RAMSEY CROOKALL & CO

6th August 2012

Evening Report

The FTSE 100 ends 0.5% higher at 5815.26 in a day of low volumes, closing above the 5800 level for the first time since May 1. Gains have been led by banking and resources stocks, with these sectors likely to benefit most by more largesse from not only the ECB but potentially also the Chinese authorities. Attention this week will turn to Tuesday's UK industrial production data for June and then Wednesday's BOE minutes, which should provide clues as to whether the central bank will undertake more QE.

Royal Bank of Scotland moved higher after The Sunday Times reported that Brazil´s Banco Itau could be sizing up the lender´s US operations. Those assets could fetch a price of 10bn pounds the paper reported.

Barclays was also up on widespread reports that it is planning an overhaul of its bonus system, that could see payouts withheld until bankers leave the company.

Coal and iron ore giant Evraz was in demand after UBS removed the stock from its least preferred list.

Glencore traded strongly. Several reports out over the weekend highlighted that it is expected to publish a smaller drop in its half year profits, tomorrow, than its take- over target Xstrata. That may give it additional ammunition with which to resist pressure from Xstrata shareholder Qatar Holdings for a higher offer price. Xstrata will report that profits for the half dropped 50 per cent to 1.4bn dollars (900m pounds), according to the City's consensus estimates. In contrast Glencore, whose trading activities mean it can profit from commodity price swings, is expected to report later in the month that its own earnings suffered a less steep fall of 37 per cent, to 1.5bn dollars, according to analysts at Liberum Capital.

Marks & Spencer closed higher after the Sunday Telegraph reported that the High Street giant is the subject of takeover talks. The paper said that bankers at a number of London institutions have assessed the possibility of providing debt finance for a speculative bid of £6.0bn.

Engineering group GKN gained on the back of car sales data and a bullish research note from Credit Suisse this morning. The broker raised its target price for shares and reiterated its 'outperform' rating, saying that the stock continues to offer an "undemanding" valuation compared with the sector.

















Supermarket giant Tesco gained  after launching mortgage services. Philip Clarke, Chief Executive of Tesco, described the launch of Tesco Bank mortgages as "a major milestone towards offering Tesco customers a full retail banking service". Meanwhile, airline group IAG was pressured lower after Credit Suisse downgraded its rating on the stock to 'neutral' and cut its target price from 176p to 160p.

SSE and Centrica were also down after Deutsche Bank cut its recommendations on the shares to 'hold'.

THE FTSE 100             closed            Up         27      @      5,815 THE DOW JONES            @ 17:00           Up         75      @     13172 THE NASDAQ               @ 17:00           Up         25      @      2993 Exchange Rates GBP – USD        @      17:00             1.5623 GBP - EURO      @      17:00             1.2578