London midday: Desire subsides after well wash-out

18th Apr 2011 12:18

Bright spots are hard to find on the first trading days of the shortened week, and far from bursting through the 6,000 barrier Footsie heads at pace in the opposite direction.Insurer Resolution leads the blue-chip index lower after UBS downgraded the stock from "buy" to "neutral". Bid hopes for medical devices maker Smith & Nephew (S&N) took a knock after reports emerged that massive US healthcare conglomerate is taking a look at Swiss company Synthes, one of S&N's rivals.Upstream exploration and production company Heritage Oil has been slapped with a $313.45m lawsuit by Tullow Oil related to the sale of Heritage's 50% interest in Blocks 1 and 3A in Uganda.Tullow is claiming that Heritage should foot the tax bill that Tullow has paid relating to the sale of Heritage's Ugandan interests to Tullow, while Heritage is claiming that Tullow had no right to pay the Ugandan's tax demand on Heritage's behalf, and questions whether the tax liability is legal in any case.Elsewhere in the oil sector, highly volatile stock Desire Petroleum loses more than half its value after it said the 14/15-3 well on the Ninky prospect in the North Falkland basis is to be plugged and abandoned.Charlie Sharp of Matrix Group thinks another fund raising by the group is on the cards as, by his estimates, the group has insufficient funds to drill another well. "The company has £23m cash post the Ninky ... well, but only around £10-15m (by our estimate) post the demob costs, seismic survey, etc.," the broker calculates. The broker has its target price for Desire under review.Engineering software firm Aveva said it expects full year results to be in line with expectations after a good performance in Asia Pacific Oil and Gas and Power sectors. "The group has continued to perform well in its key vertical markets and geographies, consistent with the trends identified in January 2011," the group said in company update.RBS was encouraged by what it saw as a reassuring trading update. "This supports our view that AVEVA is and will continue to be one of the fastest growing stocks in the sector. We maintain our Buy recommendation," the broker said.RBS also had some good words for terrestrial broadcaster ITV, the best performing blue-chip of the morning session. "Media buyers suggest ITV's advertising is proving resilient (2Q expected to be flat) despite profit warnings in the retail sector, as retailers continue to battle for share of voice. We see a buying opportunity ahead of expected improved trading in 3Q when the yoy [yer on year] comparatives ease and the Rugby World Cup will help," RBS claims.Irish mining firm Kenmare Resources said its Moma titanium minerals mine is producing broadly in line with expectations, while plans to increase total production by 50% in 2012 are on schedule. The company said revenue picked up in 2010 to $91.6m from $26.7m in 2009, while losses before tax narrowed to $16.33m from $30.35m, as prices for the company's products recovered rapidly during the course of the year.The market expressed disappointment in the numbers, making Kenmare the worst performing FTSE 250 stock of the morning. The best performing FTSE 250 stock was online gaming firm Bwin.party, after the US authorities cracked down on the four largest poker web sites in the US, charging them with money laundering, bank fraud and various other offences. Banking software firm Gresham Computing reported improved first quarter pre-tax profit and revenue while it remains confident about its recently upgraded outlook. For the quarter ended 17 April 2011 pre-tax profit rose to £0.3m from £0.0m the year before. Revenue for the period rose to £2.5m from £1.9m. Adjusted EBITDA profit increased to £0.4m from £0.1m the same quarter a year earlier.FTSE 100 - RisersITV (ITV) 75.10p +1.83%Kingfisher (KGF) 268.30p +1.09%Reckitt Benckiser Group (RB.) 3,225.00p +0.78%Serco Group (SRP) 559.00p +0.72%British Land Co (BLND) 572.50p +0.62%WPP (WPP) 724.50p +0.49%Next (NXT) 2,210.00p +0.23%John Wood Group (WG.) 671.00p +0.22%Capita Group (CPI) 726.00p +0.14%BAE Systems (BA.) 334.40p +0.12%FTSE 100 - FallersResolution Ltd. (RSL) 296.40p -4.20%Smith & Nephew (SN.) 672.50p -3.45%International Consolidated Airlines Group SA (IAG) 218.40p -2.98%Barclays (BARC) 294.45p -2.39%Investec (INVP) 464.70p -2.29%Man Group (EMG) 245.00p -2.23%Anglo American (AAL) 3,071.00p -2.15%Essar Energy (ESSR) 439.00p -2.12%Fresnillo (FRES) 1,545.00p -1.90%Diageo (DGE) 1,187.00p -1.82%FTSE 250 - RisersBwin.party Digital Entertainment (BPTY) 178.60p +36.34%Micro Focus International Plc (MCRO) 306.30p +4.97%Yule Catto & Co (YULC) 200.00p +4.06%Home Retail Group (HOME) 219.60p +3.34%Exillon Energy (EXI) 440.00p +3.21%Jupiter Fund Management (JUP) 296.40p +2.67%Domino Printing Sciences (DNO) 606.72p +1.80%Ladbrokes (LAD) 146.00p +1.18%Supergroup (SGP) 1,475.00p +1.17%JD Sports Fashion (JD.) 861.00p +1.12%FTSE 250 - FallersKenmare Resources (KMR) 47.20p -4.80%Heritage Oil (HOIL) 258.90p -4.11%Domino's Pizza UK & IRL (DOM) 385.70p -3.65%Aveva Group (AVV) 1,539.00p -3.39%Morgan Crucible Co (MGCR) 281.50p -3.20%Petropavlovsk (POG) 861.50p -3.09%Hochschild Mining (HOC) 589.00p -2.89%Fenner (FENR) 342.20p -2.59%St James's Place (STJ) 337.20p -2.40%Aquarius Platinum Ltd. (AQP) 336.40p -2.38%---jh