THE ECONOMIC MONITOR

23 September 2010

U.K.
Free Edition

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top
brokerage firms
 Forecasts on Economic Indicators
 Important Events Scheduled on 24 September
Economic Events
 European shares fell on Thursday, though off their
lows after U.S. existing home sales data rose from a
13-year trough. FTSE 100 closed at 5547.08.
 Against the dollar sterling was up slightly at $1.5669.
 UK gilt futures extended gains by around 15 ticks
following a rise in U.S. Treasury prices.

No economic events scheduled  On the New York Mercantile Exchange, November

crude rose 36 cents, or 0.48 percent, to $75.07 a
Corporate Events barrel at 11:37 a.m. EDT.

 Bond International Software, Dillistone, Tawa,  Gold bid at $1,293.25 an ounce at 1515 GMT.
Mission Marketing Group interim results
STOCK INDICES
Breaking News
INDEX LAST CHNG % CHNG

 BA-Iberia merger clears all hurdles FTSE 100* 5,547.08 -4.83 -0.09

FTSE 250* 10,426.02 -22.31 -0.21

 Songbird NAV soars
FTSE 350* 2,926.02 -3.03 -0.10

 Mitchells & Butlers food sales surge FTSE Tech Mark 100* 1,925.06 1.63 0.08

FTSE AIM 100* 3,536.27 -14.30 -0.40

 Nightclub operator Luminar sales drop FTSE All Share* 2,862.45 -2.57 -0.09

 AstraZeneca pill waits for approval FTSE Eurofirst 300* 1,065.00 -1.46 -0.14
DAX* 6184.71 -23.62 -0.38
 Churchill confirms its coal project feasibility CAC 40* 3710.61 -24.44 -0.65

Stoxx Europe 50 2515.43 0.99 0.04

 Inflation risks must ease: Dale
* CLOSING VALUES
 British August car output rises - SMMT
CURRENCIES
 August mortgage approvals slump: BBA
INDEX LAST PRIOR
 U.K. offshore wind beats global capacity Euro (EUR/USD) 1.3348 1.3393

U.K. Pound (GBP/USD) 1.5721 1.5668

 More funds needs to be written off: HMRC
Japanese Yen (USD/JPY) 84.31 84.55

All prices are at 11:29 AM EDT

FUTURES
LAST CHANGE

Crude Oil 75.11 0.4

Natural Gas 4.16 0.064

Gold, Dec. 1294.8 2.7

Copper (¢), Dec 358.85 2.35

Wheat (¢), Dec. 705.5 -14.25

All prices are at 11:19 AM EDT

THE ECONOMIC MONITOR - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING
Deutsche Bank
Croda Raises price target to 1660p from 1420p --
Victrex Raises price target to 950p from 900p --
Arden Partners
Halfords Group Cuts price target to 550p from 650p Buy
Citigroup
Henderson Cuts to hold from buy Hold
Wellstream Cuts to hold from buy Hold
JP Morgan
John Wood Group Raises to overweight from neutral Overweight
Canaccord Genuity
K3 Business Technology Group Raises price target to 215p from 180p Buy
Nautical Petroleum Raises target price to 465p from 337p Buy
Evolution
James Fisher Raises price target to 585p from 500p --
Nautical Petroleum Raises price target to 420p from 350p --
Panmure
McBride Cuts to hold from buy Hold
Rentokil Initial Cuts target price to 120p from 148p Buy

Seymour Pierce
Penna Raises to hold from underperform Hold
Arden Partners
S & U Stores Recommends price target of 620p Buy
SocGen
Antofagasta Cuts to sell from hold Sell
BHP Billiton Cuts price target to 2,000p from 2,100p Hold
Xstrata Cuts to hold from buy Hold
Exane BNP Paribas
AstraZeneca Cuts to underperform from neutral Underperform
GlaxoSmithKline Raises to neutral from underperform Neutral
Shire Cuts to underperform from neutral Underperform
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. Gold was in focus as Randgold Resources, which mines for the
precious metal in Africa but the market took a dramatic downward
turn and moved to red after Lloyds Banking Group fell heavily. The
intense turnaround was with recent volatility following uncertain
comments from the US Federal Reserve on economic prospects.

B. Imperial Tobacco showed second day gains after yesterday rising

on the back of a positive update. However, it seems to be the
Lambert & Butler maker's defensive qualities that were in
demand today; shares were lower overall with the FTSE 100 firmly
in the red. FTSE 100 down 48 at 5,504.

