Tonight:
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Monday 3 November - afternoon update
Its rivals may have hogged the headlines today with news of further write-downs, but it was Barclays that attracted some undesired attention from brokers.
The bank, which turned its back on the Government's offer of fresh funding, continued its slide, sinking 8.9p to 170p as sentiment soured against the group in response to its fund-raising with Middle Eastern investors.
UBS has slashed its target price from 220p to 170p and repeated its neutral rating. The broker points out that existing shareholdings will be heavily diluted by the funding programme.
Merrill Lynch jumped on the bandwagon, warning that existing shareholders may take a £3.2 billion hit from Barclays' refusal to seek a Government bailout.
Lloyds TSB was 5.5p lower at 192.3p after confirming that its takeover of HBOS, 8p stronger at 107.3p, will go ahead despite talk of a counterbid. Royal Bank of Scotland, which is borrowing a further £20 billion from the Government, slipped 4p to 63.5p. This means its rights issue, priced at 65.5p, is under water.
Shares were heading for their fifth consecutive day of gains on the London stock market today. If they were to achieve that goal, it would be the first time so far this year, bringing some much-needed cheer and stability to frazzled City investors.
The prospect of another cut in interest rates, expected to be half a point, this week, and gains on Wall Street this afternoon provided a positive backdrop to sentiment. The FTSE 100 index traded nervously but still got its nose in front with a rise of 3.66 to 4381. Said one trader: “There really isn't much to cheer on.
There is no guarantee that even if the Bank of England cuts rates the benefits will be passed on by the retail banks.”
The FTSE 250 index, a better bellwether of the domestic economy, was up 139.73 points at 6422.28 in thin trading. In New York, the Dow climbed 40.7 points to 9365.71.
The miners made the running among blue-chips. Kazakhmys rose 47¼p to 332¾p. Dealers say the shares were oversold last week and are now having to do some catching up.
BT Group marked time at 115.1p as Morgan Stanley cut its target from 210p to 170p in the wake of Friday's profit warning. It says that until the telecoms giant can explain how its only growth division will earn a proper return on capital, confidence will remain low.
It has also cut its 2009 earnings per share estimate from 22.9p to 20.8p, and for 2010 from 22.2p to 19.9p, and repeated its equalweight rating on the shares. It cut its full-year dividend forecast to 10p. Collins Stewart has dropped its target for BT from 110p to 100p, and warns a dividend cut is inevitable. It remains a seller.
Any ideas investors may have that supermarkets remain safe havens for their money in times of trouble have been kicked into touch by Société Générale. It has downgraded Tesco, off 8.3p at 331.1p, from hold to sell in the face of a weakening grocery market in the UK. It says sales growth has been dependent on high food prices.
Morgan Stanley has raised its target for Shire, up 5p at 824p, from 1252p to 1273p after last week's third-quarter numbers from the drugs giant. It says new-product launches continue to drive growth while the guidance for Vyvanse, its treatment for attention deficit hyperactivity disorder, will help set expectations for next year. It has repeated its overweight rating and lowered its earnings per share forecast for 2008 from $1.21 to $1.08. But it has raised that for next year from 84 cents to 85 cents.
GKN retreated 5p to 113¾p. Citigroup has halved its target from 250p to 125p in the wake of last month's profits warning, but continues to rate the shares a hold. It has cut its current-year earnings per share forecast by 22% to 22.6p.
