THE ECONOMIC MONITOR

20 September 2010

U.K.
Free Edition

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top  The FTSE 100 was up 94.09 or 1.71% to 5,602.69.
brokerage firms
 By 1503 GMT, the euro rose 0.7 percent at 84.01 pence,
 Forecasts on Economic Indicators near the day's high of 84.12 pence.

 Important Events Scheduled on 21 September  By 1145 GMT, the December gilt future was 19 ticks lower
at 122.30, broadly in line with the equivalent Bund
Economic Events contract.

 By 1340 GMT, ICE Brent for November delivery was up 8

 Adair Turner, chairman of FSA and Andrew Bailey a Bank of cents at $78.29.
England senior official speeches
 Spot gold hit a record $1,283.70 an ounce and was bid at
Corporate Events $1,282.15 an ounce at 1526 GMT.

 Dealogic Holdings, JD Sports Fashion, Morson Group,

Dolphin Capital Investors (Dolphin) interim results STOCK INDICES
 Carnival Q3 Earnings INDEX LAST CHNG % CHNG

FTSE 100* 5602.54 94.09 1.71

Breaking News
FTSE 250* 10548.19 107.21 1.03

 Petra Diamonds FY net profit soars FTSE 350* 2955.93 47.06 1.62
FTSE Tech Mark 100* 1949.6 22.26 1.15
 Clipper, UTC on takeover talks
FTSE AIM 100* 3536.98 47.48 1.36
 Mixed drilling results for Sterling FTSE All Share* 2890.54 45.83 1.61

FTSE Eurofirst 300* 1087.02 14.15 1.32

 BAE eyes on counter-terror expansions
DAX* 6294.58 84.82 1.37
 BP fixes leaking well CAC 40* 3788.01 65.99 1.77

 HSBC disposes banknotes business to UOB Stoxx Europe 50 2571.04 33.81 1.33

* CLOSING VALUES
 U.K. M4 money supply retreats
CURRENCIES
 U.K. property prices fall: Rightmove
INDEX LAST PRIOR
 U.K. employers' group urges Govt on spending cuts
Euro (EUR/USD) 1.3082 1.3037
 No alternative to spending cuts: Clegg U.K. Pound (GBP/USD) 1.5568 1.5623
Japanese Yen (USD/JPY) 85.71 85.80
 Banking sector competition under probe
All prices are at 11:21 AM EDT

FUTURES
LAST CHANGE

Crude Oil 75.10 1.44

Natural Gas 4.00 -0.203

Gold, Dec. 1284.00 6.50

Copper (¢), Dec 353.25 1.05

Wheat (¢), Dec. 738.00 -1.25

All prices are at 11:10 AM EDT

THE ECONOMIC MONITOR - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING
Seymour
Intertek Raises to outperform from hold Outperform
Goldman Sachs
Segro Cuts price target to 266p from 271p --
Oriel Securities
Bluebay Asset Management -- Add
Segro Raises to buy from reduce Buy
Sterling Energy Recommends to hold from buy Hold
Ashmore Recommends to hold from buy Hold
Numis
Hikma Pharmaceuticals Recommends to sell from reduce Sell
Brewin Dolphine
Robert Wiseman Dairies Cuts price target to 355p from 600p --
Investic
United Business Media Raises price target to 765p from 686p Buy
Panmure
Hays Raises to buy from hold Buy
Evolution Securities
Sterling Energy Cuts price target to 165p from 250p Buy
Rockhopper Exploration Recommends to add from neutral Add
Bofa Merrill
Rockhopper Exploration Cuts price target to 50p from 700p Buy
Deutsche Bank
Forth Ports Recommends to hold from buy Hold
HSBC
United Business Media Raises price target to 750p from 700p Overweight
Bunzl Raises price target to 940p from 850p Overweight
UBS
Kingfisher Raises price target to 270p from 265p Buy
Booker Group Raises price target to 54p from 47p Buy
RBS
Easyjet Cuts price target to 400p from 430p Hold

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. BP was prominent among the risers in a buoyant FTSE 100 after
U.S. authorities described the leak from the Macondo well in the
Gulf of Mexico as "effectively dead". Fellow oil group BG Group
was also in demand. Sage and Serco were lower. FTSE 100 up 39
at 5,548.

