London open: Nervous wait for spending review

20th Oct 2010 08:54

An overnight slump on Wall Street has made for a muted start as investors wait for minutes from the Bank of England's last policy meeting and the government's spending review.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. Any wishy-washy tactics won't be tolerated.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.