THE ECONOMIC MONITOR

14 September 2010

U.K.
Free Edition

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top
brokerage firms
 Important Events Scheduled on 15 September
Economic Events
 At the close, the FTSE 100 was up 1.88 points, or 0.1
percent, at 5,567.41, marginally extending Monday's four-
month closing high.
 At 1457 GMT, sterling was trading up around 0.5 percent
versus a broadly weaker dollar at $1.5505.

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

 Economists emerging market summit
123.12.

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

 Next, Brooks Macdonald, Galliford Try, Indus gas,  Spot gold was at $1,269.65 an ounce by 1515 GMT, up
Regenersis, Unitech Corporate Parks, Fairpoint, Ideal from $1,245.25 the day before.
Shopping Direct earnings releases

Breaking News
STOCK INDICES
 RBS plans to sell mortgage-backed securities: Reports INDEX LAST CHNG % CHNG

 Rio Tinto raises stake in Ivanhoe Mines FTSE 100* 5567.41 1.88 0.03

FTSE 250* 10472.44 -35.89 -0.34

 Rio Tinto plans expansion of diamond mine
FTSE 350* 2937.02 -0.47 -0.02

 NBNK to raise funds for buying assets FTSE Tech Mark 100* 1934.6 2.04 0.11

FTSE AIM 100* 3444.47 22.08 0.65

 BP resumes drilling on Gulf relief well
FTSE All Share* 2872.1 -0.63 -0.02

 Amec look for acquisitions in Asia, South America FTSE Eurofirst 300* 1087.63 -0.34 -0.03
DAX* 6275.41 13.73 0.22
 Aer Lingus intensifies talks with BA and competitors
CAC 40* 3774.4 7.25 0.19
 Ashmore profits rise driven by strong flows Stoxx Europe 50* 2587.22 -1.70 -0.07

* CLOSING VALUES
 U.K. August house price index falls: RICS

 U.K. consumer confidence rises in August CURRENCIES

 U.K. annual inflation unchanged INDEX LAST PRIOR

Euro (EUR/USD) 1.2989 1.2876

 Government not to gain from oil price rise: OBR
U.K. Pound (GBP/USD) 1.5517 1.5421
 FDA sets committee for Glaxo-Human Genome’s drug Japanese Yen (USD/JPY) 83.13 83.67

 U.K, Brazil to sign defence agreement All prices are at 11:31 AM EDT

FUTURES
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

THE ECONOMIC MONITOR - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

Investic
Hilton Food Raises price target to 290p from 255p Hold
RBC
Premier Oil Raises price target to 1,850p from 1,600p Outperform
KBW
St. James’s Place Recommends price target of 345p Outperform
Collins Stewart
Hill& Smith Holdings Cuts price target t 372p from 400p Buy
Minera Recommends price target of 90p Buy
Seymour
HMV Group Recommends to sell from buy Sell
UBS
Carphone Warehouse Group Raises price target to 260p from 235p Buy
Exane BNP Paribas
Pearson Cuts to neutral from outperform Neutral
KBC Peel Hunt
Hilton Food Recommends hold from buy Hold
Arbuthnot
YCO Group Raises price target to 33p from 25p Buy
Spectrics Raises price target to 1,100p from 995p Buy
Panmure
JD Weherspoon Cuts price target to 525p from 580p Buy
Jefferies
GKN Recommends price target of 190p Buy
BBA Aviation Recommends price target of 220p Buy
Credit Suisse
Cobham 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 Buy
HSBC
Segro Raises price target to 230p from 290p Underweight
Bofa Merrill
TUI Travel Raises price target to 230p from 270p Underweight
Goldman Sachs
William Hill Raises price target to 195p from 235p Neutral

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.

MARKET PERFORMANCE

FTSE 100
A. The risers and fallers were more or less equal in number at this
time and around 10% of the stocks were unchanged. The FTSE 100
was 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 its
Argyle diamond mine in Western Australia.

