Shares week: Novera, Goldstone, Vyke soar

 

The last time the FTSE 100 was at this level was almost exactly a year ago, when the collapse of Lehman Bros had sent the world markets into meltdown - and the HBOS crisis pulled the rug from under UK banking.

The sign and logo of the London Stock Exchange

The FTSE 100 index closed 150 points, or 3.47%, up on the week at 5,161.87. The Footsie is now 32% higher than its low point at the beginning of March, when it had fallen well below the 3,900 level.

Dealers expect the third-quarter earnings and forecasts that come out of Wall Street in the coming weeks to have a big influence on the market's direction through to the end of the year.

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Major US conglomerates largely beat modest earnings forecasts in the second quarter by cutting costs and streamlining operations.

For the third quarter, analysts and investors will be looking for actual growth in revenue and sales to provide more evidence of economic recovery, Aluminium giant Alcoa, first of the Dow's 30 constituents to report, got the season off to a storming start late on Wednesday.

With number crunchers forecasting a third-quarter loss, it reported a third-quarter profit helped by climbing metal prices and job cuts.

Mining buffs were buoyant as Alcoa's performance, a record gold price of $1,055.60, or £676 an ounce, and further good gains in other precious metals as the dollar weakened, helped the sector drive the Footsie higher.

Indeed, miners led the FTSE 100 leaderboard over the week, comprising nine out of the ten top-rising stocks. Kazakhmys was in pole position with a 16.37% gain of 161.5p to 1,148p. Eurasian Natural Resources was up 15.38% and Anglo American was up 14.65% higher at 930p and 2,151.5p respectively.

Some of the shine was taken off Vedanta Resources by a Goldman sachs downgrade on Friday, so that its shares finished the week up 15.18% up on 2,162p.

The odd man out was Kingfisher, mixing it with the heavyweights with a 12.72% gain to 233.1p, after a UBS upgrade to buy from neutral on Wednesday. The broker says the group has strong margin momentum, operational focus and cash flow.

Hotel chain Whitbread had a good week with a 8% gain to 1,269p, after US hotel giant Marriott posted upbeat earnings.

Whitbread, which owns Premier Inn and the Costa coffee brands, also benefited from a recommendation upgrade by Barclays Capital to 'overweight' from 'underweight', as the broker believes consensus forecasts are conservative.

'We would recommend buying shares ahead of [Whitbread's first-half results on 13 October] as we believe that profit guidance is likely to prove conservative and we expect consensus forecasts to be revised upwards again following this event,' BarCap analysts write in a note.

Intercontinental Hotels also rose 6.74% to 823.5p.

Fashion group Burberry rose 5.37% to 529.5p after Nomura advised clients to buy ahead of Wednesday's second-quarter trading statement. The Japanese love its trademark black-red-tan tartan trenchcoats and hats, so the broker is confident that Burberry can continue to gain market share while improving its profitability.

BAE Systems was the big loser on the week, with a 4.11% drop to 319.3p, as its ongoing difficulties with the Serious Fraud Office were compounded by the Tories pledging a 'strategic defence review' if they win office.

Nervous selling ahead of its trading statement on October 16 slammed shares of motor insurer Admiral into reverse. The close was 3.28% lower at 1,090p. Sainsbury's trading update on Wdnesday was poorly received and it lost 2.27% on the week at 313.9p.

Russian gold producer Petropavlovsk, the former Peter Hambro Mining, waqs the top riser among FTSE 250 companies, soaring 27% to 1,090p. Buyers climbed aboard after it agreed along with Leader, the largest asset manager in Russia, to create a joint investment fund to buy and develop Russian gold mines. It will provide mining expertise and some capital, while Leader will invest client funds.

One of the biggest gains in the FTSE 250 came from recruitment firm Michael Page International following its announcement of third quarter operating profits, against expectations for a loss. Shares were 14.88% higher at 369p.

Halfords rallied 11.77% to 391.1p, after it reported a 2.2% rise in second quarter like-for-like sales on Thursday and forecast half-year profits well above market forecasts.

