UK MARKET TALK ROUNDUP: SHARES GAINING

22nd Jul 2010 10:58

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] 0958 GMT [Dow Jones] Panmure Gordon upgrades Reckitt Benckiser (RB.LN) to buy from hold and lifts the target price to 3800p from 3650p, following the company's move to acquire SSL International (SSL.LN) for 1171p per share. "We regard this as an excellent strategic fit," says Panmure. SSL's two key brands, Durex and Scholl will become power brands within the Reckitt stable, says Panmure. "We expect that both brands will benefit significantly from Reckitt's expertise in consumer brands." Reckitt shares +0.6% at 3320p, SSL -0.1% at 1176p. ([email protected]) 0944 GMT [Dow Jones] Collins Stewart upgrades Connaught (CNT.LN) to hold from sell. Comes as Connaught says it is reviewing its accounting treatment of mobilization costs. Collins Stewart says the balance sheet impact of a change in accounting estimate or accounting policy would result in around a GBP30M write-off, net of tax. Still thinks the risk/reward remains firmly in place. Says there is a risk that sentiment could worsen pending a change in accounting estimates, which could mean the stock continues to trade at a discount to fair value. Maintains 150p price target. Shares are +0.9% at 104p. ([email protected]) 0919 GMT [Dow Jones] Royal Bank of Scotland nudges up Ryanair Holdings (RYA.DB) price target to EUR3.70 from EUR3.50 after delivering a good performance in the 1Q results. Adds that the outlook for trading in the next quarter looks encouraging. However, keeps at hold as sees risks in the future from austerity measures, aviation taxation, the rising dollar and emissions trading. RBS prefers network carriers to low cost carriers at this time. Ryanair shares are +2.4% at EUR4.04. ([email protected]) 0904 GMT [Dow Jones] Goldman Sachs lowers ITV (ITV.LN) price target to 70p from 77p, having reduced '11 and '12 EPS forecasts by close to 10%. Sees a more cautious advertising outlook, delay to some regulatory changes and greater levels of reinvestment from the new management. Still thinks the stock offers good fundamental value. Keeps the stock at buy but removes it from its conviction list. Notes that since being added to the list on January 6 '10, the shares are down 11% versus the FTSE World Europe down 10%. Currently, shares are +0.4% at 52p. ([email protected]) 0837 GMT [Dow Jones] UBS cuts Cable & Wireless Worldwide (CW.LN) target to 70p from 85p. Says C&W Worldwide has been taken by surprise by the speed of the downturn in UK public spending. Says project work has "all but stopped" and thinks this accounts for GBP60M of revenue, GBP35M gross margin. UBS has concerns that there could be further pressure on estimates if contract revenue is renegotiated by the UK government. As a results, cuts '11 EPS forecast to 5.68p from 6.48p and '12 to 6.90p from 7.62p. Maintains a neutral recommendation. Shares +1.1% at 66.5p. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] 0733 GMT [Dow Jones] Seymour Pierce upgrades Rexam (REX.LN) to buy from outperform and lifts its target price to 370p from 350p. It cites evidence of growth in demand for beverage cans in the Coca Cola (KO) 2Q numbers Wednesday, given Rexam is the leading supplier to Coca-Cola in North America and in Europe. Seymour says Rexam shares are trading on just 11.3x the brokerage's FY2010 EPS forecast, which is well below the peer group. Shares +1.1% at 334p. ([email protected]) 0725 GMT [Dow Jones] Malaysia government bonds mixed late on dearth of market moving news, says dealer with local brokerage. "Volume continues to be subdued as investors await details of the upcoming reopening auction of the 7-year MGS (expected around noon Friday)," dealer says. Adds, market expects central bank to sell MYR3.5 billion of September 2017 MGS. "If the auction size is smaller than the MYR3.5 billion, then there is a good chance some investors may buy from the open market," says dealer; expects yields to hold steady at current levels ahead of MGS auction details. Yields on May 2013 MGS +2 bps at 3.18%, August 2015 MGS down 2 bps at 3.35%, September 2017 MGS flat at 3.71% and November 2019 MGS flat at 3.89%. ([email protected]) 0721 GMT [Dow Jones] Peripheral euro zone yields have tightened to the core recently as the market appears to be worn out by the debt crisis, says Steven Mansell, Citigroup Global Markets strategist. The 12-month LTRO expiry passed without any major problems and negative newsflow has eased back for the weaker sovereign credits. "We doubt that upcoming bank stress tests, which risk being rather meaningless