9/14/2010 - the economic monitor free u.k. edition

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14 September 2010 THE ECONOMIC MONITOR U.K.

At the close, the FTSE 100 was up 1.88 points, or 0.1percent, at 5,567.41, marginally extending Monday's four-month closing high.

At 1457 GMT, sterling was trading up around 0.5 percentversus a broadly weaker dollar at $1.5505.

By 1321 GMT, December gilt future were 53 ticks up at

123.12.

At 0628 GMT, ICE Brent inched 2 cents higher to $79.05.

Spot gold was at $1,269.65 an ounce by 1515 GMT, upfrom $1,245.25 the day before.

MARKETS AT A GLANCE

STOCK INDICES

CURRENCIES

INDEX LAST PRIOR

Euro (EUR/USD) 1.2989 1.2876

U.K. Pound (GBP/USD) 1.5517 1.5421

Japanese Yen (USD/JPY) 83.13 83.67

All prices are at 11:31 AM EDT

FUTURES

INDEX LAST CHNG % CHNG

FTSE 100* 5567.41 1.88 0.03

FTSE 250* 10472.44 -35.89 -0.34

FTSE 350* 2937.02 -0.47 -0.02

FTSE Tech Mark 100* 1934.6 2.04 0.11

FTSE AIM 100* 3444.47 22.08 0.65

FTSE All Share* 2872.1 -0.63 -0.02

FTSE Eurofirst 300* 1087.63 -0.34 -0.03

DAX* 6275.41 13.73 0.22

CAC 40* 3774.4 7.25 0.19

Stoxx Europe 50* 2587.22 -1.70 -0.07

* CLOSING VALUES

LAST CHANGE

Crude Oil 77.67 0.48

Natural Gas 3.955 0.017

Gold, Dec. 1272.3 25.20

Copper (¢), Dec 348.95 1.05

Wheat (¢), Dec. 741 -4.00

All prices are at 11:21 AM EDT

Stock recommendations and price targets from topbrokerage firms

Important Events Scheduled on 15 September

Economic Events

Economists emerging market summit

Corporate Events

Next, Brooks Macdonald, Galliford Try, Indus gas,Regenersis, Unitech Corporate Parks, Fairpoint, IdealShopping Direct earnings releases

Breaking News

RBS plans to sell mortgage-backed securities: Reports

Rio Tinto raises stake in Ivanhoe Mines

Rio Tinto plans expansion of diamond mine

NBNK to raise funds for buying assets

BP resumes drilling on Gulf relief well

Amec look for acquisitions in Asia, South America

Aer Lingus intensifies talks with BA and competitors

Ashmore profits rise driven by strong flows

U.K. August house price index falls: RICS

U.K. consumer confidence rises in August

U.K. annual inflation unchanged

Government not to gain from oil price rise: OBR

FDA sets committee for Glaxo- Human Genome’s drug

U.K, Brazil to sign defence agreement

INSIDE THE REPORT

Free Edition



THE ECONOMIC MONITOR - U.K.

Disclaimer : The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before taking any investment decisions.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

InvesticHilton Food Raises price target to 290p from 255p HoldRBC

Premier Oil Raises price target to 1,850p from 1,600p OutperformKBW

St. James’s Place Recommends price target of 345p OutperformCollins StewartHill& Smith Holdings Cuts price target t 372p from 400p BuyMinera Recommends price target of 90p BuySeymourHMV Group Recommends to sell from buy SellUBSCarphone Warehouse Group Raises price target to 260p from 235p BuyExane BNP Paribas

Pearson Cuts to neutral from outperform NeutralKBC Peel Hunt

Hilton Food Recommends hold from buy HoldArbuthnotYCO Group Raises price target to 33p from 25p BuySpectrics Raises price target to 1,100p from 995p BuyPanmureJD Weherspoon Cuts price target to 525p from 580p BuyJefferiesGKN Recommends price target of 190p BuyBBA Aviation Recommends price target of 220p BuyCredit SuisseCobham Recommends to outperform from neutral Outperform

