London midday: Footsie rallies despite BoE caution

12th Aug 2009 12:16

Footsie has rallied despite a mixed morning for UK economic news with unemployment hitting a new 14-year high and low key comments about UK recovery from the Bank of England.In the central bank's quarterly inflation report, Bank governor Mervyn King said the sustainability and strength of any recovery will be affected by balance sheet adjustments within the banking, household and public sectors.Banks have bounced back from early losses to lead the index higher. Royal Bank of Scotland has agreed to sell its Pakistan unit to MCB Bank for $87m (£53m). The UK lender, 70%-owned by the British government, said it has reached agreement in principle for the sale of its 99.37% to Pakistan's largest bank.Lloyds Banking has sold part of the HBOS Insight investment business to Bank of New York Mellon for £235m. The rest of the Insight business will be folded into Lloyds' Scottish Widows arm. Balfour Beatty leads the risers after a strong pipeline of orders from the public sector helped the engineer and construction contractor post a rise in pre-tax profits and revenues in the six months to June 27. Revenue climbed to £5.1bn from £4.3bn over the same period the previous year as pre-tax profit before exceptional items rose to £108m from £95m. The interim dividend climbed 8% to 5.5p.Package holiday group TUI Travel now leads the fallers despite a seemingly upbeat third quarter profits statement with good trading in the UK, Nordics and Germany outweighing an adverse impact from the swine flu outbreak. Revenues for three months to June fell by 1% to £3.58bn, while underlying operating profit rose by 57% to £102m. Thomas Cook is down in sympathy.Full-year profits halved at miner BHP Billiton as the recession slashed volumes and sent prices tumbling, although restocking and improving demand is brightening the outlook. The world's largest mining company said profit before tax tumbled to $11.6bn in the year to 30 June from $23.5bn in 2008 on revenue down 16% to $50.2bn.Meanwhile, the Chinese authorities have formally charged Rio Tinto executive Stern Hu with bribery and violating commercial secrets, raising the prospect of seven years in a Chinese jail. Australian citizen Hu, Rio's chief negoiator of iron ore sales, was arrested with three Chinese colleagues who work with him at the world's third-largest miner.Platinum miner Aquarius Platinum slumped into losses in the year to June 30 as prices for the precious metal collapsed from the highs they reached in the middle of last year. The company posted a pre-tax loss of $97.4m for the year, compared with a profit of $536.8m over the same period the previous year as revenues slumped to $310.6m from $919m.Legacy software specialist Micro Focus fell back as it has predicted a running twelve-month revenue contribution of $150m from recent acquisitions Compuware and Borland. Combined EBITDA margins will be approximately 15% in the first year of ownership, well below the rest of the group.