B. Shares in Intertek moved higher after an upgrade to 'outperform'

from Seymour Pierce after a well received strategic update from
fellow testing group SGS. Intertek was the top riser in a buoyant
FTSE 100, even Indian energy group Essar and engineering and
project management group Amec were up.

C. Index was high following a good start on Wall Street. Intertek, the
company which tests the safety of toys and many other products
was boosted by an upgrade to 'outperform' from Seymour Pierce.
THE ECONOMIC MONITOR - U.K.
COMPANY NEWS
Petra Diamonds FY net profit soars
Petra Diamonds, the largest diamond producer on London's junior AIM
market, reported unexpected annual results, due to increase sale of the
507-carat Cullinan Heritage diamond. It reported a record net profit
of $70.2 million for the year to end June from a loss of $89.0 million the
previous year, while its revenue climbed 88 percent after it received
$35.3 million for the Cullinan Heritage. The group expects to produce
about 1.3 million carats in the current financial year and is also in talks
to buy the Finsch and Namaqualand mines in South Africa from De
Beers, Chief Executive Johan Dippenaar told Reuters
Clipper, UTC on takeover talks
Clipper Windpower, a Wind turbine maker is in talks with major
shareholder United Technologies over a takeover so as to fulfill its
additional capital to continue operating. UTC, which had earlier limited
to a 49.9 percent stake until Jan 2012, may now increase its stake in
Clipper to 55 percent. Clipper said that it will also focus on raising
capital and credit lines with financial providers and negotiating with
UTC on additional credit support.
Mixed drilling results for Sterling
Sterling Energy, the oil and gas company had mixed results with its
latest exploration well drill tests in Kurdistan. In the first drill stem test an
initial recovery of gas was followed by flowing water with minor gas
content during the six hour flow period while the second produced gas
at an estimated flow rate of 4m standard cubic feet per day (mmscfd)
along with some drilling fluids. Two prospective zones were identified
from the well data
BAE eyes on counter-terror expansions
With the acquisition of the consultancy division of American firm L-1
Identity Solutions, BAE Systems seems to reinforce its position in the
U.S. counter-terrorism market. The acquisition is expected to close in
the fourth quarter of 2010 as it requires U.S. regulatory approval. BAE
Systems will also pay $296m in cash for the L-1 division as
consideration to be funded from the company‟s existing cash resources,
which encompasses three firms SpecTal, Advanced Concepts and
McClendon.
The L-1 businesses balances the activities of its existing US-based
Intelligence & Security arm, while the acquisition will boost its
customer support and services business, the company said.
BP fixes leaking well
BP has finally declared that it has permanently sealed the leaking well in
the Gulf of Mexico, U.S. officials said. An additional relief well cut
through the original well, helped BP engineers to fill it with cement in a
permanent seal. The U.S. government has also asked the firm put aside
$20bn into a fund to pay for costs of dealing with the leak in addition to
$8bn spent directly on the clean-up operation. BP internal report said
that it accepted its mistake, but also added that the responsibility for
the explosion and subsequent leak should be shared by several
companies and was due to decisions by „multiple companies and work
teams‟.
HSBC disposes banknotes business to UOB
HSBC is all set to sell its wholesale banknotes business in Asia to
United Overseas Bank (UOB) by the final quarter of 2010. Under the
agreement, UOB will be paying $15m in cash for the assets and HSBC
will license to UOB the technology system used in connection with its
COMPANY NEWS (contd...)
Asian wholesale banknotes business. HSBC will work with UOB to ease
the signing of new contracts between UOB and customers and staff of
HSBC's Asian banknotes business.
Motive buys Adecq Digital
Adecq Digital, the digital terrestrial television technology company
gets acquired by Motive Television as its raise £4.75m nominal of
convertible loan notes and 71.25m subscription warrants to fund the
subscription, the company said. The group also said institutional clients
of Jendens Securities had come up with the money.
Discovery Mining identifies two new targets
Discovery Metals, the Botswana-focused miner said that two new
exploration targets have been acknowledged southwest of Discovery
Metals' Boseto Copper Project through the study of surface
geochemistry. The Ophion Target, located 40 km southwest of the
Zeta Deposit at Boseto, is a continuous geochemical anomaly over a 12
kilometres (km) strike length, while the Ourea Target, located 50 km
further to the southwest, is a geochemical anomaly covering an area of
4 square kilometres.
Silence suffer losses on Interdigm integration
Bid target Silence Therapeutics suffers losses as a result of Intradigm
integration. Its first half of the year revenue drops to £0.72m from £0.86,
while loss before tax widened to £7.05m from £3.57m the year before,
as research & development costs increased to £4.40m from £2.55m last
year. Administrative expenses also increased, from £1.92m to £3.23m.
The company said it will focus on partnerships, intellectual property and
clinical progress, as the three important area to bring the company on
track.
Salamander rig work to start by October
Salamander Energy, which mainly focused on Asian oil and gas
exploration and production company announced that the rig to be
used on its Bontang PSC asset in Indonesia should probably arrive in
the drilling area in the first week of October. Having acquired Bontang
Energy, which owned a 20% stake in the asset, the company has a 90%
stake in the Bontang PSC. The drill will be used for the Angklung-1
exploration prospect.
WPP acquires stake in Comwerks
WPP acquires 51% stake in Singapore-based Comwerks, a full service
digital agency with a big list of government and public sector clients,
thereby boosting its Asian business. With Wunderman's backing,
Comwerks Interactive position is expected to rise to one of the top 5
digital agencies in Singapore. No financial details relating to the deal
had been made public yet.
Comwerks Interactive, specializes in digital media and web 2.0 solutions
and does work for the likes of eBay, Ministry of Law, Ministry of
Manpower, National University of Singapore and People's Association.
New facility boosts China Food H1 profits
China Food, cooking and dipping sauces group reported a 57% rise in
half year pre-tax profit and after opening a new facility in May to
double existing soya sauce production. Turnover jumped £17.2m
compared to £14m before. A maiden dividend next year could be
considered by the board, following a capital restructuring, on the basis
that trading continues as expected.
THE ECONOMIC MONITOR - U.K.