Ultra electronics Holdings Raises price target to 1,400p from 1,200p - -Rolls-Royce Group Raises price target to 640p from 580p BuyHSBCSegro Raises price target to 230p from 290p UnderweightBofa MerrillTUI Travel Raises price target to 230p from 270p UnderweightGoldman SachsWilliam Hill Raises price target to 195p from 235p Neutral

FTSE 100

MARKET PERFORMANCE

A. The risers and fallers were more or less equal in number at thistime and around 10% of the stocks were unchanged. The FTSE 100was down at 5,557. Rio Tinto was up after it said it is spending$803 million (£522 million) ramping up the block cave project at itsArgyle diamond mine in Western Australia.

B. Capita, which takes on work outsourced by the government, wasthe top riser. Retailers were a weak spot in the FTSE 100, with Nextand B&Q owner Kingfisher among the fallers. FTSE 100 down at5,564.

C. Footsie continued to limp along slightly below last night's close.Broker comment lifts Cobham and Marks & Spencer but did theopposite for TUI Travel and Next . FTSE 100 was down 7 at 5,558.




COMPANY NEWS

RBS plans to sell mortgage-backed securities: Reports

Royal Bank of Scotland will sell 4.7billion pounds of mortgage-backedsecurities, its first such deal after thecredit crisis.

According to media reports anagreement over the mortgage portfolio

for the securitisation deal is likely to be reached within the next fewweeks. Europe's markets for asset-backed securities (ABS) reopened lastyear after being closed during the credit crisis, when many asset-backedbonds suffered huge losses.

Rio Tinto raises stake in Ivanhoe Mines

Global miner Rio Tinto has raised its stake in Canada's Ivanhoe Minesto 34.9 percent, on the conversion of a matured convertible creditfacility.

Rio Tinto till now has invested about $1.73 billion in Ivanhoe, and alsoholds additional rights to subscribe for common shares in the company,which controls the big Oyu Tolgoi copper-gold project in Mongolia. RioTinto now owns 184.75 million common shares of Ivanhoe.

Rio Tinto plans expansion of diamond mine

Rio Tinto plans to expand its Argylediamond mine in Western Australia, andhas estimated to spend around $13billion through the end of 2011 to liftgrowth. It plans to invest $803 million todevelop an underground mine under the

existing open pit, and increaseproduction from 2011 to reach 9 million tonnes of diamond-bearingore a year within two years.

The project, put on hold in 2009 due to the global financial crisis, willexpand the life of the world's largest mine for pink diamonds to at least2019 as the company looks to capture burgeoning demand.

NBNK to raise funds for buying assets

New British banking venture, NBNK (Nationalised Bank NorthernRock ) Investments plans to raise 2-3 billion pounds ($3.1-$4.6 billion)from top institutions to buy assets from bailed-out lenders.

According to its chairman Peter Levene the venture targets 600branches that Lloyds Banking Group has been ordered to sell tocomply with European state aid rules. It has raised 50 million poundsfrom a stock market listing in August, and aims to tap investors for afurther 2-3 billion pounds to fund acquisitions about a year from now.

BP resumes drilling on Gulf relief well

BP, has restarted drilling on a relief well as part of the last step toplugging permanently its broken Macondo oil well in the Gulf of Mexico. The relief well has had been on hold for several weeks as BPtook other steps to kill the well that blew out on April 20, leading to anexplosion aboard the Deepwater Horizon drilling rig that killed 11 men.The subsequent leak ejected more than 4 million barrels of oil into the

sea.

COMPANY NEWS (contd...)

Amec look for acquisitions in Asia, South America

Amec, energy-engineering company, is planning for acquisitions inregions including Asia and South America after the global recessionreduced asset prices.

Company’s Chief Executive Officer Samir Brikho said the company islooking for growth in several areas including Australasia, Middle Eastand Latin America. Amec, gets most of its revenue from North Amer-ica, which accounted for 57 percent last year.

