By Sarah Turner
LONDON (Dow Jones)--Broker upgrades for asset manager Schroders
and insurer Aviva helped both companies contribute to another day
of gains for the top London share index on Wednesday.
Schroders shares climbed 4.6% after Morgan Stanley upgraded the
firm to overweight while Aviva shares advanced 3.3% after it was
upgraded to buy at Deutsche Bank.
On Schroders, Morgan Stanley said: "We believe consensus
underestimates the earnings upside risk from a strong rebound in
high-margin retail flows."
"Despite headwinds in the form of Asia and U.S. units, we expect
positive surprises for the market at the interims on August 6," it
added.
Meanwhile, Aviva shares have underperformed, the Deutsche Bank
analysts said.
They think that bad news is once again reflected in a price to
earnings ratio 20% below the sector and yield of 1.6 times the
sector - post a 33% dividend cut.
"If a reasonable market develops for closed books, we highlight
Prudential and Aviva as potential gainers," the broker said.
Prudential (PUK) shares rose 1.5% and Legal & General shares
advanced 1.9%.
Banks were also advancing, with shares of HSBC Holdings (HBC) up
0.7% and Asia rival Standard Chartered up 3%. Royal Bank of
Scotland shares advanced 3.6%.
The financial-sector gains helped the FTSE 100 index climb 0.4%
to 4,547.53, recovering from the previous session's stumble.
The FTSE 100 is now up twelve times in the last thirteen
sessions.
"The run had to end one day, as the FTSE finally had a down day
after 11 straight positive closes. Although statistics such as this
are largely irrelevant, what matters is that such a display of
strength is unlikely to unravel in the same fashion," said John
Prior, technical analyst at brokerage Killik & Co.
"There is perhaps a bit more of the overbought condition to come
out yet, but as that plays out, it is better to start to position
for a retest of the highs into any weakness," he said.
Among British companies reporting earnings on Wednesday,
confectionery group Cadbury (CBY) advanced 1.9%.
The chocolate maker said that its first-half net income more
than doubled to 313 million pounds ($515 million) from 113 million
pounds a year ago, boosted by the sale of its Australian beverages
unit.
On the downside, shares of packaging firm Rexam fell 8.1% to 254
pence after it swung to a first-half net loss of 15 million pounds
($24.7 million) from a profit of 97 million pounds a year earlier,
hurt by weak volumes in plastic packaging and beverage cans.
Rexam also said that it will sell 350.7 million pounds of
shares, with shareholders having the right to buy four new shares
for every 11 they own at a price of 150 pence each. It won't pay an
interim dividend and is planning to cut capacity to reduce
costs.
Outside the top index, shares of no-frills carrier easyJet
advanced 3.7%.
Fiscal third-quarter revenue rose 12% to 721 million pounds
($1.18 billion), helped by increasing traffic outside the U.K. and
by a 36% jump in ancillary revenue, including checked-bag
charges.
Shares of CSR jumped 17.8%. The maker of Bluetooth microchips
swung to a second-quarter net loss of $29 million, from a profit of
$17.4 million a year ago. Revenue fell to $122.9 million, from
$188.4 million last year.
Still, CSR said orders are now improving and this will have a
positive effect on third quarter revenues, which are now expected
at between $195 million and $215 million.
"Second-quarter results came in towards the upper end of its
revenue guidance ($95 million to $115 million) and third-quarter
guidance was stronger than expected," said analysts at Credit
Suisse.
Services Desk; Dow Jones Newswires; +44-20-7842-9319/9274