ADVFN Evening Euro Markets Bulletin - October 11th 2010

By ADVFN.com
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Footsie limps higher

Market Movers
techMARK 1,763.83 +0.28%
FTSE 100 5,672.40 +0.26%
FTSE 250 10,804.84 +0.75%

Footsie closed just a few points higher Monday after a sluggish day’s trading that saw the leading share index fluctuating in a narrow range just above the zero mark.

Oil services group Petrofac firmed on the back of a lucrative contract win. The government of Sharjah has appointed the company to take over operational responsibility and facilities management of the Sajaa Gas Plant and related assets in the United Arab Emirates. The five year contracted is worth more than $250m.

Petrofac’s sector peer Wood Group also went well after saying it is trading in line with forecasts and expects to match full-year estimates. The Aberdeen-based firm, which today won a $152m contract to convert California’s Tracy Peaker power plant to a combined cycle facility, said higher bidding volumes and recent contract awards at its engineering business should help improve numbers in the second half and into 2011.

Insurance giant Prudential fell back after JP Morgan Cazenove cut its rating on the stock from “neutral” to “underweight” on valuation grounds, though the target has been hoisted 40p to 653p.

Oil titan BP, meanwhile, also sank lower after Royal Bank of Scotland cut its recommendation on the stock from “buy” to “hold” while telecoms leviathan BT saw its rating cut to “underperform” from “market perform” by US broker Bernstein.

Broker comment lifted satellite operator Inmarsat, however. Goldman Sachs has upgraded the stock from “neutral” to “buy”. Soft furnishings retailer Dunelm also floated higher after KBC Peel Hunt initiated coverage with a “buy” recommendation and a 520p price target, while high-tech group Smiths Group edges higher after UBS upped its price target to 1550p.

Builders merchant and Wickes’ owner Travis Perkins is on track as sales improved again in the third quarter. Turnover for the nine months to end of September rose 6%, driven by the merchants businesses and a modest improvement at Wickes, which grew sales for period to 2 October by 2.1%, though like-for-like turnover eased 0.1%.

Drugs companies AstraZeneca and Pozen said their jointly developed pain reliever Vimovo has received positive agreement for approval across 23 EU countries. Vimovo treats osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis.

British defence company Cobham has been awarded a contract that allows it to compete for orders with the US missile Defense Agency worth up to $1.62bn.


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Ladbrokes, the bookmaking firm, is higher after it said group net revenue was up 12% year on year in the third quarter. Operating profits (excluding high rollers) were 128% higher, albeit against weak comparative figures. The company has seen a recovery in its football betting margins and also banked £8.3m of gross win from the tail-end of the World Cup in the third quarter.

No-frills airline easyJet is going well after saying it has agreed a settlement to its acrimonious dispute with founder Sir Stelios Haji-Ioannou over its continued use of the 'easy' name. The price is not cheap. For the next 50 years, easyJet will have to pay a royalty of 0.25% of revenues, fixed at £3.9m and £4.95m in the first and second years respectively.

Bluetooth chip specialist CSR “will defend itself” against Broadcom which filed an enforcement action on Friday against redesigned products made by the UK firm's SiRF unit. In the latest episode of a long-running patent infringement case, the American firm alleges violation of the US International Trade Commission's (ITC) orders despite a previous ruling by US customs that the "redesigned chips fall outside the scope of the exclusion order issued by the ITC”.

Among smaller companies, shares in Global Petroleum jumped after the Australia-based oil and gas group said drilling the Tyler Ranch horizontal well in Texas, in which it has an 8% interest, ‘encountered good oil and gas shows.’

Video search engine Blinkx should turn over about $27m in the six months to 30 September, double the figure reported last year, and beat current profit forecasts.

Brownfield site developer Inland has seen a return to profitability with a pre-tax profit of £1.1m in the year to end-June, a substantial improvement from the pre-tax loss of £10.5m previously.

Uranium exploration and development company Uranium Resources has completed phase one of its drilling programme at the Mtonya prospect in Tanzania and declared itself pleased with the results, which have confirmed management's geological interpretation on a district and prospect scale.