Aer Lingus intensifies talks with BA and competitors

Aer Lingus Group is strengthening talks with British Airways over a pos-sible coalition with the Oneworld airline alliance and carriers from therival Star alliance and Skyteam groups .

Chief Executive Officer Christoph Mueller said that United Airlinesand KLM will accomplish the role of intermediaries in discussions with

Star and Skyteam.

The problem for Mueller is that Aer Lingus already has codeshareagreements with all three airlines which generate roughly equal reve-nues. From Heathrow to Ireland the company has a codeshare agree-ment with BA. With KLM it has deals on its Dutch routes and withUnited it codeshares to and from the US. One of the main issues to bediscussed before any agreement is signed will be the fares that are of-fered to Aer Lingus by its alliance partners.

Ashmore profits rise driven by strong flows

Ashmore, Emerging markets fund manager declared an increase of 36percent in its full-year profit, lifted by a rise in investors demand for

emerging market debt products. Also there was strong interest fromsovereign wealth funds and governments in emerging markets them-selves.

The company reported a pretax profit of 217 million pounds ($334 mil-lion) for the year to June.. Performance fees were up 58 percent to 82.9million pounds, and total net revenues were up 41 percent to 286 mil-lion. Net inflows touched $7.6 billion.

Hilton Food H1 profits rise on strong volumes

Meat-packaging firm Hilton Food Group announced a rise of 12 per-cent in first-half pretax profit, lifted by improved volumes in centralEurope. The company expects to meet its forecasts for fiscal 2010 and

looks for new opportunities for further expansion. The company ex-pects feed ingredient and meat prices to rise in the second half.

The company’s H1 pretax profit rose to 11.5 million pounds ($17.7 mil-lion) from 10.4 million pounds last year. Revenue rose 5 percent to449.9 million pounds, while volumes rose 11 percent to 102,688 tonnes.Volumes in central Europe jumped 45 percent. It raised its interim divi-dend by 8 percent to 2.8 pence.

Debenhams sees rise in annual profits

Britain's No.2 department store group, Debenhams expects its annualprofit to be slightly higher than analysts' average forecast, boosted by arise in fourth-quarter sales and higher profit margins.

The group, said its profit before tax and one-off items for the yearended August 28 would be in the region of 150 million pounds ($231million). That would be up about 20 percent from the year before and

just ahead of analysts' average forecast of 147 million pounds, accord-ing to Thomson Reuters estimates.




Most sufferers still not authorized to sue: BP

BP and its partners said that thousands of fishermen, seafood proces-sors, restaurants, hotel owners and others do not have the right to sueover the gulf spill, according to court’s document.

The document, part of the defense team's proposal, said the majority of alleged victims who brought about 400 lawsuits must first take theirclaims to a $20 billion fund established by BP.

U.K, Brazil to sign defence agreement

Britain and Brazil will sign a defence agreement. which the U.K. govern-ment consider a path for a multi-billion dollar contract for BAE sys-tems, which will supply vessels to Brazil's navy, according to mediareports.

The BAE deal could be worth up to 2.9 billion pounds if the vessels werebuilt in the U.K. The report said the six patrol boats, costing about 60-80

million pounds each, would likely be used for surveillance and deter-rence at Brazil's offshore oil fields.

REGULATORY NEWS (contd…)

U.K. August house price index falls: RICS

U.K. house prices dropped to lowest since May 2009 in August,according to the survey from Royal Institution of CharteredSurveyors.

RICS house price index fell to -32 from -8, the sharpest one-month fallsince June 2004, and newly-agreed sales suffered their biggest fall intwo years. Mortgage lender Nationwide last month reported decline inhouse prices since February, while the Halifax survey showed a rise.

U.K. consumer confidence rises in August

British consumer confidence rose in August after falling for threecontinuous months on growing optimism in consumers about theoutlook for the economy, according to the data from Nationwidebuilding society .

