London midday: Pru deal casts shadow

1st Mar 2010 12:01

Gains have been eroded steadily through the morning to leave the leading index up by a baker's dozen as Prudential slumps on rights issue fears and miners step back.Confirmation that Pru may pay $35bn (£23bn) for the Asian business of troubled US insurer AIG ate into London's early 60-point lead. Any deal would need to be funded by a cash call many estimate as high as £15bn.The UK firm's shares, suspended since the news broke, plunged over 14% when they began trading again just before 10.30am. Speculation that Pru would sell its UK life assurance operations to Resolution to raise money for the Asian acquisition were quashed when the Clive Cowdery's investment vehicle said today it is not in discussions with Prudential.Fellow insurers Aviva, Legal and General, RSA Insurance Group and Standard Life are among today's fallers. Miners had rallied following a rise in copper prices following the earthquake in Chile, the world's number one producer of the red metal.The earthquake shut down up to a fifth of the South American country's copper mining operations, but mines have already resumed operations.Kazakhmys, Fresnillo, Xstrata and Chile-focused copper miner Antofagasta are still going well, although they've lost some of their early advantage.Elsewhere, HSBC is lower after releasing worse than expected profits of $7.1bn. Underlying profits were $13.3bn but loan impairments rose again.Educational and financial information publisher Pearson bumped up sales and profits in 2009 helped by favourable exchange rate movements. Sales in 2009 at £5,624m were 17% higher than 2008's £4,811m but were up just 4% at constant exchange rates. Adjusted pre-tax profit also rose 13%, to £761m from £674m. Market expectations were for a pre-tax profit of around £725.68m.Engineer Tomkins moved modestly back into profit last year, but cautioned that conditions remain challenging and any sustained recovery will be towards the latter half of the year. The group posted a pre-tax profit of $38.4m in 2009 against a loss of $8.1m the previous year, but remained in deficit after tax with a net loss of $15.6m against $64.6m. Sales tumbled from $5.52bn to $41.28bn.Underwriter Amlin enjoyed a bumper 2009 with profits rising by more than 300% as low claims combined with a record performance from its investment arm.A pre-tax profit of £509.1m "blew away" the consensus estimate of £454m, says KBC Peel Hunt. "Amlin rightly trades at a premium to the sector and, given the extent and consistency of the returns, it deserves to trade substantially above its current 1.20x 2010E NTA."