London midday: Shares sit higher ahead of Spending Review

20th Oct 2010 12:39

Shares are still sitting in the blue as trader's prepare themselves for chancellor George Osborne's Comprehensive Spending Review.The leading share index moved into positive territory after minutes from the Bank of England's Monetary Policy Committee meeting earlier this month showed that one member voted in favour of an expansion of quantitative easing.Seven members of the Monetary Policy Committee voted in favour of keeping rates at 0.5% and maintaining the asset purchase programme designed to stimulate the economy at £200bn.However, one member, Adam Posen, wanted to increase the size of the asset purchase programme by £50bn to £250bn, while the hawkish Andrew Sentance repeated his call to hike rates by a quarter percentage point.It also emerged today that public borrowing rose to a record high for September. Public sector net borrowing rose to £15.607bn from £14.806bn pounds in the same month a year ago.Meanwhile, the coalition's Comprehensive Spending Review is fully expected to be a bloodbath, but the City will want clear evidence that cuts will be made swiftly to slash the record budget deficit. In company news, Rio Tinto has earmarked another US$3.1bn (£2bn) for its Pilbara operations, doubling new investment there just days after the company scrapped its iron ore joint venture with BHP Billiton. The mining giant, which is chipping in $2.1bn (£1.3bn) of its own money, says the move will increase annual infrastructure capacity to 283 million tonnes (Mt/a) during 2013.BHP put the disappointment of the collapse of the proposed $116bn iron ore collaboration with Rio behind it to issue an upbeat production update. It says most assets were operating at capacity in the first quarter, seeing a year on year increase in output for 11 commodities. Iron ore production in Western Australia rose 6% from a year earlier and by 2% from the preceding quarter. The board of mining titan Xstrata has given the thumbs up to the $710m of development of the second phase of Lion ferrochrome complex expansion in South Africa. Work will involve the construction and commissioning of a 360,000 tonne per annum capacity smelter and will increase the Xstrata-Merafe chrome venture's total ferrochrome capacity to over 2.3m tonnes per annum.A fall of almost a third in profits at its Argos chain sent interim profits tumbling at retailer Home Retail with sales of furniture, TVs and video games all falling sharply. Underlying profits in the half year to August fell by 23% to £95m with pre-tax profits down from £117m to £103m. Sales fell by 3% to £2.72bn with like-for-like sales down 6.5% at Argos and 0.8% at Homebase, its other core business.Filtrona, the international supplier of speciality plastic and fibre products, saw solid revenue growth in the third quarter, in line with expectations. Revenue was 17% higher than a year earlier once the effects of the March disposal of the North American Plastic Profile & Sheet business is stripped out. On a constant currency basis the climb in revenues was 15%. Logistics group Stobart has cut its profit expectations for this year to the bottom of the market's range and is wary over prospects for 2011. "We have slightly reduced our full year profit expectations as a result of reduced spend by Network Rail and increased overall finance costs," it said.Britain's debt hit record levels last month, new figures that are likely to be seized on by the government as evidence of the need for deficit cutting show.The government borrowed £15.6bn, taking the overall debt to a record high of £952bn, some 64.6% of GDP. Analysts had expected the borrowing figure to fall modestly from the £14.8bn borrowed in September 2009.However, borrowing in the current financial year to date is still down from the same period the previous year.Investec economist Philip Shaw said the figures still 'seem on course to meet the Office for Budget Responsibility's forecast for 2010/11.'Howard Archer, chief European & UK economist at the forecasting group IHS Global Insight, said the deterioration in borrowing from a year earlier was 'disappointing' and that interest payments are rising.'The government will highlight this as a key reason to why there should be no delay in enacting measures to improve the public finances,' he said.FTSE 100 - RisersSmith & Nephew (SN.) 572.50p +4.00%Rio Tinto (RIO) 4,019.50p +1.81%Xstrata (XTA) 1,270.50p +1.76%Anglo American (AAL) 2,829.50p +1.73%BHP Billiton (BLT) 2,174.50p +1.66%Imperial Tobacco Group (IMT) 1,963.00p +1.50%Wolseley (WOS) 1,656.00p +1.47%Vedanta Resources (VED) 2,206.00p +1.47%Eurasian Natural Resources Corp. (ENRC) 926.00p +1.42%Lonmin (LMI) 1,793.00p +1.36%FTSE 100 - FallersBAE Systems (BA.) 351.30p -3.46%Smiths Group (SMIN) 1,219.00p -2.48%Serco Group (SRP) 611.00p -2.47%Scottish & Southern Energy (SSE) 1,106.00p -1.69%ARM Holdings (ARM) 382.40p -1.62%British Sky Broadcasting Group (BSY) 696.00p -1.35%BG Group (BG.) 1,171.00p -1.31%Carnival (CCL) 2,547.00p -1.13%Associated British Foods (ABF) 1,036.00p -1.05%Old Mutual (OML) 136.30p -1.02%FTSE 250 - RisersAshtead Group (AHT) 120.20p +3.62%Premier Foods (PFD) 17.45p +3.44%Jardine Lloyd Thompson Group (JLT) 597.00p +2.75%Ocado Group (OCDO) 138.90p +2.36%Afren (AFR) 115.40p +2.12%Fenner (FENR) 261.00p +1.95%Dunelm Group (DNLM) 471.60p +1.86%RIT Capital Partners (RCP) 1,148.00p +1.86%Genus (GNS) 843.00p +1.81%Renishaw (RSW) 1,203.00p +1.69%FTSE 250 - FallersHansen Transmissions International NV (HSN) 40.99p -18.51%Stobart Group Ltd. (STOB) 142.50p -8.99%Filtrona PLC (FLTR) 244.40p -5.64%Hays (HAS) 115.10p -3.92%Home Retail Group (HOME) 211.60p -3.77%Hochschild Mining (HOC) 468.00p -3.37%Kenmare Resources (KMR) 18.80p -3.13%Lamprell (LAM) 372.50p -2.99%Mcbride (MCB) 166.90p -2.85%Brit Insurance Holdings NV (BRE) 1,011.00p -2.79%