The consumer confidence indicator rose to 61 in August from a 14-

month low of 56 in July. The index remains below the long-run averageof 83 and February's two-year high of 84. Britain's economy grew by1.2 percent in the second quarter.

U.K. annual inflation unchanged

British consumer prices rose 3.1 percent in August compared to thesame month last year, staying at same level of inflation rate that of July,according to the report from Office for National Statistics . Comparedto July, CPI rose 0.5%. Economists surveyed by Dow Jones Newswireshad forecast a 0.4% monthly rise and a 3% annual increase. Inflationremains above the Bank of England's 2% annual target.

U.K. house prices rises in July

Britain house prices rose 8.4 percent on the year in July, down from a9.9 percent gain in June, according to government data by theDepartment for Communities and Local Government. House pricesfell 0.3 percent on the month, after gain of 0.4 percent in June.

Government not to gain from oil price rise: OBR

Office for Budget Responsibility said in a statement that provisionalrise in the oil price would have a minor effect on the U.K. public financesbut a permanent rise would create a loss.

Finance minister George Osborne had charged the new fiscalwatchdog to report on the effect of oil price fluctuations on the publicfinances. The OBR said that there was almost zero impact on the publicfinances if oil prices rose temporarily. Higher pump prices would reducedemand for fuel, it said. In addition, inflation would push up theindexation of tax thresholds, benefits, public service pensions and index-linked gilts.

ECONOMY NEWS

REGULATORY NEWS

FDA sets committee for Glaxo- Human Genome’s drug

A panel advising the U.S. Food and Drug Administration will discussGlaxoSmithKline and Human Genome Sciences' experimental lupus

drug Benlysta on November 16. Glaxo and biopharmaceutical companyHuman Genome are co-developing the drug.

Lupus is a complex disease that causes the immune system to attackthe body's own tissue and organs. Benlysta, if approved, would be thefirst new drug for systemic lupus in 50 years.

ECONOMIC INDICATOR WATCH

U.K. Average Earnings (July)

Forecast: 1.7% Prior: 1.3%

The figures for average earnings including and excluding bonus will be releasedat Local/GMT/ET 0930/0830/0430. It is a key short-term indicator of how levelsof pay are changing within the U.K. economy. The earnings annual growth ratefor total pay (including bonuses) was 1.3 per cent for the three months to June2010, down from 2.7 per cent for the three months to May. The earnings annualgrowth rate for regular pay (excluding bonuses) was 1.6 per cent for the threemonths to June 2010, down from 1.8 per cent for the three months to May.

Source: Office of National Statistics

Claimant Count Rate (Au

Forecast: -3.0k Prior: -3.8k

The Office of National Statistics will release Claimant Count Rate figures whichis a monthly measure of unemployment in the U.K. It indicates the health of theU.K. labor market. If the rate is up, it indicates a lack of expansion within the U.K.labor market, while it indicates economic expansion and could spark inflationarypressures if the rate is down. The claimant count unemployment rate was stableat 4.5% in July. The data showed that the number of people claimingunemployment benefit fell by 3,800 in July.


ILO Unemployment Rate

Forecast: 7.8% Prior: 7.8%

The Office of National Statistics will release figures for ILO unemployment rate,which is the number of unemployed workers divided by the total civilian laborforce.

It is a leading indicator for the U.K. Economy. If the rate is up, it indicates a lack of expansion within the U.K. labor market. As a result, a rise leads to weaken the U.K.economy. ILO-defined unemployment in April to June was 2.46 million (7.8%) -down by 49,000 on the previous quarter but up 23,000 from a year previously.There was also a rise in employment, with the number of people in work risingby 184,000 in the three months to June.





