RAMSEY CROOKALL & CO

MORNING REPORT 17th January 2011

London has opened moderately firmer, with potential M&A deals outweighing a weak start for the miners.

BP opened higher after the oil giant announced a controversial landmark deal with Rosneft, the Russian state oil company.

As well as confirming the tie-up with Rosneft, BP said it has been awarded four deepwater blocks off the coast of south Australia. BP said that it will explore Exploration Permit for Petroleum (EPP) areas EPP 37, EPP 38, EPP 39 and EPP 40 covering an area of 24,000 square kilometres for oil and gas reserves, with the right to develop any commercially viable discoveries.

It's the Rosneft deal, however, that has garnered most interest. The two companies have put in place a share-swap deal to cement an alliance that will see them jointly explore and develop three license blocks, EPNZ 1,2 & 3, on the Russian Arctic continental shelf.

Engineer Smiths Group has soared after it turned down a £2.45bn cash approach for its medical division, Smiths Medical.

"The board has carefully considered this approach with its advisers and has concluded that it would not be in the interests of shareholders to pursue discussions on the basis of an indication at this price level," it said in its statement.

Smith & Nephew is also also in demand on weekend reports that Johnson & Johnson is mulling a higher offer for the knee implants group.

Coal miner UK Coal increased fourth quarter total production to 2.3m tonnes compared to 0.2m tonnes the same quarter a year earlier. Total production for the year ended 25 December 2010 rose to 7.2mt compared to 7mt the year before.

THE FTSE 100 AT 10.00 IS DOWN 8 @ 5993 THE DOW JONES CLOSED UP 55 @ 11,787 THE NASDAQ COMP CLOSED UP 20 @ 2755

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