Ladbrokes Bookmakers

Bookmaker Ladbrokes moved in the opposite direction, down 8% to 114.4p, after it announced on Thursday plans to issue new shares and said an unfavourable run of football results had caused profits to slide.

As gold soared to a record price of $1,040 an ounce, any company whose performance is heavily reliant on it gave a sparkling performance.

Canadian-based miner European Goldfields soared 40% on the week to 390p on what analysts at Canaccord described as a 'significant de- risking event'.

Benefiting from post-election euphoria in the country, European Goldfields announced it has received approval from the Greek Ministry of Environment for the Preliminary Environmental Impact Study of its 95%- owned Olympias and Skouries development projects in Greece.

Less than a week after respected chief executive David Fitzsimmons stepped down 'by mutual consent' at Novera Energy, multimillionaire private equity guru Guy Hands jumped in with a £90m, or 62.5p-a- share, cash bid for the rudderless renewable energy firm.

Infinis Energy, owned by Hands' private equity empire Terra Firma, which is responsible for producing more than 10% of Britain's renewable energy, made its aggressive move after snatching a 13% stake from Credit Suisse.

That purchase increased its total shareholding in Novera to almost 43% and sent Novera's shares - which were changing hands at 29p this time last year - soaring 40% to 66.75p.

Copper and nickel explorer Discovery Metals saw a 32.5% rise to 26.5p after announcing a joint venture with Japanese state-owned mining agency, Japan Oil Gas and Metals National Corporation, for its Dikoloti nickel project in north-east Botswana.

South African based GoldStone Resources confirmed midweek it was in an advanced stage of negotiations regarding a joint venture opportunity over a gold project in Ghana, responding to speculation which had caused its stock to skyrocket. The shares finished the week with a gain of more than 300% to 2.63p.

Vyke Communications - a leading Voice over Internet Protocol (VoIP) service provider with a focus on mobile applications - secured a £10m line of credit from GEM Global Yield Fund.

Vyyke, which issued a profit warning at the end of September, also announced the agreement of a large scale distribution deal with Steen Group to expand across Latin and South America. Investors have welcomed the developments, sending shares in Vyke 60% higher to 16.5p.

Shares in Songbird Estates - which owns much of London's Canary Wharf business hub - fell 42% to 1.43p as it placed 7.66m new shares at 1.32p each, the rump of its recent share issue aimed at repaying debts.

WEEK AHEAD

Tuesday

Man reading the FT
Newcastle-based Bellway's annual results are likely to make grim reading, with the City expecting underlying pre-tax profits of £25m to £30m before writedowns in the year to July 31 - less than a fifth of the previous year's £165m. Investors will be hoping for further optimistic signals in the results from the firm, which said in August that current sales rates were ahead of management expectations.

• Premier Inn to Costa Coffee firm Whitbread's interim results should cap a healthy six months for the leisure group. Although underlying pre-tax profits are likely to come in around 7% down on last year at £113m, this represents a creditable showing in a year of recession.

• Inflation figures for September should show a further decline on Tuesday after falling to the lowest level in almost five years during August. The Bank of England's benchmark, the Consumer Prices Index (CPI) was 1.6% in August although Investec's chief economist Philip Shaw expects this to have fallen to 1.3% last month.

Wednesday

Pubs giant Punch Taverns is braced for a near-40% fall in annual profits when it reports its figures. The market is predicting pre-tax profits of around £161m, well below the £262m seen in the previous year. Nomura analyst Simon Larkin warned the results would be 'severely impacted' by heavy falls in the worst-performing 20% of its tenanted estate.

Thursday

• Investors will hope figures from retailer WH Smith live up to the firm's bullishness earlier this year when the company reports annual results on Thursday. Consensus forecasts put WH Smith's pre-tax profits at around £81m for the year to August, up from £76m previously.

Friday

• Greeting cards chain Clinton Cards has felt the chill wind of bleak high street conditions and Friday's annual results will reveal a sharp fall in profits. Forecasts suggest underlying pre-tax profits of around £5m for the year to August, down from £19.5m the previous year.

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