B. Capita, which takes on work outsourced by the government, was

the top riser. Retailers were a weak spot in the FTSE 100, with Next
and B&Q owner Kingfisher among the fallers. FTSE 100 down at
5,564.

C. Footsie continued to limp along slightly below last night's close.

Broker comment lifts Cobham and Marks & Spencer but did the
opposite for TUI Travel and Next. FTSE 100 was down 7 at 5,558.
THE ECONOMIC MONITOR - U.K.
COMPANY NEWS
RBS plans to sell mortgage-backed securities: Reports
Royal Bank of Scotland will sell 4.7
billion pounds of mortgage-backed
securities, its first such deal after the
credit crisis.
According to media reports an
agreement over the mortgage portfolio
for the securitisation deal is likely to be reached within the next few
weeks. Europe's markets for asset-backed securities (ABS) reopened last
year after being closed during the credit crisis, when many asset-backed
bonds suffered huge losses.
Rio Tinto raises stake in Ivanhoe Mines
Global miner Rio Tinto has raised its stake in Canada's Ivanhoe Mines
to 34.9 percent, on the conversion of a matured convertible credit
facility.
Rio Tinto till now has invested about $1.73 billion in Ivanhoe, and also
holds additional rights to subscribe for common shares in the company,
which controls the big Oyu Tolgoi copper-gold project in Mongolia. Rio
Tinto now owns 184.75 million common shares of Ivanhoe.
Rio Tinto plans expansion of diamond mine
Rio Tinto plans to expand its Argyle
diamond mine in Western Australia, and
has estimated to spend around $13
billion through the end of 2011 to lift
growth. It plans to invest $803 million to
develop an underground mine under the
existing open pit, and increase
production from 2011 to reach 9 million tonnes of diamond-bearing
ore a year within two years.
The project, put on hold in 2009 due to the global financial crisis, will
expand the life of the world's largest mine for pink diamonds to at least
2019 as the company looks to capture burgeoning demand.
NBNK to raise funds for buying assets
New British banking venture, NBNK (Nationalised Bank Northern
Rock ) 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 600
branches that Lloyds Banking Group has been ordered to sell to
comply with European state aid rules. It has raised 50 million pounds
from a stock market listing in August, and aims to tap investors for a
further 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 to
plugging permanently its broken Macondo oil well in the Gulf of
Mexico. The relief well has had been on hold for several weeks as BP
took other steps to kill the well that blew out on April 20, leading to an
explosion 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 in
regions including Asia and South America after the global recession
reduced asset prices.
Company’s Chief Executive Officer Samir Brikho said the company is
looking for growth in several areas including Australasia, Middle East
and 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 the
rival Star alliance and Skyteam groups.
Chief Executive Officer Christoph Mueller said that United Airlines
and KLM will accomplish the role of intermediaries in discussions with
Star and Skyteam.
The problem for Mueller is that Aer Lingus already has codeshare
agreements 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 with
United it codeshares to and from the US. One of the main issues to be
discussed 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 36
percent in its full-year profit, lifted by a rise in investors demand for
emerging market debt products. Also there was strong interest from
sovereign 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 82.9
million 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 central
Europe. 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 to
449.9 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 annual
profit to be slightly higher than analysts' average forecast, boosted by a
rise in fourth-quarter sales and higher profit margins.
The group, said its profit before tax and one-off items for the year
ended August 28 would be in the region of 150 million pounds ($231
million). 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.
THE ECONOMIC MONITOR - U.K.
ECONOMY NEWS
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 Chartered
Surveyors.
RICS house price index fell to -32 from -8, the sharpest one-month fall
since June 2004, and newly-agreed sales suffered their biggest fall in
two years. Mortgage lender Nationwide last month reported decline in
house 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 three
continuous months on growing optimism in consumers about the
outlook for the economy, according to the data from Nationwide
building 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 average
of 83 and February's two-year high of 84. Britain's economy grew by
1.2 percent in the second quarter.
U.K. annual inflation unchanged
British consumer prices rose 3.1 percent in August compared to the
same month last year, staying at same level of inflation rate that of July,
according to the report from Office for National Statistics. Compared
to July, CPI rose 0.5%. Economists surveyed by Dow Jones Newswires
had forecast a 0.4% monthly rise and a 3% annual increase. Inflation
remains 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 a
9.9 percent gain in June, according to government data by the
Department for Communities and Local Government. House prices
fell 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 provisional
rise in the oil price would have a minor effect on the U.K. public finances
but a permanent rise would create a loss.
Finance minister George Osborne had charged the new fiscal
watchdog to report on the effect of oil price fluctuations on the public
finances. The OBR said that there was almost zero impact on the public
finances if oil prices rose temporarily. Higher pump prices would reduce
demand for fuel, it said. In addition, inflation would push up the
indexation of tax thresholds, benefits, public service pensions and index
-linked gilts.
REGULATORY NEWS
FDA sets committee for Glaxo-Human Genome’s drug
A panel advising the U.S. Food and Drug Administration will discuss
GlaxoSmithKline and Human Genome Sciences' experimental lupus
drug Benlysta on November 16. Glaxo and biopharmaceutical company
Human Genome are co-developing the drug.
Lupus is a complex disease that causes the immune system to attack
the body's own tissue and organs. Benlysta, if approved, would be the
first new drug for systemic lupus in 50 years.
REGULATORY NEWS (contd…)
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 sue
over 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 their
claims 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 media
reports.
The BAE deal could be worth up to 2.9 billion pounds if the vessels were
built 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.
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 released
at Local/GMT/ET 0930/0830/0430. It is a key short-term indicator of how levels
of pay are changing within the U.K. economy. The earnings annual growth rate
for total pay (including bonuses) was 1.3 per cent for the three months to June
2010, down from 2.7 per cent for the three months to May. The earnings annual
growth rate for regular pay (excluding bonuses) was 1.6 per cent for the three
months 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 which
is a monthly measure of unemployment in the U.K. It indicates the health of the
U.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 inflationary
pressures if the rate is down. The claimant count unemployment rate was stable
at 4.5% in July. The data showed that the number of people claiming
unemployment benefit fell by 3,800 in July.
Source: Office of National Statistics
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 labor
force.
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 rising
by 184,000 in the three months to June.
Source: Office of National Statistics
THE ECONOMIC MONITOR - U.K.