C. An unexpected rise in unemployment in the US was the latest bad

news to jangle traders' nerves. Miners, dependent on the health of
the world economy, were among the heaviest fallers, with
Kazakhmys leading the mining sector - and the FTSE 100 - lower.
FTSE 100 down 71 at 5,480.
THE ECONOMIC MONITOR - U.K.
COMPANY NEWS
BA-Iberia merger clears all hurdles
The last and major hindrance between British Airways and Iberia over
the planned £5bn merger has been
removed. The target to create the world's
third biggest airline is all set after the
Spanish carrier approved BA's plan to
tackle its £3.7bn pension deficit. The tie-
up between BA and Iberia, which was
approved in April and has EU clearance,
still requires shareholder approval by
November. After the deal, BA
shareholders are expected to own 56% of the combined company, to
be called International Airlines Group. They also plan to launch a joint
transatlantic business with AMR Corp's American Airlines this autumn.
Songbird NAV soars
Songbird Estates reported a 6 percent hike in net asset value as the
demand for offices across the estate held firm against Britain's feeble
economic outlook. The market value of its investment portfolio jumped
to 4.8 billion pounds ($7.52 billion) in the half-year to end-June,
reflecting adjusted NAV of 178 pence a share. The company has also
proposed a fully underwritten, 140 million pounds open offer of new
ordinary shares to finance the repurchase of a 135 million pounds
shareholder.
Mitchells & Butlers food sales surge
Mitchells & Butlers, Britain's biggest pubs and restaurants group
announced that its sales at outlets open for more than a year increased
by 4.4 percent driven by a surge in demand for food. The company
sales of food increased 7.1 percent in the nine weeks to Sept. 18, with
drink sales up 2.2 percent. The company which is re-shaping itself into a
food-led business said it expected its operating margin to be about
16.5 percent, 1.2 percentage points higher than last year.
Nightclub operator Luminar sales drop
Luminar, a struggling British nightclub operator sales dropped as
trading remained challenging. The company’s sales at its 76 clubs were
down 20.2 percent in the 26 weeks to Aug. 26 with admission revenue
down by 26.5 percent and customer numbers down 19.1 percent. The
company has suffered from rising unemployment within its key 18-24
customer age group.
AstraZeneca pill waits for approval
An AstraZeneca pill has submitted for regulatory approval as a
treatment for thyroid cancer, offering the drugmaker a smaller sales
opportunity. The company failed last year in treating lung cancer.
AstraZeneca said that the agency will make a decision by Jan. 7, 2011,
as FDA has granted priority review status. It also stated that the U.S.
Food and Drug Administration and the European Medicines
Agency had accepted submissions for vandetanib.
Churchill confirms its coal project feasibility
Churchill Mining announced that a study at its East Kutai project in
Indonesia 'confirms the technical and economic feasibility of the project
and demonstrates that it is a world-class thermal coal deposit. This
investment evaluation suggest that the project has a net present value
of $1.8bn, and expects the pre-tax net cash flow to be in excess of
$500m (£319m) in the first 20 years of production. The company is
optimistic about its project to feed growing demand for energy in India
and China.
ECONOMY NEWS
Inflation risks must ease: Dale
Bank of England's Monetary Policy Committee debate continues as
policy-makers struggle to assess the relative strength of upside and
downside risks to inflation, BoE chief economist Spencer Dale. He
clearly said in his speech at Cardiff Business School that he was is in no
hurry to change monetary policy from its current ultra-loose setting, but
confirmed that BoE will act if necessary. (See Analysis and Views)
British August car output rises - SMMT
British August car production was up 37.3 percent as compared to the
previous year, while year-to-date output was
up by an annual 41.3 percent, the Society of
Motor Manufacturers and Traders said.
Carmakers turned out 77,882 vehicles in
August, while approximately 57,005 were
destined for export, a rise of 51.8 percent on
the year, SMMT stated. Commercial vehicle
output also jumped 22.1 percent on the year
and engine production was 15.4 percent
higher.
August mortgage approvals slump: BBA
The data from major banks showed that the number of loans approved
for buying homes fell in August to its lowest as the housing market is
yet to cope with the crisis. The mortgage approvals fell 22.3 percent on
the year in August to 31,767, down from 34,219 in July and the lowest
since April 2009, as said by British Bankers' Association. Bank of
England data released also showed home loan approvals by the
country's six biggest banks were also their lowest since April 2009.
Recent surveys show house prices are now falling and may further
decline.
U.K. offshore wind beats global capacity
Britain's offshore wind capacity surpasses global capacity after the
largest offshore wind park came into operation off the coast of Kent.
Compared with 1,100 MW installed in the rest of the world, the UK's
total offshore capacity climbs to 1,341 megawatt (MW), as per the
statistics published by RenewableUK, Britain's wind and marine
renewables industries association. The opening of the Thanet wind farm
also pushed Britain's installed renewable energy capacity to a five-
gigawatt (GW), while Swedish utility Vattenfall's, Thanet offshore wind
farm added another 300 MW.
REGULATORY NEWS
Need to write-off more funds: HMRC
HM Revenue and Customs will writes off approximately £1.5bn of
unpaid tax after tax miscalculations. HMRC is manually dealing with
the backlog of 7.5m cases because the discrepancies date are far back.
Some of the cases involve overpayment estimated at a total of £3bn
which will reimbursed. HMRC had earlier admitted six million other
cases of incorrect tax, with 1.4m Britons who underpaid expected to
receive an average demand for payment of £1,428. The taxpayers owe
£300 or less.
ECONOMIC INDICATOR WATCH
No major indicators scheduled for the release.
THE ECONOMIC MONITOR - U.K.