MARKET BRIEFING

Britain's leading shares edged higher, matching modest gains on Wall Street following above-forecast U.S. retail sales data, withcommodity issues standing out. At the close, the FTSE 100 was up 1.88 points, or 0.1 percent, at 5,567.41, marginally extendingMonday's four-month closing high. Heavyweight miners posted the best gains, with Randgold Resources and Fresnillo up 2.8 percentand 2.6 percent respectively, as gold hit a record high and copper pared losses as better-than-expected U.S. retail sales data boosteddemand expectations. Crude prices also benefited oil issues, with Essar Energy the top FTSE 100 gainer, up 3.8 percent. U.S. blue chips

were 0.3 percent higher by London's close, with the above-forecast August retail sales numbers helping allay fears over a double-diprecession.

Sterling rose against a broadly weaker dollar, aided by stubborn U.K. inflation data which raised speculation that the Bank of Englandwould hold off from extending quantitative easing in the near term. But a weak reading of U.K. house prices highlighted structuralweaknesses within the UK economy which, combined with austerity measures, were set to dampen upward pressures on prices andwages in the medium term. At 1457 GMT, sterling was trading up around 0.5 percent versus a broadly weaker dollar at $1.5505, withtraders reporting demand from leveraged accounts on the break of $1.5500. The euro rose 0.2 percent to 83.70 pence, after findinggood support from buy orders in the 83.30 region. Further demand was reported at 82.90.

British gilt futures rose around half a point in choppy trade, taking their cue from an unexpectedly weak German sentiment survey andbrushing off U.K. and U.S. data that looked bond-negative. U.S. retail sales rose by a bigger-than-expected 0.4 percent in August, withex-cars sales rising twice as fast as expected. But aside from a short-lived flurry of activity, the figures had little impact on bond prices,which resumed an ascent triggered earlier in the day by a sharp fall in the German ZEW survey. By 1321 GMT, December gilt future were53 ticks up at 123.12, off a session high of 123.31 struck after the German data, but 10 ticks higher than before the U.S. figures. In thecash market, the yield on ten-year gilts was 5 basis points down at 3.065 percent, widening the spread against Bunds by around half abasis point to 69 basis points.

Oil remained below Monday's one-month high, with traders reluctant to take strong positions ahead of eagerly awaited inventorynumbers. U.S. crude for October was trading close to Monday's closing price in early U.S. trading. It was at $77.27 at 1414 GMT, 8 centsup on Monday's close, but well below Monday's intraday peak of $78.04, the highest value since August 11. Prices had surged onMonday as the shutdown of the biggest Canada-U.S. pipeline, run by Calgary-based pipeline giant Enbridge, continued. At 0628 GMT,ICE Brent inched 2 cents higher to $79.05.

Gold hit record highs above $1,270 an ounce in its biggest one-day rally in four months, as the U.S. dollar declined broadly after upbeatdata failed to convince investors to shift into risk-linked assets. Gold is now on course for a 15 percent gain in 2010, fuelled largely byinvestor nervousness that stemmed from the fallout from the euro zone debt crisis and from economic data that has suggested globaleconomic growth may be losing momentum. Spot gold was at $1,269.65 an ounce by 1515 GMT, up from $1,245.25 the day before,having hit a record high of $1,271.20 earlier in the session. U.S. gold futures for December delivery were last up $24.3 an ounce at

$1,271.20.

CORPORATE RESULTS

COMPANY NAME EVENT

French Connection Group Interim 2010

Galliford Try Preliminary 2010

Next Interim 2010

Photo-Me International Interim Management Statement

RM Trading Update

Ideal Shopping Direct Interim 2010

Fairpoint Group Interim 2010

Avanti Communications Group Preliminary 2009/2010

Brooks Macdonald Final results

Galliford Try Final results

DATE - 15/September/2010 DATE LST INDICATOR F’CAST PRIOR

WED 09/15 1400 Avg wk earnings 3mth yy 1.7% 1.3%

14:00 Claimant count unem chng -3.0k -3.8k

1400 ILO unemployment rate 7.8% 7.8%

THU 09/16 1400 Retail sales mm 0.3% 1.1%

1400 Retails sales yy 2% 1.3%

1530 CBI trends -13 -14

FRI 09/17 N/A No major indicators N/A N/A

MON 09/20 1400 Money Supply M4 - - 0.4 %

ECONOMIC CALENDAR




This report is produced byInternational Business TimesFor questions or commentsreach us at

[email protected]

For more information aboutour products visitwww.ibtimes.com

© IBTimes 2010. All rights reserved.