FTSE 100 - Risers
Man Group (EMG) 257.00p +2.64%
Petrofac Ltd. (PFC) 1,428.00p +2.51%
Weir Group (WEIR) 1,580.00p +2.40%
Schroders (SDR) 1,488.00p +2.20%
Burberry Group (BRBY) 1,038.00p +2.17%
Inmarsat (ISAT) 644.00p +2.14%
Cairn Energy (CNE) 441.20p +2.13%
Standard Chartered (STAN) 1,870.00p +2.10%
Eurasian Natural Resources (ENRC) 926.00p +2.09%
Schroders NV (SDRC) 1,190.00p +1.97%

FTSE 100 - Fallers
Autonomy Corporation (AU.) 1,485.00p -2.30%
Reckitt Benckiser Group (RB.) 3,403.00p -1.56%
BT Group (BT.A) 146.90p -1.41%
Xstrata (XTA) 1,278.50p -1.35%
Marks & Spencer Group (MKS) 405.70p -1.29%
Prudential (PRU) 628.50p -1.26%
Rio Tinto (RIO) 3,892.50p -1.11%
Unilever (ULVR) 1,794.00p -1.10%
Randgold Resources (RRS) 6,455.00p -0.92%
BP (BP.) 432.35p -0.80%


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FTSE 250 - Risers
Kenmare Resources (KMR) 18.97p +10.29%
John Wood Group (WG.) 449.90p +4.77%
Dunelm Group (DNLM) 440.10p +4.66%
SDL International (SDL) 615.00p +4.24%
International Personal Finance (IPF) 288.30p +4.15%
Halma (HLMA) 338.00p +3.74%
Tullett Prebon (TLPR) 413.80p +3.68%
Senior (SNR) 136.60p +3.48%
Centamin Egypt (CEY) 172.00p +3.37%
Ashmore Group (ASHM) 360.60p +3.21%

FTSE 250 - Fallers
Supergroup (SGP) 1,090.00p -3.71%
Melrose Resources (MRS) 325.00p -2.26%
Petropavlovsk (POG) 999.50p -2.01%
Rentokil Initial (RTO) 101.00p -1.66%
Hansen Transmissions International (HSN) 48.20p -1.63%
Premier Foods (PFD) 16.35p -1.51%
Xchanging (XCH) 138.00p -1.43%
BSS Group (BTSM) 439.00p -1.35%
Kesa Electricals (KESA) 150.00p -1.32%
Unite Group (UTG) 219.90p -1.21%

US Market Reports

Choppy Trading Persists On Wall Street In The Late Morning

Stocks continue to show a lack of direction in late morning trading on Monday, with traders reluctant to make significant moves. The major averages have spent much of the trading day lingering near the unchanged line after posting strong gains last week.

The choppy trading comes amid a light news day due in part to the Columbus Day holiday, with traders looking ahead to the release of a slew of economic data later in the week. Nonetheless, the major averages are largely holding on to their recent gains, with the Dow hovering above the 11,000 level.

Despite the lack of direction being shown by the broader markets, semiconductor stocks are seeing notable strength. The gains by semiconductor stocks have resulted in a 1.2 percent advance by the Philadelphia Semiconductor Index, which is currently poised to end the day at a two-month closing high.

Health insurance stocks are also posting strong gains, driving the Morgan Stanley Healthcare Payor Index up by 1.5 percent. Moderate strength is also visible among computer hardware stocks, while telecom and housing stocks are seeing some weakness.

The major averages are currently posting modest gains, well off their highs for the session. The Dow is up 6.16 points or 0.1 percent at 11,012.64, the Nasdaq is up 4.61 points or 0.2 percent at 2,406.52 and the S&P 500 is up 0.76 points or 0.1 percent at 1,165.91.


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Tuesday Event Calendar preview
Tuesday’s full year results for Punch Taverns will be the first set of figures released under the helmsmanship of new boss Ian Dyson.

The heavily indebted pubs group raised full year profits guidance back in August after trading improved in the final quarter of the company’s fiscal year. Like for like sales in the 12 weeks to mid-August were up 2.6% year on year.