from a market perspective, will have a lasting impact on spread levels. To reiterate, our main concern relates to the potentially lenient assumptions regarding sovereign default haircuts." The 10-year Spanish/German yield spreads is 1 bp wider on the day at +159.5 bp, Portuguese/German is 3 bps wider at +282 bps, Irish/German is unchanged at +275.5 bps, Italian/German is 2 bps wider at +139 bps while Greek/German is 2 bps wider at+785.5 bp. ([email protected]) 0718 GMT [Dow Jones] China government bonds end down slightly, reversing earlier gains after PBOC mops up net CNY101 billion from money market via regular open market operations this week, 1st weekly fund withdrawal since late May. "The fund-draining effort signaled the central bank's intention to prevent banking system liquidity from becoming too excessive, adding pressure to bond prices somewhat," says analyst at Shanghai Securities. Shanghai Stock Exchange government bond index ends at 126.14 vs 126.16 last close, may extend losses tomorrow if local equities maintain recent upward bias. ([email protected]) 0712 GMT [Dow Jones] Fed chairman Bernanke really only echoed the recent downbeat FOMC minutes. However, the market took his testimony as even more downbeat and so sold risk and bought safety. This led to a stronger USD, CHF and JPY, lower equities and firmer bonds. That mood continued overnight and although late Asia has taken a little profit the risk currencies still look shaky. For Thursday, the data calendar is back with a vengeance with PMIs, U.S. weekly jobless, Bernanke part 2 and U.S. housing data. However the imminent European stress test results will dominate thinking into the weekend and there now seems some uncertainty as to when they will be released. The official line is 1600 GMT Friday; however, 2200 GMT Thursday and 0600 GMT Friday have also been mentioned in research. ([email protected]) 0711 GMT [Dow Jones] Singapore stocks remain in demand, propped up by players buying on yesterday's dip, which brought STI to 7-session low. Benchmark +0.8% at 2948.74, but may face resistance at current July high of 2958. Penny stocks faring better, with FTSE ST Catalist Index +3.0%. "There's not a lot of buying conviction as volume remains thin, although the gains are still commendable considering markets in most of the region are down," says trader at local brokerage. Key gainers among STI components include Fraser & Neave (F99.SG), +4.1% at S$5.80, on hopes company may issue special dividend following recent completion of US$257.8 million sale of its glass business in Malaysia. Olam (O32.SG) +3.4% at S$2.71, with brokers citing interest by fund managers following recent purchase of NZ Farming Systems Uruguay (NZS.NZ). ([email protected]) 0704 GMT [Dow Jones] KLCI down 0.5% at 1334.01; local dealer says weak regional bourses affecting local sentiment. "The profit-taking is not a surprise... except for the odd one or two sessions, the index has been on a rising trend for more than a fortnight." Tips psychological support at 1330 likely to stay firm, market may consolidate at 1330-1335 levels before rising further next week. Market breadth negative with 389 decliners vs 223 advancers; decliners include Sime Darby (4197.KU) down 1.8% at MYR7.60, RHB Capital (1066.KU) down 1.4% at MYR6.16, Tenaga (5347.KU) down 0.8% at MYR8.58. Advancers Mudajaya (5085.KU) +3.7% at MYR5.92, Malaysia Airports (5014.KU) +1.6% at MYR5.00. ([email protected]) 0702 GMT [Dow Jones] The ingredients for another AUD rally are all there. Australian growth remains robust and Australian interest rates will more than likely be hiked again soon. However, much of the AUD's fortunes will now depend on the mood of the international investment community, says Nicholas Hastings in Forex Focus. ([email protected]) 0702 GMT [Dow Jones] USD/CNY stays up but well off morning high on fairly heavy CNY demand, mostly from Chinese banks, says Shanghai-based trader at Asian bank. Onshore spot USD/CNY at 6.7790 vs 6.7884 intraday high, 6.7769 last close; offshore 1-year USD/CNY advances further to 6.7170/6.7210 vs 6.6893/6.6943. "The dollar selling is quite heavy despite the higher dollar-yuan central parity rate today," trader says. "That's because people believe the dollar will sooner or later fall against the yuan and businesses are taking the opportunity to sell dollars." Still, expects dollar-yuan fixing unlikely to break new low in near term so long as USD holds strength vs major currencies, implying rangebound USD/CNY trade near term. ([email protected]) (MORE TO FOLLOW) Dow Jones Newswires July 22, 2010 05:58 ET (09:58 GMT)