London pre-open: Footsie set for retreat

10th Aug 2010 07:34

London's blue chips are seen opening around 20 points lower as investors consider a tie-up between International Power and GDF-Suez and earnings from hotel and travel firms.International Power shareholders will own 30% of the new company to be formed by the merger of the UK power company with French electricity giant GDF Suez Energy International. The proposed combination, which has the full backing of the International Power board, will take the form of a contribution of GDF SUEZ Energy International into International Power in exchange for newly issued International Power shares in order to create an enlarged International Power.Half-year results from InterContinental Hotels underpin that the hotel trade is showing signs of recovering from the effects of the recession, and not just at the budget end of the market. The Holiday Inn owner reported a better than expected 22% rise in operating profit to $219m in the six months ended 30 June. Broker Charles Stanley expected to see earnings of $210m. Pre-tax profit increased from a loss of $50m to a profit of $192m. Revenue rose to $772m, up from $726m.Worries over the economy have caught up with travel group TUI Travel, which warned profits this year will be at the low end of forecasts after UK bookings faltered. UK bookings fell by 2% over the past 12 weeks with the Netherlands also down by 3%. The market has been hit hard by ash cloud disruption, good weather and the uncertainty around the emergency budget, resulting in a later booking pattern that has adversely affected profitability.Bakery and sandwich chain Greggs delivered a 2.9% rise in half year sales and said despite the recent surge in wheat prices it remains confident for the full year. Pre-tax profit rose to £18.6m in the 26 weeks to 3 July from £16.5m the same time a year earlier. Sales for the period rose to £321m from £312m as it opened 26 new shops and closed eight. Like for like sales were up 0.7%, in line with company forecasts.