London afternoon: Banks' balance sheet issues resurface

12th Oct 2009 14:23

The Footsie crashed through the 5200 barrier this morning to rise to a one-year high and although prices came off the top over the lunch-time session, the vast majority of blue-chips are still in the blue.The upward trend in global equity markets is good news for the insurers and their investment portfolios. Old Mutual, Standard Life and Legal & General feature among the best performers. Elsewhere in the financial sector, however, balance sheet issues are back on the agenda for banks. Banking giant Barclays has fallen despite reports its contemplating selling off a £4bn chunk of toxic assets. Lloyds Banking is also lower on reports that it is to push the button on an £11 billion rights issue in the next two weeks, after lining up a powerful syndicate of investment banks to support the move. Fellow part-nationalised bank Royal Bank of Scotland is also easier after it reportedly ruled out a flotation of its Churchill insurance arm.Crude prices up near $73 a barrel help BP and Royal Dutch Shell gain ground but do nothing for the appeal of holiday firms Thomas Cook and TUI Travel. The long running soap opera revolving around the chairman role at TV broadcaster ITV took another twist as the two leading candidates withdrew from the running. Former Reed Elsevier boss Sir Crispin Davies and former BMI boss Sir Michael Bishop have both ruled themselves out. The market has taken the news well so far. Troubled sportswear group JJB Sports has confirmed its plans for a rights issue to raise £100m are now back on track after it suspended the cash call on Friday after rumours surrounding executive chairman Sir David Jones. JJB said these rumours are totally unfounded and it has given Sir David its full backing. It added its cash call plans have also been well-received sending the shares higher.Carillion, the support services company, is to sell its environmental consultancy business Enviros. Engineering, sciences and project delivery firm, Sinclair Knight Merz, is paying around £27m (net) in cash for Enviros. The funds will be used to reduce Carillion's debt.Diversified miner Xstrata has agreed to sell its 70% interest in El Morro, which operates a copper-gold mine in Chile, to gold miner Barrick Gold for $465m. Xstrata chief executive Charlie Sartain said the project, which is also known as El Morro, would create more value as part of Barrick's portfolio.Punch Taverns is lower on weekend reports it will take a £600m write-off on its pub estate with its results this week, which will also be poor according to the stories. Enterprise Inns and Mitchells & Butlers are down in sympathy.Credit lender International Personal Finance (IPF) said it had seen a recovery in trading that will result in its full year performance being 'materially ahead of current market expectations' if it continues.Market researcher and polling group YouGov fell into losses in the year to July 31, but said it was winning market share.Higher margins will help profits come in higher than expected this year at telco billing software group Intec.Engineer Keller has agreed to acquire Singapore-based foundation contractor Resource Holdings for £30.6m. Keller said the acquisition would help it grow its heavy foundations capability in South East Asia. Property and insurance software firm Innovation Group said its net cash position is a lot better than the market has calculated. While adjusted profit before tax in the year to 30 September 2009 is likely to be in line with market expectations net cash, at more than £10m, will be 'substantially ahead of market expectations', the company said.Shares in industrial holdings company C H Bailey took flight on Monday morning as the company announced it is to sell the majority of its properties in Malta at a price well above book value.