NEXT TRADING DAY MARKET BRIEFING (contd…)

Economic Events ConocoPhillips' New Jersey refinery was undergoing

major maintenance and also helped by Wall Street paring
No economic event scheduled its losses and moving higher. On the New York Mercantile
Exchange, November crude rose 36 cents, or 0.48 percent,
Corporate Events to $75.07 a barrel at 11:37 a.m. EDT (1537 GMT), trading
from $73.58 to $75.28.
Bond International Software, engaged in the provision of software,
hardware and related support services, principally to the recruitment  Bullion rises towards the previous session's record highs
industry will declare interim results. The company is expected to report as investors remain concerned over the potential impact
full year profit of £2.10 per share, up from £0.52 reported a year ago. of further quantitative easing on the currency markets.
Analysts expect the company to report a full year revenue of £31.900 Gold bid at $1,293.25 an ounce at 1515 GMT against
million, higher from £32.54 million reported a year ago. $1,289.60 late in New York on Wednesday.
Dillistone, a U.K. based company engaged in the sale of computer
software and the provision of related support services will announce its
interim results. The company is expected to report a full year profit of CORPORATE RESULTS
£14.90 per share, up from £14.68 reported a year ago. Analysts expect
the company to report a full year revenue of £3.80 million, higher from
DATE - 24/September/2010
£3.66 million reported a year ago.
COMPANY NAME EVENT
Tawa, which operates in Underwriting run-off, Run-off management
services and Other corporate activities, will declare interim results. The Bond International Software Interim 2010
company is expected to report a full year profit of £0.064 per share,
down from £2.352 reported a year ago. Analysts expect the company to Dillistone Interim 2010
report a full year revenue of £22.75 million, higher from £6.65 million
Pinnacle Staffing Group Interim 2010
reported a year ago.
Tawa Interim 2010
Mission Marketing group, a marketing communications and
advertising company specializing in providing national and international Mission Marketing group Interim 2010
clients with marketing, advertising and business communications will Aegis Group Interim Dividend Payment
release interim results. It is expected to report a full year profit of £3.20
per share, against £6.54 reported for the same period a year earlier. Catlin Group Interim Dividend Payment
Analysts expect the company to report a full year revenue of £86
Globus Maritime Interim Dividend Payment
million , up from £85.98 million a year ago.
Henderson Group Interim Dividend Payment

Henderson Opportunities Trust Interim Dividend Payment

MARKET BRIEFING
Kingspan Group Interim Dividend Payment
 European shares fell on Thursday, though off their lows London Capital Group Interim Dividend Payment
after U.S. existing home sales data rose from a 13-year
Paddy Power Interim Dividend Payment
trough. A sharper than expected slowdown in euro zone
services and manufacturing growth for September was Patsystems Interim Dividend Payment
compounded in the afternoon session by a surprise rise in
Promethean World Interim Dividend Payment
U.S. jobless claims, before the home sales data. FTSE 100
closed at 5547.08. Rotork Interim Dividend Payment

SPARK VCT Interim Dividend Payment

 Against the dollar sterling was up slightly at $1.5669. The
UK currency's trade-weighted index stood at 80.9, pulling SPARK VCT 2 Interim Dividend Payment
away from a two-month low of 80.4 hit on Wednesday
Ultra Electronics Holdings Interim Dividend Payment
due to the pound's gains versus the euro. At 1230 GMT,
the euro was down 0.6 percent at 85.00 pence , although Xaar Interim Dividend Payment
this still left it in sight of a four-month high of 85.77
Alpha Tiger Property Trust Trading Announcement
pence and its 200-day moving average, currently at 85.95
pence. Euromoney Institutional Invest Trading Announcement

 UK gilt futures extended gains by around 15 ticks

following a rise in U.S. Treasury prices after higher-than-
expected weekly U.S. jobless claims figures. Before the This report is produced by
news, the December gilt future was at 15 ticks up at International Business Times
124.18, and it rose as high as 124.35 shortly afterwards. For questions or comments
Ten-year gilt yields were 2 basis points down on the day reach us at
researchanalysis@ibtimes.com
at 2.95 percent.

 U.S. crude oil futures turned positive on Thursday, led by For more information about
RBOB gasoline futures that were lifted by news that our products visit