ODL Capital UK - FTSE Down 75 Points

[newsroom]

After the colossal gains achieved at the start of this week, it would seem that the hangover has kicked in and investors have sobered to the reality that recession is here. We are continuing to see faltering confidence in a number of different areas of the markets and after having seen so much cash being pumped into the troubled banking sector we really should be seeing a stronger rally in worldwide markets rather than just a one day party.

Today the main focus in the UK will be upon the banking sector which is still getting used to the idea that the government may be its biggest shareholder, and similarly, is still considering the full impact of the recent dividend and bonus cuts. We will also be paying particular attention to the UK retail sector as predators start to move in on the troubled Baugur as it would seem that 24 hour darkness has hit Iceland early this year as its main exchange collapsed yesterday after having been suspended for the last three days.

Philip Green has been in negotiations for certain parts of the Baugur group for several days now and is now meeting competition from private equity according to press reports this morning, it will be interesting to see which parts he considers to be of value.

Andrew Turnbull, ODL Securities

Economics

US PPI(-0.4%)/RETAIL SALES(-0.2%) DUE 13:30
UK AVG EARNINGS(3.5%) DUE 09:30

Markets

In London –The FTSE 100 index ended more than 3% higher as confidence returned after government moves to help banks. The FTSE closed 3.23% higher, up 137.31 points at 4,394.21. Bank shares were mixed in the wake of the UK's bail-out plan. Lloyds TSB fell 6.6%, HBOS lost 5.2% and Royal Bank of Scotland fell 1%. However Barclays surged 14.2%. Unlike the other three, it has decided to raise its own money rather than ask for help from the government. Outside the FTSE 100, shares in sports retailer JJB jumped 25% after the firm said it was in talks to sell some of its non-core assets.

In the US– US shares closed lower on profit-taking, after initially soaring following the US government's $250bn plan to buy bank shares. The Dow Jones industrial average quickly rose almost 400 points on opening - but then fell back. The index closed down 0.82% or 76.62 points, at 9,310.99, after its huge rise on Monday. While bank shares were largely higher, technology stocks fell because of poorer prospects for consumer spending. Morgan Stanley rose 21.2%, Bank of America was up 16.4%, Citigroup soared 18.2% and Wells Fargo rose 10.2%. But in the technology sector, profit worries drove chipmaker Intel down 6.2%. Intel then rose modestly in after-hours trading as it reported a 12% rise in its third quarter earnings.

In Europe –European shares were set to fall on Wednesday, breaking a two-day winning run and tracking U.S. and Asian stocks lower on global recession fears even as money markets continued to thaw. The pan-European FTSEurofirst 300 index gained 3.1 percent on Tuesday but U.S. shares were lower, and on Wednesday, Asian stocks fell. On the macro front, eurozone and U.S. inflation figures, UK unemployment and U.S. retail sales will be in focus, while on the corporate side, all eyes are on
results from JPMorgan Chase.

In Asia –The Nikkei average reversed course and rose 1.1 percent on Wednesday as the sense of panic over the financial crisis eased, though worries about the global economy and company earnings sent the market lower in earlier trade.The benchmark Nikkei added 99.9 points to end at 9,547.47. It jumped more than 14 percent on Tuesday, the biggest one-day gain in its 58-year history. The broader Topix dipped 0.08 percent to 955.51.

News

BANKS - Some of Britain's banks are urging the government to lift a ban on dividend
payments imposed as part of its 37 billion pound ($64.9 billion) bail-out of the crisis-hit sector, newspapers reported on Wednesday. The Independent said the government is considering a U-turn that would allow Lloyds to pay dividends to shareholders while still taking advantage of its 37 billion pounds bank bailout scheme. Separataely, the Daily Telegraph said shareholders who stumped up billions of pounds in rights issues for Royal Bank of Scotland, HBOS and Bradford & Bingley are exploring whether there are grounds for legal action because they invested on the basis of what was stated in the prospectus.

HBOS, LLOYDS TSB - Eric Daniels, chief executive of Lloyds TSB, insisted the bank's takeover of HBOS would go ahead on the existing terms, despite a 7 percent drop in Lloyds' share price, the Daily Telegraph said.

BARCLAYS - Barclays has clinched the backing of Qatar's state investment fund as it races to raise an additional 6.5 billion pounds of capital, the Daily Mail said.

ROYAL BANK OF SCOTLAND - John McFarlane is emerging as a strong internal candidate to become chairman of the bank, taking over from Tom McKillop, who is leaving RBS, the Daily Telegraph said.

INSURERS - The City watchdog is keeping a close eye on insurance companies as fears grow they could be the next victims of the credit crunch, the Daily Mail said.

RIO TINTO - The mining giant showed a 17 percent rise in third-quarter iron ore production.

TOBACCO STOCKS - Tobacco companies argued on Tuesday that a lower court in the U.S. erred in finding they had conspired to lie about the dangers of smoking, while public health groups urged an appeals court to force the companies to fund programs to help smokers quit.

GLAXOSMITHKLINE - Eye company Alcon Inc said it expanded a licensing agreement with GlaxoSmithKline for global opthalmic rights to cilomilast, a drug compound.

MARKS & SPENCER, SCOTTISH & SOUTHERN ENERGY - The British retailer said it is preparing to expand into the household gas and electricity supply market following a partnership with utility Scottish & Southern Energy.

VEDANTA RESOURCES - Indian mining company Sterlite Industries, a unit of Vedanata Resources, has said it will not be able to close a $2.6 billion deal to buy U.S. copper miner Asarco LLC out of bankruptcy, due to troubles in the credit markets, an Asarco attorney said on Tuesday.

CADBURY - ING raised Cadbury to hold from sell

DIAGEO - Diageo releases a trading statement

FERREXPO - Ferrexpo releases its trading statement

Results

MARSTONS-expect FY in line with expectations................-5p

PEARSON-Sales+8%/Op pft+11%/remain on track for 2008.......+10p

BAE-H1 trading in line/benefit from currency moves........-10p

EXPERIAN-saw accelerated grwth in Q2/good H1 performance....+5p

AUTONOMY-Q3 pbt $53.7m/solid numbers/positive outlook......+60p

MINERS-Weak overnight/Poor production numbers from RIO......-5%

EX DIVS- BAE-5.8p/BLND-9.375p/FP-1.3p/SN-4.96c Takes 1.29 points off FTSE