NEXT TRADING DAY

Economic Events

Economists emerging market summitThe Emerging Markets Summit is an unrivalled opportunity to reallyuncover the true potential of new high growth economies. TheEmerging Marketing summit in 2009 attracted attendance from over 40countries with three heads of state, and over 73% of corporateattendees at director level or above.

High-Profile Speakers at this Event Include U.K.'s Cabinet Minister forBusiness, Innovation & Skills Vince Cable, South Africa's DeputyPresident Kgalema Motlanthe , IADB President Luis Alberto Moreno and Brazil and Nigeria Central Bank Governors.

Corporate Events

Next is expected to reports its interim resultsand investors will be curious to know whethera spell of cooling in its sales has continued.After its successful share buyback, Nextreported a £1.5 per cent decline in first-half sales in August, although this was offset bygains in gross margin. In its update for the sixmonths to July 31, the company noted thatconsumer spending would be restrained” and that its outlook remainedcautious.

Analyst expect company’s interim profit to rise to 109.8 per share ascompared to £81.1 per share a year ago. Revenue for the interimperiod is also expected to increase from £1,571.63 million in theprevious year to £1,894.2 million in the current year. The consensus of analysts’ forecasts is for underlying pre -tax profits of £551m, from salesof £3.47bn. Full year profit and revenue is also expected to rise to

£211.15 per share and £3,467.15 million respectively.Indus gas, an oil and gas exploration company is expected to reportsits yearly results. Company is expected to report loss of £0.662 pershare, while revenue is estimated to show slight fall. Capital expenditureis expected at £12.03 million.

NEXT TRADING DAY (contd...)

Brooks Macdonald, an integrated wealth management company isexpected to declare its final results at a full year profit of £35.676 pershare, up from £22.2 per share in the previous year. Even company’s fullyear revenue is expected to show steep rise to stand at £32.08 millionas compared to £20.45 million a year ago. The company had previously

declared its cash dividend for its interim period. Few months back thecompany also acquired Braemar Group for a deal value of £3.87 million.

Galliford Try, a housebuilding and construction company is expectedto declare its final results, at a full year revenue of £1,204.11 million,down from £1,541.21 million in the previous year. Company is expectedto report its net debt at a loss of £40.82 million, while its capital expen-diture is expected at £5.64 million.

Regenersis, a business support company is expected to announce itsfull year results at a profit (pre amortization) at £9.6 per share, downfrom £11.4 per share in the previous year. Company’s full year revenueis expected to rise to £117 million as compared to £102 million a yearago. Capital expenditure is expected to change slightly to £2 million.

Unitech Corporate Parks , a retail estate company is expected to de-clare its interim results. Analysts expect the company full year profit at£0.74 per share, up from previous year loss of £0.81 per share. Com-pany’s full year revenue is estimated to rise steeply to £33.97 million ascompared to £10.5 million a year ago. Net debt is expected at a loss of £17.73 million.

Fairpoint, a U.K. based financial advisor company is expected to de-clare its first half results, analysts expect the company to report its in-terim revenue at £13.99 million, while net debt at 4.1 million. Com-pany’s full year profit is expected at £11.1 per share, while revenue isexpected to rise to £30.95 million, from £27.95 million a year ago.

Ideal Shopping Direct, a retail store company is expected to declare itsfirst half results. Company’s full year profit is expected to rise steeplyfrom £3.04 per share in the previous year to £12.43per share in thecurrent year. Company’s revenue is also expected to rise steeply to£114.33 million as compared to £103.68 million a year ago.

9/14/2010 - the economic monitor free u.k. edition

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