ECONOMY NEWS REGULATORY NEWS

U.K. M4 money supply retreats No alternative to spending cuts: Clegg

The statistical release by Bank of England showed September's preliminary M4
Money Supply changing -0.2% over the previous month and 1.8% over same
period of last year. Previous data released by the central bank showed the MoM
broad money indicator at 0.4% and 2.3% increases, with expectations for the
current MoM reading at 0.2%.
U.K. property prices fall: Rightmove
Nick Clegg, U.K. Deputy Prime Minister will discuss
with his Liberal Democrat party today that
spending and welfare cuts are necessary and there
is no alternative for it, rejecting accusations he “sold
out” by joining a coalition with the Conservatives.
He says that overcuts are for long term benefits
and it is to safeguard Britain from tough times
ahead.

Property asking prices fell for the third month in
a row during September as estate agents
continued to have record levels of unsold stock
on their books. The average cost of a home put
up for sale in England and Wales during the five
weeks to September 11 dipped by 1.1pc to
£229,767, following drops of 1.7 percent in
August and 0.6 percent in July, according to
property website Rightmove. The annual rate
of growth slipped to 2.6 percent from 4.3 percent. In July 48,772 mortgages were
approved by U.K. banks.
U.K. employers' group urges Govt on spending cuts
He also will warn delegates to face criticism if they don‟t support him. He further
added saying that the party is making a liberal mark on government policy
without losing its identity and will work with Conservatives to “put the country
on a better path.”
Banking sector competition under probe
Banking sector is to get closed attention by the U.K. government's
Independent Commission on Banking as they plans to split up large retail
banking operations, a person familiar with the situation. They will also publish an
issues paper Friday detailing the scope of its investigations. This commission was
set up after the near collapse of the banking system in the U.K. during the
financial crisis.

