London midday: Tough morning for blue chips

23rd Nov 2010 11:48

Blue chips have had a difficult morning with the twin concerns of a serious outbreak of fighting in Korea and Irish bail-out worries knocking sentiment.Fears of debt contagion are pushing the banks down, with Barclays, Standard Chartered and Lloyds Banking the hardest hit. Royal Bank of Scotland is better today after UBS upgraded to 'buy', the broker suggesting it can manage its £50bn Irish exposure.The Korean situation is sapping demand for miners such as Vedanta, Kazakhmys and Antofagasta. Gold miner Randgold Resources defies the trend in the mining sector, however, and heads higher. The shelling of Yeonpyeong Island by North Korea is the fourth flare-up of tensions between North Korea and South Korea this year. In March, a South Korean corvette was sunk near the disputed border between the two counties, with a North Korean submarine suspected of being responsible for the act. In May, South Korea suspended trade with its northern neighbour and banned North Korea's ships from the waters around Seoul. Hostilities broke out again in October when troops exchanged fire across the border, ahead of the G20 summit meeting held in Seoul.Aero-engine maker Rolls-Royce got a lift from news that a pair of A380 super-jumbos owned by Qantas will resume flights again on Saturday, three weeks after the airline's entire fleet was grounded after an engine exploded mid-flight.Mitchells & Butlers' debt reduction programme has cut the pub group's interest bill, helping boost full-year profit by 26%. The shares fell back, however, as the market expressed disappointment that the company does not feel able to resume dividend payments yet. The company said it will make a decision on dividend payments after monitoring the level of operating cash flow generation and capital investment opportunities for the business during 2011.Water Group Severn Trent posted a fall in profits in the six months to 30 September despite higher revenues, after facing a number of charges. The company, which serves 8m customers across England and Wales, said pre-tax profits fell to £101.1m from £208.2m the previous year on turnover that rose to £867.9m from £852.1m.De La Rue's underlying interim profits tumbled after the well-flagged problems at one of its paper production sites. That cost it £35m and the resignation of chief executive James Hussey. The firm says demand for banknotes was also weak generally in the past six months with revenues falling from £252m to £209m.Emergency repair service provider Homeserve posted a 32% decline in half year pre-tax profit as it issued a confident outlook for the year. The boiler repair group said statutory pre-tax profit fell to £17.8m for the six months ended 30 September 2010 from £26.0m after including exceptional revenue of £10.2m.Lower impairments and a much stronger investment portfolio were behind a sharp increase in half-year profit at mezzanine finance specialist Intermediate Capital. It posted a profit before tax of £105.1m for the six months ended 30 September compared with just £8.1m a year ago and £97.7m in the second half of the last financial year.Electrical component maker Laird is acquiring Cattron Group, which makes remote controls for cranes, agricultural machinery and other equipment, for $90m (£56.5m). The acquisition will allow Laird to expand its wireless 'machine-to-machine' offering while providing technology, product development and revenue synergies, Laird said.A combination of a recovery in sales and cost-cutting helped industrial chain-maker Renold move into profit in the half year to September 30. Renold said it has begun discussions on the future of its Seclin facility in France that could result in the cessation of activities there. Chief executive Robert Davies told ShareCast that the manufacturing operations at the facility would be moved to the UK.Oil and gas services provider Hamworthy has taken a 38% slump in first half profits on the chin and thinks it will meet expectations for the full year.Blue-blood investment firm Caledonia Investments is taking a cautious view of short-term prospects for equity markets and intends to increase liquidity and focus more on income rather than capital growth. Shares in Intellego jumped after the training consultancy group said it had made a good start with its trial programme providing financial services products to a high street bank and other financial services groups.