London midday: Shares pause for breath

22nd Jul 2009 12:07

Leading shares are mixed, with losses on miners and banks offset by gains on defensive favourites such as tobaccos and utilities. Mining giant BHP Billiton set the tone for the sector with its annual production report this morning. Quarterly (Apr-Jun) production increased for 12 major commodities including metallurgical coal, petroleum, copper and energy coal, while annual production records were achieved for petroleum, copper cathode and iron ore. However, the company said the underlying trend for metals demand is still being masked by restocking activity, and demand for commodities generally is mixed as China has rebuilt its stocks.Broker Investec responded to the announcement by cutting its rating for BHP Billiton to "hold" from "buy" while Evolution Securities thinks the shares should be sold after their recent good run. Xstrata, ENRC, Kazakhmys and Lonmin are all lower after BHP's statement.Banks are rubbing shoulders with the miners at the bottom of the Footsie pile after US broker comment suggested that more fund raising may be on the way. US broker JP Morgan calculates Barclays will need to find another £12.8bn and RBS £8.5bn to comply with new rules on higher capital requirements, scheduled to be introduced next year. Meanwhile long time banking bear Sandy Chen at Panmure Gordon estimates RBS will be loss making until 2012 and rack up £39bn of bad debt provisions, while he expects Lloyds to write-off £24bn this year and £23.5bn in 2010.HSBC defies the sector trend and edges higher while Standard Chartered is only moderately lower.With the market rally stalling, defensive favourites are back in favour, with utilities such as Scottish & Southern Energy, Severn Trent, National Grid, United Utilities and Centrica all rising. Imperial Tobacco is the best performing FTSE 100 stock, while oil groups BG and Tullow also make progress. Engineer GKN has received the backing of 95.4% of shareholders for its £423m fundraising. Over 807m of the shares available through the fully underwritten 6 for 5 rights issue at 50p were taken up. Just over 91% of shareholders at Marston's also backed the brewer and pub owner's £176m fully underwritten 11 for 10 cash call at 59p. The firm has been criticised for earmarking the money to finance expansion rather than reduce its £1.2bn debt pile.Business publisher Euromoney saw heavy falls across three of its revenue streams in the last three months and cautioned that the one bright spot, subscriptions, is also now slowing. Total revenues for the quarter to June 30, 2009 fell by 11% to £84.2m. US solar panel group Energy Conversion Devices has offered to buy Aim-listed Solar Integrated Technologies for $16.3m including debt.Transport and logistics group Stobart has bagged a distribution contract for Tesco's new 1.2m sq ft import centre in Middlesbrough worth about £25m a year.Pharmaceuticals group Sinclair Pharma said it expects annual EBITDA to be in line with board expectations while revenue is expected to decline as wholesalers destock in the economic downturn. The revenue decline disappointed the market and the shares are trading sharply lower.Elsewhere in the sector Phytopharm is wanted after it said discussions are underway with potential partners for the future partnering or out-licensing of pharmaceutical and functional food programmes. Shares in joinery group Galiform powered ahead as it said the rate of revenue decline in the second half was less than in the first.FTSE 100 - RisersImperial Tobacco Group (IMT) 1,670.00p +2.39%BG Group (BG.) 1,076.00p +2.28%National Grid (NG.) 574.00p +2.04%TUI Travel (TT.) 229.00p +1.78%FTSE 100 - FallersKazakhmys (KAZ) 720.00p -4.82%Lonmin (LMI) 1,135.00p -3.24%BHP Billiton (BLT) 1,481.50p -3.17%London Stock Exchange Group (LSE) 661.50p -3.08%