London open: Stocks rise ahead of Budget

21st Mar 2012 08:48

- Budget expected at 12:30- Retailers rise, Sainsbury in demand- Serco upgraded by HSBC, Morgan StanleyThe Footsie was bouncing back in early trading on Wednesday, following a steep fall the day before as fears about a slowdown in Chinese economic growth fuelled a sell-off in the mining sector. It is likely to be a cautious day on the markets with Chancellor George Osborne due to reveal his 2012 Budget at lunchtime.After ratings agency Fitch warned last Thursday that there is a slightly better than evens chance that Britain will lose its cherished AAA rating on its sovereign debt, Osborne will be under even more pressure to raise revenue while at the same time juicing the economy. "We think Mr Osborne has little scope for significant giveaways, with the government debt ratio already at the margin of triple-A acceptability under existing plans," said analysts at Barclays Capital. They expect the Office for Budget Responsibility's forecasts to be broadly changed on November, "although the forecast for public borrowing this year is likely to be revised downwards, and the borrowing forecast for 2012-13 is likely to be around £30bn lower, largely owing to the transfer of the Royal Mail pension fund to the government's books."Meanwhile, the minutes of the Monetary Policy Committee are due out at 09:30 this morning and are largely expected to show that decisions to leave both the interest rate and asset purchases unchanged at the last meeting were unanimous.RETAILERS PROVIDE A LIFTRetailers were on the rise in early trading with Marks & Spencer, Sainsbury, Tesco and Morrison making gains. Debenhams was leading the gainers on the FTSE 250 after Citigroup upped its recommendation on the stock from hold to buy.Sainsbury, once Britain's leading supermarket chain by sales but now relegated to the number three slot, has continued its revival in the fourth quarter with like-for-like (LFL) sales growth ahead of expectations. LFL sales in the 10 weeks to March 17th were up 2.5% year-on-year, or 2.6% excluding fuel. That was down from the third quarter growth rate of 4.8% (inc. fuel) but better than the 2.1% growth the market had been expecting. Outsourcing giant Serco was the highest riser after HSBC upgraded its rating from neutral to overweight and hiked its target price from 550p to 635p. Morgan Stanley also raised its recommendation from equal weight to overweight and raised its target price by the same amount. Telecoms giant Vodafone was also advancing after Goldman Sachs upgraded the stock from buy to conviction buy.Meanwhile, the insurers were being sold off, with Standard Life and Aviva being the two-worst performers.Kazakhstan-focused miner Eurasian Natural Resources Corp (ENRC) fell despite saying it expects production to be at full available capacity across all divisions in 2012, with increased copper volumes anticipated. The bullish outlook statement accompanied full year results for 2011 which showed revenue up 17% to $7.71bn and underlying earnings before interest, tax, depreciation and amortisation up 7% to $3.43bn. On the FTSE 250, Ophir Energy, the African energy firm which began trading in London last year, is hailing 2011 as a 'transformational year' as both revenue and cash-flow surged. Revenue jumped from just $0.53m in 2010 to $14.68m in the 12 months ended December 31st 2011, helped by a farm-out gain from its AGC Profond interests toNoble Energy.Elsewhere, trading the GAME Group's shares have been suspended with the board conceding that, in its opinion, there is no equity value left in the group. The verdict came after the board had assessed the status of the ongoing and regular discussions between GAME and its lending banks and between its lending banks and a potential third party provider of finance to the business. BCFTSE 100 - RisersSerco Group (SRP) 558.00p +2.95%Wolseley (WOS) 2,548.00p +2.21%Marks & Spencer Group (MKS) 387.90p +2.08%Sainsbury (J) (SBRY) 311.80p +2.06%Vodafone Group (VOD) 173.45p +1.55%Randgold Resources Ltd. (RRS) 6,485.00p +1.49%Prudential (PRU) 785.50p +1.35%Petrofac Ltd. (PFC) 1,702.00p +1.31%Burberry Group (BRBY) 1,551.00p +1.31%Fresnillo (FRES) 1,708.00p +1.24%FTSE 100 - FallersStandard Life (SL.) 236.60p -3.51%Aviva (AV.) 360.70p -3.48%Eurasian Natural Resources Corp. (ENRC) 653.50p -1.51%Aggreko (AGK) 2,244.00p -0.66%Smiths Group (SMIN) 1,036.00p -0.58%Associated British Foods (ABF) 1,181.00p -0.42%InterContinental Hotels Group (IHG) 1,443.00p -0.35%Reckitt Benckiser Group (RB.) 3,535.00p -0.25%Unilever (ULVR) 2,060.00p -0.19%GlaxoSmithKline (GSK) 1,431.00p -0.17%FTSE 250 - RisersDebenhams (DEB) 79.15p +3.40%Lamprell (LAM) 339.60p +2.91%Essar Energy (ESSR) 152.70p +2.55%Barratt Developments (BDEV) 145.80p +2.32%Dixons Retail (DXNS) 17.86p +2.23%Premier Farnell (PFL) 221.80p +2.16%JPMorgan Indian Inv Trust (JII) 371.80p +2.06%Aegis Group (AGS) 184.70p +2.04%Bovis Homes Group (BVS) 502.50p +1.95%Balfour Beatty (BBY) 292.40p +1.92%FTSE 250 - FallersJohn Laing Infrastructure Fund Ltd (JLIF) 106.80p -2.47%Millennium & Copthorne Hotels (MLC) 489.20p -2.14%SEGRO (SGRO) 244.70p -2.00%Close Brothers Group (CBG) 784.50p -1.75%Mitie Group (MTO) 281.10p -1.71%Ocado Group (OCDO) 121.30p -1.62%Chemring Group (CHG) 428.10p -1.56%Galliford Try (GFRD) 608.00p -1.22%Go-Ahead Group (GOG) 1,308.00p -0.68%Moneysupermarket.com Group (MONY) 124.70p -0.64%