London shares remain lower midday, Dow seen weaker, Yell slumps on warning

London shares remain lower midday, Dow seen weaker, Yell slumps on warning

	Published : Tue, 24 Apr 2007 12:25 By : Agencies Print this Story

LONDON (Thomson Financial) - Leading shares remained at lower levels midday, ahead of weaker opening to Wall Street and after a near 20 pct slump in directories group Yell offsetting gains seen at Aviva on better-than-expected results, dealers said.

By midday, the FTSE 100 index was 45.2 points lower at 6,434.5, with the FTSE 250 down 134.9 at 11,790.4 as UK housebuilders were hit by a fall in Spain's blue chip index amid fears of an end to the county's real estate boom.

Volume was heavy with 1.23 bln shares changing hands in 227,673 deals.

Looking ahead to Wall Street, CMC Markets is forecasting the DJIA to open 8 points lower at 12,911, the Nasdaq down 2 at 1,852 and the S&P500 down 1.3 at 1,479.6.

Later today, there is a bit more activity on the US economic calendar with Consumer Confidence and Existing Homes Sales data both due out after the market opens.

Expectations are for a reading of 105 for the consumer number and for March existing homes sales to come in at 6.45 mln.

On the earnings front, chemicals group DuPont reported results that beat analyst forecasts. Net income grew to 945 mln usd, or 1.01 usd per share, from 817 mln, or 88 cents per share, a year ago. Excluding one-time items, earnings totaled 1.07 usd per share, versus 93 cents per share, a year earlier.

Ahead of the bell, AT&T is the other key Dow component expected to report earnings Tuesday.

Back in the UK, Yell Group led blue chips lower, down over 20 pct or 130 pence at 483 after the UK directories publisher warned on its US business outlook, prompting Goldman Sachs to downgrade its stance to 'neutral'.

The directories firm said its US organic growth for the current financial year is likely to be around 3 pct, due to competition, but the company maintained its expectations for the UK and Spanish businesses.

Goldman Sachs cut its stance on the stock to 'neutral' from 'buy' and slashed its price target to 454 pence from 630.

The broker said Yell's guidance for US organic revenue growth for the current financial year of 'around 3 pct' is significantly below Goldman's and the market's expectations of around 8-10 pct growth.

Persimmon was another casualty, down 35 at 1,371 after a collapse this morning in the share prices of Spanish peers amid fears the long expected property crash has finally come.

Midcap peers Bellway lost 64 at 1,514, George Wimpey was down 21-1/2 at 598, Redrow fell 16 at 604 and Taylor Woodrow lost 12 at 496-1/2.

Meanwhile, AstraZeneca fell back 60 at 2,772 after a slew of brokers downgraded the pharma giant after news yesterday that it is to buy biotechnology company MedImmune for 15.2 bln usd.

HSBC downgraded the group to 'neutral' from 'overweight', WestLB cut to are duce' from 'hold' and ING cut to 'hold' from 'buy'.

HSBC said the acquisition of MedImmune may be strategic, but investors may have to wait until 2009 for AstraZeneca to show the fruits of its strategy.

Also under pressure was Associated British Foods, off 4-1/2 at 929, as an in-line interim results from the owner of Primark prompted investors to take profits.

This morning, the group said profit before exceptionals for the six months to March 3 came in at 268 mln stg, against 255 mln stg the previous year, and compared with analysts' forecasts of between 265-272 mln.

In contrast, Slough Estates gained 12 to 768 amid vague market talk of a possible bid for the UK property group at 1,100 pence per share.

Traders saying the rumour was 'ridiculous' although some speculated that British Land might consider launching an offer for Slough using the proceeds of its planned disposal of Meadowhall, its 1.75 bln stg shopping centre near Sheffield.

Elsewhere, Aviva took on 13 pence at 788-1/2 after the UK's biggest insurer unveiled a better-than-expected increase in first quarter sales.

New business sales to the end of March on a Present Value of New Business Premiums basis came in at 7.75 bln stg, up 16 pct from the previous year and beating analysts' expectations of 7.527 bln.

In response, Cazenove described the US performance as 'storming' and reiterated its 'outperform' recommendation.

Elsewhere, Whitbread ticked up 18 at 1,920 after the leisure group reported full-year pretax profit before exceptionals increased 24.5 pct to 213 mln stg, beating analyst expectations of 204-212 mln.

Sentiment was further boosted as the group revealed it is to increase its level of leverage by around 400 mln stg and intends to return surplus cash to shareholders.

In response, ABN Amro reiterated its 'buy' advice and said 'the numbers are good, trading momentum is strong, and a high real estate valuation is confirmed'.

In broker comment, GlaxoSmithKline rose 5 pence at 1,471 after Deutsche Bank upped its rating to 'buy' from 'hold' and upped its target to 1,700 pence from 1,550.

The broker said the company's vaccines and respiratory products account for 25 pct of 2012 estimated sales, and with its two franchises -- Advair and Avandia -- largely 'immune' from genericisation, GSKs revenue stream looks set to be rejuvenated following recent generic pressures.

BAE Systems was 7 to the good at 782 as vague talk circulated of Saudi investor interest in the defence group -- but this was played down by traders.

On the second-line, broker comment helped Grainger to rise 13 at 655 and Derwent London 12 to the good at 2,202 after Merrill Lynch's upgraded the stocks to 'buy' in a UK real estate note.

Merrill said rising UK interest rates have unsettled UK property shares again, but argued underlying property markets will show a good positive return to the end of the year as office rents are rising strongly.

Furthermore, prime retail rents are rising, albeit more slowly, and while secondary retail yields are now rising the prime market remains solid.

Finally, Northgate fell back down 22 pence at 1,153 after Altium Securities downgrading the van hire group to 'hold' from 'add'.

The broker said it believes the share price will lack catalysts after an imminent trading update.

Altium told clients it expects the company to issue a trading update in the next couple of weeks but said it believes this is unlikely to be accompanied by estimate upgrades.

tf.TFN-Europe_newsdesk@thomson.com

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