Britain's biggest employers' group urged the government to prioritize areas that
foster the economy's ability to grow rather than welfare and social spending. The
government had plenty of scope to reshape public services, identifying 63 billion
pounds ($98.71 billion) of savings that could be achieved over the next five years.
The Confederation of British Industry (CBI) supported government's plans on
budget deficit, saying the alternative would have been even more painful.
The major focus will be on financial-stability issues, which could lead to
recommendations including a potential split-up of banks between retail
operations and investment firms.
Hochschild, Minera Andes settle mine dispute

Financial industry evades Labour Party
Following the general election, a sharp divide in U.K. has materialized in the
support for the three main political parties from the financial-services sector in
the two months. The Conservative Party received a total of £1,039,100 from
donors identified as financiers or financial firms since May 6, while the Labour
Party received a single donation from a financial backer, just £25,000.
Following an agreement between the two to restructure the $65m loan,
Hochschild Mining has dropped its legal action against partner Minera Andes.
As per the new agreement, both loans will be repaid over a maximum period of
8 years, with fixed interest rates of 7% per annum. The settlement also includes a
restructuring of a 2004 $50m shareholder loan by Hochschild and MAI to a co-
venture entity, Minera Santa Cruz.

MARKET BRIEFING

 Britain‟s leading share index trading surged on the back of rising optimism. The BoE in its latest report noted despite the fall in rates lending to
household has not increased and U.K. home prices fell Rightmove said. A strong start on Wall Street ensured FTSE finished with good gains having
started the day on a strong footing. The FTSE 100 was up 94.09 or 1.71% to 5,602.69. The FTSEurofirst 300 of top European shares rose 1.3 percent to
end the day at 1,087.02 points, after falling on Friday when figures showed U.S. consumer sentiment dropped to its lowest level in more than a year.
Energy companies BP and Royal Dutch Shell rose between 2 and 2.9 percent, as crude prices rose 2 percent to more than $75 a barrel, helped by
expectations that inventories may have fallen.

 Sterling hit a seven-week low against the euro after a raft of weak economic numbers highlighted a sluggish U.K. economic recovery, although buying
by some Asian sovereign funds offered support. Bank of England (BoE) data showed lending to U.K. businesses fell for the fifth month in July and home
loan approvals dropped to their lowest in more than a year. Separately, M4 broad money supply fell by 0.2 percent on the month in August. By 1503
GMT, the euro rose 0.7 percent at 84.01 pence, near the day's high of 84.12 pence. Against the dollar, sterling eased 0.2 percent to $1.5588, roughly 1
cent lower from the day's highs.

 British gilts eased, hurt by a recovery in equity prices even as Moody's reassured on Britain's triple-A credit rating and a batch of data fuelled concerns
about the country's recovery. Lending to U.K. businesses fell for a fifth month running in July and home loan approvals by major banks fell last month to
the lowest level in more than a year, according to Bank of England data. That chimed with a survey from Rightmove which showed asking prices for
homes in England and Wales fell for a third straight month in September and have lost half the gains they made in the first half of the year. By 1145 GMT,
the December gilt future was 19 ticks lower at 122.30, broadly in line with the equivalent Bund contract. Ten-year gilt yields were one basis point higher
at 3.14 percent, while the spread over Bunds was little changed at just under 68 basis points.

 U.S. crude oil futures rose by more than $1 a barrel, bolstered by stronger stock markets with the S&P 500 index hitting a four-month high and on
expectations stocks of crude will have fallen last week due to a pipeline outage. On the New York Mercantile Exchange, October crude rose $1.04 or 1.4
percent, to $74.70 a barrel by 1429 GMT, trading from an earlier low of $73.32. The October crude contract expires on Tuesday. By 1340 GMT, London‟s
ICE Brent for November delivery was up 8 cents at $78.29.

 Gold hit record highs for a fourth day, lifted by a potent mix of factors including dollar weakness, further central bank buying and speculation more
stimulus measures could prove inflationary. Expectations the Federal Reserve could announce further moves to stimulate the U.S. economy after its
policy meeting this week has piqued interest in the precious metal as a hedge against inflation, analysts said. Spot gold hit a record $1,283.70 an ounce
and was bid at $1,282.15 an ounce at 1526 GMT, against $1,275.95 late in New York on Friday. U.S. gold futures for December delivery rose $6.50 to
$1,284.00 an ounce. Spot gold prices have risen by more than 16 percent this year, driven by the desire among investors for a safe store of value in light
of major currencies, equities and bonds becoming increasingly volatile.
THE ECONOMIC MONITOR - U.K.

