has revived interest in the supermarkets, where Tesco and Morrisons lead the sector higher. Japanese broker Nomura Securities has boosted Tesco's appeal by lifting its price target from 405p to 526p.Broker comment is also lighting a fire under the share price of plumbing supplies merchant Wolseley. Merrill Lynch has raised its rating on Wolseley from 'underperform' to 'buy'.Merrill Lynch has also turned more positive on property stocks Hammerson, upgraded to 'buy' from 'neutral', and Land Securities, now rated 'neutral', having previously been expected to underperform.Power station operator Drax is trading in line with expectations for the current year but said conditions remain challenging. 'Since publishing our half year results on 4 August, trading conditions in the commodity markets in which we operate remain challenging,' said the group. Cadbury has thrown down the gauntlet to potential bidder Kraft by upping its guidance for 2009 revenue growth to the middle of its 4-6% goal range and stating its underlying operating margin improvement will be at least 135bps in constant currency. Miner BHP Billiton reported record iron ore production over the past three months amid signs of stabilising demand from both emerging and developed countries. 'Over the last three months there has been increasingly positive economic news across most economies. Chinese economic growth continues to be robust on the back of strong domestic focused consumption and infrastructure-based stimulus spending,' it said.Demand for property ahead of the Olympics helped East London focused housebuilder Telford Homes nearly double completions in the past six months, but a lack of mortgage finance remains a constraint.Online gaming technology developer Playtech said activity improved towards the end of the third quarter and momentum has continued into the start of the fourth quarter.