MARKET BRIEFING

 Britain's leading shares edged higher, matching modest gains on Wall Street following above-forecast U.S. retail sales data, with
commodity issues standing out. At the close, the FTSE 100 was up 1.88 points, or 0.1 percent, at 5,567.41, marginally extending
Monday's four-month closing high. Heavyweight miners posted the best gains, with Randgold Resources and Fresnillo up 2.8 percent
and 2.6 percent respectively, as gold hit a record high and copper pared losses as better-than-expected U.S. retail sales data boosted
demand 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-dip
recession.

 Sterling rose against a broadly weaker dollar, aided by stubborn U.K. inflation data which raised speculation that the Bank of England
would hold off from extending quantitative easing in the near term. But a weak reading of U.K. house prices highlighted structural
weaknesses within the UK economy which, combined with austerity measures, were set to dampen upward pressures on prices and
wages in the medium term. At 1457 GMT, sterling was trading up around 0.5 percent versus a broadly weaker dollar at $1.5505, with
traders reporting demand from leveraged accounts on the break of $1.5500. The euro rose 0.2 percent to 83.70 pence, after finding
good 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 and
brushing 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, with
ex-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 were
53 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 the
cash market, the yield on ten-year gilts was 5 basis points down at 3.065 percent, widening the spread against Bunds by around half a
basis point to 69 basis points.