NEXT TRADING DAY ECONOMIC INDICATOR WATCH

Economic Events PSNB, mm ( August )

Adair Turner, chairman of FSA and Andrew Bailey a Bank of England
senior official set to become deputy CEO of new regulatory body at
BOE, will give speeches at annual mayor of London Mansion House
dinner at 2015 GMT.
Corporate Events
Dealogic Holdings, the London listed company that designs, develops
and markets a suite of software, communications and information
products, will report its interim results. The company is expected to
report a full year profit of 33 cents per share, up from 28 cents per share
reported last year. Analysts expect the company to report full year
revenue of $98 million, up from $91.50 million reported last year.
Significant amount of the company's revenue are generated through its
development of software for the capital markets industry.
Prior: 3.17 bln; Forecast: 12.51 bln
Office of National Statistics will release the data for Public Sector Net
Borrowing at 14:00 LST. U.K. public sector net borrowing, including
financial interventions totaled £3.2 billion in July, down from £5.5 billion
in the same period of last year, while the expected level was £4.8 billion.
Excluding financial interventions, net borrowing was £3.8 billion. This
was £2.3 billion lower than in July 2009, when net borrowing was £6.1
billion. Public sector net debt at the end of July was £816.2 billion,
equivalent to 56.1% of GDP. The public sector current budget was in
deficit by £0.5 billion, which was a £3.3 billion lower deficit than in July
2009, when there was a deficit of £3.8 billion.
PSNCR ( August )

JD Sports Fashion, engaged in the retail and distribution of sport and Prior: -4.13 bln; Forecast: 8.0 bln
athletic inspired fashion, footwear, apparel and accessories will report its
interim results. Analysts expect the company to report full year profit of The Public Sector Net Cash Requirements is the amount of money
£103.096 per share, up from £93.64 per share reported a year earlier. the government has to borrow to meet its expenditure. Governments
Company's full year revenue is expected to be at pound 808.09 million, often spend more than they receive in tax revenue and the only way to
higher than £769.79 million reported a year earlier. plug the gap is to borrow. In July 2010, U.K. PSNCR showed a loss of
£4.13 billion, down from £0.9 billion a year ago.
Analysts will be looking for the performance of the company‟s core
retail stores and its recently acquired foreign businesses.
CORPORATE RESULTS
Morson Group is expected to report its interim results. Analysts
expected the company to report full year earnings of £12.76 per share, DATE - 21/September/2010
against £18.30 per share reported a year earlier. Analysts expect the COMPANY NAME EVENT
company to report full year revenue of £424.30 million lower than the
revenue of £436.63 reported a year ago. Dealogic Holdings Interim 2010
JD Sports Fashion Interim 2010
Dolphin Capital Investors (Dolphin), a real estate investment company
will report its interim results. The company is expected to report full Dolphin Capital Investors Interim 2010
year profit of £10.319 per share, down from £25.557 per share reported Morson Group Interim 2010
a year ago. Roxi Petroleum Interim 2010

Velosi will declare its interim results. Analysts expect the company to Velosi Interim 2010
report full year earnings of £14.636 per share, against £14.513 per Schroders Interim Dividend Payment
share reported last year. The company is expected to report full year
Carnival Q3 2010
revenue of £131.42 million, against £119.46 million reported a year
earlier. Minerva Final Results

Wilmington Group Final Results

Carnival, a tour operator will release third quarter results. It is expected
to report a profit of $1.478 per share, for the third quarter against a
profit $1.310 per share reported for the corresponding period a year
ago. Analysts expect the company to report a revenue of $4,511.69
higher from 4,139.00 million for the corresponding period reported a
year ago.

ECONOMIC CALENDAR

DATE LST INDICATOR F’CAST PRIOR

TUE 09/21 1400 PSNB, mm GBP N/A 3.17bln

1400 PSNCR, mm GBP N/A -4.13bln

This report is produced by
WED 09/22 1400 MPC Vote Outcome N/A 8-1 International Business Times
1400 MPC QE Vote Outcome N/A 9-0
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