RAMSEY CROOKALL & CO

MORNING REPORT 10 MARCH 2011

Surprisingly weak data out of China this morning has sent shares lower overall, while a stream of company updates has been given a mixed reception.

China posted a trade deficit of $7.3bn in February compared with the usual surplus, due mainly to the shutdown of factories during the Chinese New Year holiday, and higher commodity prices.

Argos and Homebase owner Home Retail Group has lowered full year profit guidance as trading remains tough, especially at Argos. The shares are down 8%. The guidance range for the year just finished has been lowered to between £250m and £255m, versus market consensus of £260.9m. "There are clear signs of further pressures on consumer spending, with recent trading conditions, particularly at Argos, proving to be more difficult and volatile than we anticipated,” said boss Terry Duddy.

Meanwhile supermarket Morrisons is also predicting tough times but it is bucking the downward trend today after it beat expectations in 2010 as its reputation for value had hard-pressed shoppers flocking to its stores. Underlying pre-tax profits totalled £874m for the year, ahead of estimates and up from £767m the previous year. Turnover climbed by 7% to £16.5bn.It expects higher taxes, government spending cuts, inflation and rising unemployment to continue weighing on consumer confidence in 2011, but says its value offering leaves it well positioned to deliver further profit growth.

Finally, struggling pubs group Punch Taverns is posting good gains after it claimed its turnaround campaign remains on track, with strong sales growth in its managed estate in the second quarter while trends in the leased estate improved in the second quarter. In a statement covering trading for the 12 weeks to 5 March, Punch said its managed estate enjoyed like for like (LFL) sales growth of 8.6% from the corresponding period a year earlier. That raised LFL sales growth for the first two quarters of the group’s financial year up to 4.9%.

THE FTSE 100 AT 9.30 IS DOWN 41 @ 5895

THE DOW JONES CLOSED DOWN 1 @ 12,213

THE NASDAQ COMP CLOSED DOWN 14 @ 2751

Exchange Rates

GBP – USD 1.62 GBP - EURO 1.652