Market consensus is for profit before tax of £131m on sales of £1,274m. Recent trading updates from sector peers Mitchells & Butlers and Marston’s have been encouraging and there is every chance that Punch will report improved trading has continued into its new financial year.

The company recently hosted a “meet the new chief executive officer” day for investment analysts and clearly left a favourable impression on KBC Peel Hunt.

Internet and catalogue home shopping company N. Brown should continue on its growth path with its interim results, though the pace of growth is likely to have slowed.

Panmure Gordon thinks underlying earnings before interest and tax will be 1.1% higher than last year at £46.0m, while profit before tax should advance by 2.4% to £42.8m. On those figures Panmure Gordon calculates earnings per share of 11.6p, up 5.1%. “We expect an interim dividend of 5.6p (+27.6%),” the broker predicted.

Sales are forecast to hit £349.5m, up 3.2% on a year earlier. “Clothing macro data have been strong in the period to date. N. Brown customers’ income streams are likely to be less affected, relatively, than other retailers’ by rising interest rates (less exposed to mortgages) and unemployment,” is Panmure Gordon’s view.

The gross margin may be subject to some erosion, however, with the broker suggesting it could deteriorate by one-fifth of a percentage point to 52.9%, as trailed in the firm’s July statement.

The same broker has been turning its eye on engineering software developer Aveva which is scheduled to give a trading update and, in a nutshell, Panmure Gordon thinks the shares are too expensive and liable to be re-priced after results come out.

Singer Capital Markets is singing a similar tune. “We believe estimate momentum will play a crucial role in sustaining the re-rating the company has seen recently. Given planned investments in Aveva Net and the modest pace of recovery in its markets, we believe it is difficult for the company to beat what appear to be some aggressive market expectations near-term,” states Singer analyst Tintin Stormont.

On the crack of midnight the embargo on publishing the British Retail Consortium’s retail sales monitor will be lifted. The expectation is that retail sales showed a modest uplift in September from August’s level.

Round about the same time the housing market survey by the Royal Institute of Chartered Surveyors will be released, and is likely to show that more surveyors saw price falls over the last three months than those who saw price rises. The balance of the latter minus the former is expected to move further into negative territory, at 35% of the total, from -32% in August.


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Sticking with the housing theme, the Department for Communities and Local Government (DCLG) is expected to show that house prices, at least compared with the same month a year ago, were higher in August. Market consensus is for the August reading to advance to 9.4% from 8.4% in July.

The September UK consumer price index for September is expected to be unchanged from August’s level. The annual inflation rate is also expected to be unchanged from August, at 3.1%.

Higher food prices are likely to have prevented the inflation rate from heading back down towards the 2% target level set by the Bank of England.

The retail price index for September is expected to show an easing of the year on year gain to 4.4% from 4.7% in August.

UK trade figures are expected to make their usual grisly reading. The total trade deficit is seen narrowing to £4.1bn in August from £4.9bn in July, while the visible trade deficit may just dip below £8.0bn after rising to £8.7bn in July.

INTERIMS
Brown (N.) Group, C&C Group, Summit Corporation

INTERIM DIVIDEND PAYMENT DATE
Capita Group, Chesnara

QUARTERLY PAYMENT DATE
XP Power

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Confidence (JPN)
Consumer Price Index (GER) (07:00)
Current Account (FRA) (07:45)
FOMC Interest Rate Minutes (US) (19:00)
ABC Consumer Confidence (US) (22:00)

GMS
ACTA, Aurum Mining, Leisure & Gaming

FINALS
Air Partner, Asian Citrus, Imperial Innovations, Punch Taverns

AGMS
Invesco Perpetual AiM VCT, M&G Equity Inv Trust Capital Shares, M&G Equity Inv Trust Income Shares, Orosur Mining Inc., Standard Life UK Smaller Companies Trust

TRADING UPDATES
Aveva

UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:01)
RICS House Price Balance (00:01)
Balance of Trade (09:30)
DCLG House Prices (09:30)
Consumer Price Index (09:30)
Retail Price Index (09:30)

FINAL DIVIDEND PAYMENT DATE
Colefax Group, IG Group Holdings