London open: Blue chips retreat as uncertainty returns

11th May 2010 08:40

Footsie has given back some of the strong gains posted yesterday on the back of the euro bail-out. Uncertainty over who will govern the UK is to blame but there are also growing doubts over the substance of the euro plan. A string of company announcements is helping to deflect attention away from these issues a little, while Fabio Capello's provisional World Cup squad announcement will also likely provide some distraction for dealing rooms later on.Part-nationalised Royal Bank of Scotland is among the worst performers. The taxpayer-owned bank has agreed to pay the US government $500m to settle charges it conspired to violate the US Bank Secrecy Act. The Department of Justice said ABN Amro, the lender RBS bought in 2007, had helped banks and customers from blacklisted countries, such as Cuba, Iran, Libya, and Sudan, to carry out transactions.BT is the best performer but you can count the risers on one hand. Life insurer Aviva is one, It grew sales for the second successive quarter as its core life and pensions businesses in the UK and Europe pushed ahead. Long-term savings sales for three months to March this year rose by 16% over the previous quarter to over £10.2bn, in line with the first quarter of 2009.Service company Serco is on track to meet its financial guidance for 2010 after a strong performance in the first half of the year so far. The company, whose activities include operating London's Docklands Light Railway and prison vans, entered 2010 with a record order book of £17.1bn. It has signed contracts worth about £1bn so far this year.Serco's rival Capita will continue to focus on providing services to central government despite the uncertain make-up of the next UK government, the outsourcing group said as it reported strong trading so far this year. Capita, whose activities include administering the payment of TV licenses and managing teachers' pensions, said all its key metrics remain on track this year, with a strong bid pipeline.TUI Travel is to take a £90m hit for the impact of the disruption caused by the volcanic ash cloud, but intends to sue national governments to get the money back. The tour operator added that forward bookings have held up well despite the disruption though pre-tax losses increased to £367m from £333m in the half-year to March. Revenues fell 8% to £4.93bn from £5.38bn.Another company hit by the volcano cloud, EasyJet, reported a smaller than expected first half loss but cut its full year profit forecast due to the travel disruption. The carrier revised its profit expectations for the year to a range of £100m to £150m at current exchange rates and fuel price, down from expectations of £175m to £200m prior to the recent volcanic ash related disruption.Recent listing Supergroup will report sales rose by 83% over the previous year when it reports its first figures since it joined the stock market. The fashion group behind the Superdry label said total sales for year to end April rose by £63m to £139m. Retail sales were up 75% to £85m (an increase of £36m) with like-for-like sales up 17% for the year. Wholesale sales rose by 98% to £54m.Engineering support services group Babcock International reported a rise in profits in the year to March 31 and said it expected to see continuing demand for its efficiency-delivering services as pressure on public spending increases.Pub group Enterprise Inns is a stand-out riser after it reported profit before tax and exceptional items of £86m (2009: £104m) but added business generally seems to be stabilising.