London afternoon: Footsie stumbles after US CPI data

17th Feb 2011 14:43

Footsie fell back over the lunchtime session with sentiment taking a knock from a bigger than expected increase in US consumer prices.The US Consumer Price Index rose 0.4% in January, as it did in December, on the back of higher fuel and food prices. Economists had pencilled in a 0.3% rise.On this side of the pond, defence firm BAE Systems is leading the market lower. The group is expecting sales in 2011 to dip as cutbacks in government spending start to bite. The company saw sales edge up by 1.8% in 2010 to £22,392m from £21,990m in 2009. The market had pencilled in a figure of £22,548m for sales. Profit before tax from continuing operations was £1,027m, compared to a loss of £61m in 2009.Reed Elsevier has not exactly set pulses rating with its update, either. Things improved at the business and academic publisher during 2010 and a "gradual" recovery this year should deliver "modest" growth in 2011. BarCap has retained its 'underweight' stance on the publisher, noting that the group's operating margin fell by 0.2 percentage points, whereas many of its peers saw margin improvements. Reed may also underperform rivals more highly geared to the advertising market such as Daily Mail, ITV and United Business Media, the broker says.Sticking with broker comment, Nomura says Lloyds Banking Group is its preferred pick of the UK lenders, and has the best exposure to recovery of traditional banking, without the overhang of a capital markets franchise. The Japanese broker estimates a group loss before non-operating items for 2010 of £959m, much improved on a loss of £12.4bn in 2009. Nomura also forecasts a much lower impairment charge of £14.25bn, compared with £24bn previously.Meanwhile, Evolution Securities has made some upbeat comments on Lloyds and Royal Bank of Scotland (RBS). RBS, which moves to Evolution's 'core buy portfolio' is benefitting from better trading conditions for retail and investment banking in Britain. Lloyds is Evolution's 'top conviction buy' in European banking. UBS remains positive on mining giant BHP Billiton, applauding the group's solid spending commitment over the next half-decade.Deal hungry insurance group Resolution is rumours that it is on the prowl again. Yesterday Redburn Partners initiated coverage of the stock with a "buy" recommendation and a target price of 483p. B&Q owner Kingfisher expects full-year profit to be at the top end of expectations after strength in the international business helped the DIY retailer shrug off weather and economy-related difficulties in Britain and Ireland in the fourth quarter. Analysts had been predicting a consensus adjusted pre-tax profit of £666m for the full year, in a range between £661m and £672m.Sports Direct creeps over the halfway line after its chief executive Dave Forsey provided some reassurance to those worried that the VAT rise and economic austerity will keep shoppers away from the high street, saying that trading at the sports shop chain has been strong since January. The sports shop chain will hit its targets for the full year, he said.Things are ticking along as expected at sensor technology firm Halma, another FTSE 250 riser today, in the second half of its financial year. Revenue in the first six months of the year was 12% ahead of 2009/10 and this trend has continued into the first four months of the second-half of the financial year. A brief statement issued on Thursday morning was enough to spark buying interest for telecoms titan Cable & Wireless Worldwide. It said that it continues to trade in line with expectations. The largely UK focused part of the old Cable & Wireless, said it continued to make progress through the second half.Total funds under management (FUM) exceeded £15bn for the first time ever at wealth management firm Rathbone Brothers last year. Underlying profit before tax in 2010 rose 18.8% to £38.5m from £32.4m in 2009, topping the consensus market forecast of £35.55m. Total FUM at the end of the year stood at £15.63bn, up 19.3% from £13.10bn at the end of 2009.Curtains to bedding retailer Dunelm posted an increase in half year revenue but like for like sales fell after a tough run up to Christmas. The out of town homewares retailer warned it, "faces uncertain consumer demand and rising costs".Bookmaker Ladbrokes ramped up profits by 20% in 2010, driven by gains at its digital business, up over a third last year. The shares fell, however, as current trading is a bit more mixed. "The start to FY11 is mixed though gross amounts staked were up 14%, however net revenues (excl. high rollers) were up only 0.1% as a result of lower gross margins in horses and football," noted broker Daniel Stewart.Housebuilder Redrow posted a first half profit after making a loss the same time a year earlier. The Wales based company said pre-tax profit came in at £8.5m for the six months to 31 December 2010 compared to a pre-tax loss of £8.7m the same time a year earlier as it sold more houses at higher prices. Revenue jumped to £216.1m from £187.2m.Solid results from French peer CapGemini sparked demand for programming contractor Logica.