UK MARKET TALK ROUNDUP: SHARES GAINING

26th Jul 2010 09:56

Stocks on the rise in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 0856 GMT [Dow Jones] Lloyds Banking (LYG) and Royal Bank of Scotland (RBS) could be biggest gainers among U.K. banks from stress test results, which could provide a lift to debt markets, says Exane BNP Paribas. "The bigger issue for U.K. banks is the extent [if any] to which the CEBS stress test exercise helps to re-establish confidence in debt markets and thereby improve, over time, the availability [and pricing] of term wholesale funding," adding RBS and Lloyds the most reliant on such funding. Keeps RBS at neutral, 50p target price; Lloyds at outperform, 80p target. Shares on both banks +1.8% at 46p, 65p, respectively. ([email protected]) 0827 GMT [Dow Jones] Pearson (PSON.LN) 1H results are "materially better-than-expectations," Panmure Gordon analyst Alex DeGroote says. "North America Education and Penguin the main drivers on the upside," he adds. Pearson has also upgraded its forecast for 2010, "which is encouraging", in spite of repeated references to market uncertainty. Pearson usually generates more than 80% of clean PBT in the 2H, says DeGroote, who retains a hold rating and 950p target price. Stock +2.4% at 996p. ([email protected]) 0716 GMT [Dow Jones] All UK banks included in the EU-wide bank stress tests--Barclays (BCS), HSBC (HBC), Royal Bank of Scotland (RBS.LN), Lloyds Banking Group (LYG)--passed, as expected, says Shore Capital, with tier 1 ratios comfortably above 6% under the adverse scenario. Takes comfort, in isolation, from the UK bank results and disclosure (while remaining conscious of EU-wide contagion risk). Says sceptics are likely to remain unconvinced, but the publication of granular sovereign debt exposures should provide welcome transparency for the more pragmatic. Prefers Barclays, HSBC and Standard Chartered (STAN.LN), all buy rated, ahead of Lloyds and RBS, both at hold. Barclays +2.2%, Lloyds +1.7%, RBS +2.3%, and HSBC +0.2%. ([email protected]) 0711 GMT [Dow Jones] UK banks all passed the EU-wide stress tests Friday. However, "the static balance sheet limitations along with the absence of important factors such as regulatory changes make the results less meaningful, especially for UK banks that will see significant restructuring," says JPMorgan Cazenove. Adds that a pass for UK banks was already expected post the FSA stress tests in 2009, and this test highlighted that UK banks would have no capital issues. Moreover, "this was more of a European exercise intended to reassure the market and so the same challenges in terms of higher funding costs, need to delever and balance sheet restructuring remain," adds JPMorgan Cazenove. Royal Bank of Scotland (RBS.LN) shares +2% at 46p, Barclays (BARC.LN) +2.8% at 310p and Lloyds Banking Group (LLOY.LN) shares +2% at 65p. ([email protected]) 0704 GMT [Dow Jones] Tullow Oil's (TLW.LN) latest discovery offshore Ghana, the Owo field, is world class, says NCB Stockbrokers analyst Peter Hutton. The field contains light oil, which considerably improves the economics, and will move Tullow materially closer to its top-end resource estimate of 1.4 billion barrels of oil equivalent for Owo and its neighbouring discovery Tweneboa, he says. "This gets Tweneboa/Owo over commerciality by some measure," he says. Shares +5.3% at 1241p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 26, 2010 04:56 ET (08:56 GMT)