London shares remain firm midmorning; ITV, miners offset weak Sainsbury

London shares remain firm midmorning; ITV, miners offset weak Sainsbury

	Published : Thu, 11 Jan 2007 11:33 By : Agencies Print this Story

LONDON (AFX) - Leading shares held on to gains midmorning, encouraged by a recovery across the mining sector and a strong performance from ITV, although Sainsbury and Alliance Boots fell after trading updates failed to impress, dealers said.

By 10.00 am, the FTSE 100 index was up 30.3 points at 6,190.4, while the broader indices were mixed.

Volume was strong, with 1.05 mln shares changing hands in 97,024 deals, swelled by a PartyGaming placing.

In London this morning, ITV topped the leader board, up 3 pence at 110 after Deutsche Bank upped its stance on the commercial broadcaster to 'buy' from 'hold' and raised its target price to 130 pence from 100.

The broker told clients it believes Michael Grade will transform the group's prospects.

Elsewhere, broker comment lifted some of the UK's insurance stocks. Citigroup said that unlike banks, insurers are still delivering earnings growth, with improving free cash-flows of near 7 pct yields.

Prudential rose 16 to 727-1/2, Royal & Sun Alliance gained 3-1/4 to 155-1/4 -- which Citigroup lifted to 'hold' from 'sell' -- and Legal & General edged 3 better to 160-3/4.

However, the same broker lowered its stance on Aviva to 'hold' from 'buy' and Standard Life to 'sell' from 'hold'.

Mining stocks were helped by a slight recovery in commodity prices overnight, with copper, silver and gold all steadying after recent falls.

BHP Billiton added 18 pence to 904-1/2, while Vedanta gained 14 pence to 1,106, Kazakhmys edged 18 pence higher to 1,031 and Rio Tinto climbed 29 pence to 2,578.

Positive broker comment also gave leisure group Carnival a boost. Deutsche Bank said it sees Carnival as one of its top picks, adding that 2006 was a tough year but that the regaining of earnings momentum should allow the stock to re-rate again in 2007.

Upbeat comment also lifted Yell Group with a bullish note from Goldman Sachs.

Yell added 16 pence to 595 after Goldman Sachs reiterated its 'Conviction Buy' recommendation and 650 pence target, saying it believes the markets concerns over integration issues at its Transwestern business and a slowdown in top-line growth in the US are overdone.

Man Group recovered from early falls to trade 4 pence higher at 516 after investors were initially unimpressed with the hedge fund operator's trading update.

It reported that it currently has more than 60 bln usd in funds under management, up from 56.8 bln usd at the end of September, although below expectations.

Among the fallers however, trading statements from J Sainsbury and Alliance Boots proved disappointing.

J Sainsbury, the UK's third biggest supermarket by market share, posted sales at the upper end of expectations but did not provide the upgraded forecasts many had hoped for.

'The market has been hoping for upgrades here and, given the substantial upgrades we saw for Morrison yesterday, there will be early disappointment,' said a dealer at a major European broker.

'The recovery remains on track but some of the fizz should have faded,' Merrill Lynch noted, repeating its 'sell' recommendation.

Sainsbury said like-for-like sales for the 12 weeks to Dec 30 increased by 5 pct, excluding fuel. That was at the upper end of analysts' expectations, which ranged between 3.5-5.5 pct.

Sainsbury shares fell 7 pence to 407-1/2.

Last night's TNS data for the four weeks to Dec 31 showed Sainsbury's growth rate bounced back, up 6.6 pct compared to 5.2 pct in the previous period. Tesco however showed a return to form with growth of 10.4 pct.

Alliance Boots also failed to impress with its trading update.

The international pharmacy-led health and beauty group created from the merger of Boots Group and Alliance UniChem last July reported a solid, if unspectacular, underlying performance in its UK retail business in the third quarter.

Alliance Boots shares ticked down 14 pence to 818.

On the second line, Spectris gained 38 pence to 784 after a bullish pre-close trading update ahead of its full-year results due Feb 23.

The group said its second half trading was in line with expectations and, after adjusting for the disposal of Arcom in the first quarter, full year sales increased by around 6 pct.

In reaction, Altium upgraded its recommendation to 'hold' from are duce'.

Elsewhere, Tomkins ticked up 7-1/4 to 254 in sympathy with Spectris. The company also announced that Terry O'Halloran, president of the Air Systems Components division, will assume the additional responsibility of managing both the Lasco Bathware and Philips Products business units.

On the downside, PartyGaming fell 1-3/4 pence to 32 amid reports that UBS has placed 160 mln shares in the online gaming group at 30-1/2 pence per share.

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