London close: Footsie dips into the red

23rd Sep 2009 17:05

A late swoon saw London's blue-chip index give up the gains of the morning to close marginally lower on the day, as investors banked profits ahead of the Federal Reserve's decision this evening on US interest rates and its quantitative easing (QE) programme.The morning's gains had been achieved on the back of a buoyant mining sector but miners saw their gains trimmed at the death while Eurasian Natural Resources and Antofagasta turned negative. The latter was hit by the slide in copper prices as inventories rose to their highest levels since 22 May, according to the London Metals Exchange.The market was also weighed down by weak property stocks after Liberty International completed a placing to raise £280.5m. The shares were placed at 500p each. Not surprisingly, the shares have headed south towards the 500p level and were the worst performers among Footsie constituents. Sector peers British Land, Land Securities and Hammerson were dragged down with them.The fund raising comes less than six months after the company raised £592m through a placing an open offer; that money was to cover capital expenditure commitments and pay down debt, whereas the latest injection of cash will enable the group to resume investment in its prime UK regional shopping centres and Central London assets.Housebuilders Barratt Developments and Redrow, plus Yellow Pages publisher Yell also got into the fund raising act.Barratt is issuing even more shares than Liberty. The builder will place 72.9m shares at 240p, representing a 10.6% discount to the closing price of 268.5p yesterday. In addition, there will be a 1.3 for 1 rights issue. In total, 618.4m new shares will be issued. The rights issue will raise £545m and the placing £175m. Rival Redrow also announced an underwritten rights issue to raise approximately £150m to strengthen its balance sheet and enable it to acquire and develop more sites.Yell is getting nearer to a £500m cash call as part of a 'comprehensive refinancing package' being thrashed out with its banks.Publisher Independent News & Media admitted today that it will give bondholders a big equity stake and carry out a rights issue to 'position the business for growth'. The rumour is that between €100m-120m of the bonds will be swapped for shares in the €250m company.While others are issuing securities for cash, indebted pub group Punch Taverns has been buying back some of its convertible bonds. It has repurchased 10.1% of the original nominal value of the 5.00% convertible bonds due 2010 for cancellation, leaving £73.32m (27% of the original nomination value) of the bonds in circulation.In a generally weak pub group sector, Punch's shares are trading lower but faring better than Enterprise Inns, Greene King and Mitchells & Butlers, all of which are on Swiss bank UBS's sell list, as is Marstons. The US Department of Labor has reportedly warned British oil explorer BP of continued safety issues at its refinery in Texas, where 15 workers were killed in an explosion more than four years ago.Shares in luxury fashion group Burberry were in demand after what some newspapers termed 'a triumphant return at London fashion week.' The company's chief executive officer, Angela Ahrendts, claimed the company's business has been 'on fire' in recent months as demand for luxury goods improves.Broker comment provided a lift to insurer Prudential. Cazenove has upgraded the shares to 'outperform'. The broker has also warmed to the Pru's rival, Aviva, though the stock traded lower in ex-dividend form. Carnival was also the subject of broker attention with Charles Stanley responding to yesterday's third quarter results from the cruise line operator by upgrading the stock to 'buy' from 'hold', albeit with the caveat that the recommendation is 'relatively high risk'.'Going forward, we expect yields to gradually recover in 2010 as consumer demand strengthens and supply growth slows. Very high operational gearing means we anticipate further material upgrades to consensus forecasts as evidence of improved trading starts to come through,' the broker states. The stock's valuation looks 'undemanding for the trough of the cycle,' Charles Stanley analyst Sam Hart believes. 'The key risk is that the US consumer recovery is delayed or is much weaker than we currently anticipate. The shares will also remain highly sensitive to the oil price, as fuel is the key variable input cost,' Hart warns.Bid target Cadbury edges higher though it remains more than a pound below the 900p level Cadbury boss Todd Stitzer reportedly believes is a reasonable starting point for negotiation. Broker Merrill Lynch claims Stitzer suggested at an investor conference that 15 times the company's earnings before interest, tax, depreciation and amortisation (EBITDA) would be a fair price for US suitor Kraft Foods to pay; that implies a take-out price of 900p, The Guardian newspaper reports that Stitzer was not commenting specifically on the Kraft bid, but merely observing that previous takeovers in the sector had gone through on an EBITDA multiple in the mid-teens.United Utilities is on track to deliver results in line with its expectations of a "sound underlying financial performance" for the six months ending to September. The group said underlying operating profit in the regulated business is expected to broadly be in line with the first half of last year, reflecting ongoing revenue and cost pressures.PC and video games retailer Game Group saw profits dive for the half year as the slower rate of hardware sales and the lack of major software launches hit turnover. Profit for the six months to July came in at £10.8m against £32.8 in the same period last year on like-for-like sales that slid 16.3% (total sales down 7%). The shares fall back while PC World owner DSG International falls back in sympathy.Brokers seem divided on the share's appeal. Investec and Seymour Pierce are optimistic the fourth quarter software release schedule will provide a boost but Singer Capital Markets is bearish, preferring HMV in this sector. The sharp downturn in the housing market means that tile and wood floor specialist Topps Tiles expects sales for the year to 26 September to fall to £186m from £208.1m over the same period the previous year. Like for like sales in the period are likely to be down by 13.4%, the firm, which operates 320 stores, adds.Homeserve expects interim profits to be on track with an improved performance in its core home maintenance business offset by losses in emergency services. Panmure Gordon said the results were in line with expectations and despite the rise in the company's share price, it remains unimpressed and strongly recommends holders take profits.PureCircle, which supplies sweeteners made from the extracts of leaves from the stevia plant to soft drinks giants such as Coca-Cola and Pepsico, posted a sharp rise in profits as demand for its product soared.Short break and educational holiday specialist Holidaybreak is on track to meet management expectations for the full year and said its businesses had not suffered any material impact from the swine flu epidemic.Shares in online betting group Webis hit a 52-week high after moving firmly into the black in the 53 weeks to 31 May 2009. The company chalked up a pre-tax profit of £0.45m, compared to aa loss of £0.35m the year before, on turnover that rose 19.5% to £140.1m from £117.2m.FTSE 100 - RisersBurberry Group (BRBY) 502.50p +5.43%Standard Chartered (STAN) 1,544.00p +4.32%Prudential (PRU) 587.00p +3.99%Man Group (EMG) 303.60p +3.37%FTSE 100 - FallersLiberty International (LII) 507.00p -10.11%British Land Co (BLND) 490.00p -4.48%Hammerson (HMSO) 417.50p -3.58%Eurasian Natural Resources (ENRC) 885.00p -3.01%