London midday: Eurozone concerns continue to weigh on stock

2nd Mar 2012 11:50

- Eurogroup releases 58bn euros but delays full Greek bailout. - Banks park record amount in ECB overnight.- International Power rises on Indonesian deal.- Goldman upgrades banks, utilities.The FTSE 100 was still trading slightly lower by lunchtime, with all eyes on the Eurozone. European leaders delayed the decision to fully bail out Greece for another 10 days, while banks deposited a record amount of cash in the ECB overnight.Eurozone finance ministers, who met for a summit in Brussels last night, released €58bn to Greece to underpin a €206bn debt restructuring, but are holding back the remaining €71.5bn until they are fully satisfied that Athens can fulfil the terms and conditions of the bailout package. They have delayed the final decision until a Eurogroup meeting on March 12th, just eight days before Athens faces a €14.5bn bond repayment. Meanwhile, banks' overnight deposits at the European Central Bank (ECB) shot up last night, reaching €776.9bn, just two days after the ECB doled out no less than €529.5bn in three-year loans to 800 European financial institutions.President of the ECB Mario Draghi said the monetary authority is 'reasonably satisfied' with the results of Wednesday's long-term refinancing operation (known as LTRO). The figure €529.5bn figure topped not only analyst expectations of €470bn but also surpassed the €489bn given out in funds in the first LTRO last December. Draghi also commented that "sizeable progress" has been achieved with fiscal and structural reforms. In domestic news, the Markit/CIPS construction sector purchasing managers index (PMI) rose to 54.3 points in the month of February, from 51.4 the month before. Consensus estimates had been pointing to a small decrease, to 51.2.UTILITIES, BANKS LEAD THE RISEElectricity group International Power (IPR) and French utilities firm GDF SUEZ (which owns 70% of IPR) have announced that IPR-GDF SUEZ Asia has signed 30-year power purchase agreements (PPAs) for two 220MW geothermal projects with the Indonesia state-owned utility, PLN. The two projects are planned to be built on Sumatra island "to deliver power to the region which continues to experience high demand growth," IPR said. Banks and utilities were performing well in London, and across Europoe, after Goldman Sachs raised its ratings on the two sects from neutral to overweight. "Despite the recent strong performance we think there is more upside for banks", analysts at the US investment bank said. They note that the recent LTRO funding has "improved liquidity and will help sector pre-provision profits, while banks still trade at a reasonable multiple of book value." Barclays, Lloyds and Royal Bank of Scotland were performing well by midday.Meanwhile, telecoms giant Vodafone and BT were among the fallers after Goldman downgraded its recommendation for the sector from overweight to underweight. Vodafone may also be weighed down by yesterday's confirmation by Tata Communications that it is in discussions with Cable & Wireless Worldwide, a firm that Vodafone is also interested in.Engineering group IMI rose after upping its full-year dividend by 15% as it reported double-digit growth in both revenues and adjusted profits in 2011. During the 12 months ended December 31st, revenue jumped 12% from £1,911m to £2,131m, ahead of expectations of £2,120bn. Adjusted pre-tax profit increased by 19% from £304.4m to £363.4m. Real estate investment trust Hammerson nudged higher after saying that it is to dispose of its freehold for 54-60 rue du Faubourg Saint-Honoré in Paris for €165m, slightly above its December 2011 book value. Pharmaceuticals giant GlaxoSmithKline (GSK) fell despite saying that it expects to create the number one vaccines company in Japan after forming a joint venture (JV) with Japanese peer Daiichi Sankyo.GKN, a British maker of aircraft components for Airbus SAS, is the frontrunner to purchase Volvo AB's aircraft-engine unit after MTU Aero Engines dropped out of the sale process, people with knowledge of the situation have told Bloomberg News. Shares were down nearly 2%.FTSE 250: RENTOKIL ANNOUNCES LOSS ON CITY LINK IMPAIRMENTS Business services company Rentokil announced a £116.2m loss before tax for the fourth quarter of 2011, while for the full year the company's red ink comes to £50m. The main reason behind those losses is the goodwill write-downs incurred by Rentokil to reflect the poor financial performance of its City Link unit. Heading the other way on the second-tier index was electronic components provider Laird after announcing a big rise in profits and a series of acquisitions worth over £30m. BCFTSE 100 - RisersMan Group (EMG) 151.90p +2.98%Barclays (BARC) 258.00p +2.73%International Power (IPR) 358.80p +2.49%British Sky Broadcasting Group (BSY) 688.50p +2.08%IMI (IMI) 990.00p +2.06%Lloyds Banking Group (LLOY) 35.38p +1.73%Weir Group (WEIR) 2,060.00p +1.48%Hammerson (HMSO) 403.70p +1.08%Royal Bank of Scotland Group (RBS) 28.05p +1.08%International Consolidated Airlines Group SA (IAG) 164.10p +0.80%FTSE 100 - FallersKazakhmys (KAZ) 1,027.00p -3.30%GKN (GKN) 217.80p -2.11%Smiths Group (SMIN) 1,072.00p -2.01%Amec (AMEC) 1,106.00p -1.43%Capita (CPI) 754.50p -1.24%Xstrata (XTA) 1,197.50p -1.20%Experian (EXPN) 945.00p -1.10%Hargreaves Lansdown (HL.) 442.70p -1.09%Next (NXT) 2,740.00p -1.05%Randgold Resources Ltd. (RRS) 7,225.00p -0.96%FTSE 250 - RisersBwin.party Digital Entertainment (BPTY) 164.40p +3.72%Ocado Group (OCDO) 103.30p +3.30%Renishaw (RSW) 1,470.00p +3.30%Laird (LRD) 177.50p +2.90%SDL (SDL) 734.50p +2.23%Ferrexpo (FXPO) 325.90p +2.10%TUI Travel (TT.) 202.60p +1.96%Electrocomponents (ECM) 251.30p +1.91%Premier Farnell (PFL) 222.10p +1.88%Taylor Wimpey (TW.) 49.59p +1.68%FTSE 250 - FallersRentokil Initial (RTO) 76.20p -5.28%Heritage Oil (HOIL) 178.00p -2.73%Gem Diamonds Ltd. (DI) (GEMD) 244.00p -2.67%Diploma (DPLM) 386.50p -2.64%SVG Capital (SVI) 274.50p -2.45%JD Sports Fashion (JD.) 790.50p -2.41%Ophir Energy (OPHR) 425.30p -2.00%Supergroup (SGP) 530.00p -1.85%De La Rue (DLAR) 951.00p -1.81%National Express Group (NEX) 237.50p -1.78%