 Oil remained below Monday's one-month high, with traders reluctant to take strong positions ahead of eagerly awaited inventory
numbers. 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 cents
up on Monday's close, but well below Monday's intraday peak of $78.04, the highest value since August 11. Prices had surged on
Monday 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 upbeat
data failed to convince investors to shift into risk-linked assets. Gold is now on course for a 15 percent gain in 2010, fuelled largely by
investor nervousness that stemmed from the fallout from the euro zone debt crisis and from economic data that has suggested global
economic 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 ECONOMIC CALENDAR

DATE - 15/September/2010 DATE LST INDICATOR F’CAST PRIOR
COMPANY NAME EVENT WED 09/15 1400 Avg wk earnings 3mth yy 1.7% 1.3%
French Connection Group Interim 2010 14:00 Claimant count unem chng -3.0k -3.8k
Galliford Try Preliminary 2010
1400 ILO unemployment rate 7.8% 7.8%
Next Interim 2010
THU 09/16 1400 Retail sales mm 0.3% 1.1%
Photo-Me International Interim Management Statement
1400 Retails sales yy 2% 1.3%
RM Trading Update

Ideal Shopping Direct Interim 2010 1530 CBI trends -13 -14
Fairpoint Group Interim 2010
FRI 09/17 N/A No major indicators N/A N/A
Avanti Communications Group Preliminary 2009/2010
MON 09/20 1400 Money Supply M4 -- 0.4 %
Brooks Macdonald Final results

Galliford Try Final results

THE ECONOMIC MONITOR - U.K.
NEXT TRADING DAY
Economic Events
Economists emerging market summit
The Emerging Markets Summit is an unrivalled opportunity to really
uncover the true potential of new high growth economies. The
Emerging Marketing summit in 2009 attracted attendance from over 40
countries with three heads of state, and over 73% of corporate
attendees at director level or above.
High-Profile Speakers at this Event Include U.K.'s Cabinet Minister for
Business, Innovation & Skills Vince Cable, South Africa's Deputy
President Kgalema Motlanthe, IADB President Luis Alberto Moreno
and Brazil and Nigeria Central Bank Governors.
Corporate Events
Next is expected to reports its interim results
and investors will be curious to know whether
a spell of cooling in its sales has continued.
After its successful share buyback, Next
reported a £1.5 per cent decline in first-half
sales in August, although this was offset by
gains in gross margin. In its update for the six
months to July 31, the company noted that
consumer spending would be restrained” and that its outlook remained
cautious.
Analyst expect company’s interim profit to rise to 109.8 per share as
compared to £81.1 per share a year ago. Revenue for the interim
period is also expected to increase from £1,571.63 million in the
previous year to £1,894.2 million in the current year. The consensus of
analysts’ forecasts is for underlying pre-tax profits of £551m, from sales
of £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 reports
its yearly results. Company is expected to report loss of £0.662 per
share, while revenue is estimated to show slight fall. Capital expenditure
is expected at £12.03 million.
NEXT TRADING DAY (contd...)
Brooks Macdonald, an integrated wealth management company is
expected to declare its final results at a full year profit of £35.676 per
share, up from £22.2 per share in the previous year. Even company’s full
year revenue is expected to show steep rise to stand at £32.08 million
as compared to £20.45 million a year ago. The company had previously
declared its cash dividend for its interim period. Few months back the
company also acquired Braemar Group for a deal value of £3.87 million.
Galliford Try, a housebuilding and construction company is expected
to 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 expected
to 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 its
full year results at a profit (pre amortization) at £9.6 per share, down
from £11.4 per share in the previous year. Company’s full year revenue
is expected to rise to £117 million as compared to £102 million a year
ago. 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 as
compared 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 is
expected to rise to £30.95 million, from £27.95 million a year ago.
Ideal Shopping Direct, a retail store company is expected to declare its
first half results. Company’s full year profit is expected to rise steeply
from £3.04 per share in the previous year to £12.43per share in the
current year. Company’s revenue is also expected to rise steeply to
£114.33 million as compared to £103.68 million a year ago.
This report is produced by
International Business Times
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