THE ECONOMIC MONITOR

15 September 2010

U.K.
Free Edition

INSIDE THE REPORT MARKETS AT A GLANCE

 Stock recommendations and price targets from top  The FTSE 100 index closed down 11.85 points, or 0.2
brokerage firms percent at 5,555.56, snapping a five session winning streak.

 Forecasts on Economic Indicators  By 1037 GMT, sterling had fallen 0.2 percent at $1.5502
against a broadly firmer dollar, marking a reversal from
 Important Events Scheduled on 16 September Tuesday.

Economic Events  By 1326 GMT, December gilt futures were 38 ticks down
at 122.84, reversing most of the previous session's gains.
 Bank of England's governor gives evidence to MPs on
 European market Brent dipped by 40 cents to $78.76.
Inflation Report.
 Spot gold was little changed at $1,268.60 an ounce by
 Pope Benedict XVI will visit England and Scotland from
1530 GMT.
September 16-19.

 Rwanda President Paul Kagame visits United Kingdom

on Thursday 16 September, 2010. STOCK INDICES
 Economists emerging market summit last day conference INDEX LAST CHNG % CHNG
at The Connaught Rooms, London.
FTSE 100* 5555.56 -11.85 -0.21

Corporate Events FTSE 250* 10494.27 21.83 0.21

FTSE 350* 2932.41 -4.61 -0.16

 Kingfisher, BlueBay Asset Management, Centaur
FTSE Tech Mark 100* 1942.63 8.03 0.42
Media, Dunelm Group, Kier Group, Quayle Munro
earnings releases FTSE AIM 100* 3449.35 4.88 0.14
FTSE All Share* 2868.06 -4.04 -0.14
Breaking News FTSE Eurofirst 300* 1085.14 -2.49 -0.23
DAX* 6261.87 -13.54 -0.22
 Next lift H1 profits rise
CAC 40* 3755.64 -18.76 -0.5
 SSE launches „iplan’ Stoxx Europe 50 2573.64 -13.58 -0.52

* CLOSING VALUES
 Resolution adds AXA men to board

 STM profits take off CURRENCIES

INDEX LAST PRIOR

 Terra Firma is set for EMI buy out dispute trial
Euro (EUR/USD) 1.3006 1.3008
 BP's North Sea record under scrutiny
U.K. Pound (GBP/USD) 1.5614 1.5559

 Jobless claims rise in August, first time since Jan Japanese Yen (USD/JPY) 85.61 83.1

All prices are at 11:43 AM EDT

 Monetary policy is the best tool: King

 China closely watches BHP's bid for Potash FUTURES

 FDA delays AstraZeneca's drug Ticagrelor LAST CHANGE

Crude Oil 75.43 -1.37

 Uncomfortably high inflation at the moment: David
Natural Gas 4.22 0.051
 Green growth may boost U.K. economy Gold, Dec. 1270.3 -1.40

Copper (¢), Dec 346.65 -0.20

 EU sets news rules for short-selling
Wheat (¢), Dec. 766 1.00

All prices are at 11:32AM EDT

THE ECONOMIC MONITOR - U.K.

STOCK RECOMMENDATIONS BY BROKERAGE HOUSES

BROKERAGE/COMPANY ACTIONS RATING

Microgen Raises price target to 122p from 97p Buy

Natixis
Morrison Supermarkets Cuts to neutral from Buy Neutral
Jefferies
Associated British Food Raises price target to 1,200p from 1,140p Buy
Goldman Sachs
United Utilities Group Raises price target to 568p from 557p --
Scottish & Southern Energy Raises price target to 1,158p from 1,109p --
Northumbrian Water Group Raises price target to 329p from 266p --
National Grid Raises price target to 535p from 480p --
Severn Trent Raises price target to 1,473p from 1,313p --
Shanks Group Cuts price target to 151p from 153p --
Centrica Raises price target to 443p from 434p --
Drax Group Cuts price target to 525p from 591p --
Pennon Group Raises price target to 667p from 532p Neutral
Barclays
Shire Recommends price target of 1,700p Overweight
Deutsche Bank
Burberry Group Raises price target to 875p from 850p Hold
UBS
JD Wetherspoon Cuts price target to 525p from 560p Buy
Rightmove Recommends to neutral from buy Neutral
Regus Cuts price target to 100p from 125p Buy

Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before
taking any investment decisions.

MARKET BRIEFING

 Commodity stocks pulled Britain's top shares lower as U.S. data showed a sharp slowdown in industrial output, and after investors
switched into the dollar after BOJ's yen intervention and recent sharp gains. The FTSE 100 index closed down 11.85 points, or 0.2
percent at 5,555.56, snapping a five session winning streak, having inched higher late on Tuesday to extend Monday's four-month
closing peak. Heavyweight mining and energy stocks fell in tandem with crude and base metal prices as worries persisted over the
choppy economic recovery in the U.S.

 Sterling touched a seven-week low against the euro and fell against the dollar as a surprise jump in unemployment fed concerns about
the U.K. economic outlook. By 1037 GMT, sterling had fallen 0.2 percent at $1.5502 against a broadly firmer dollar, marking a reversal
from Tuesday, when persistently high U.K. inflation data boosted the pound. Against the yen, the pound jumped 2.7 percent to 132.41
yen as cross yen pairs soared after Tokyo intervened for the first time in six years to rein in yen gains, but traders doubted Japan bought
anything other than dollars in the move. The pound touched 84.00 pence against the euro in early European trade, the lowest since late
July. The euro was last up 0.1 percent at 83.67 pence.

 British gilt futures fell, keeping in step with Bunds, as investors digested supply, comments from Bank of England policymakers and
braced for more gilt issuance on Thursday. By 1326 GMT, December gilt futures were 38 ticks down at 122.84, reversing most of the
previous session's gains, and keeping in line with the equivalent Bund. In the cash market, the yield on ten-year gilts was 4 basis points
higher at 3.091 percent.

 Oil trimmed earlier losses due to a fall in U.S. inventories, while the recovery prices was limited by the potential reopening of the
biggest Canada-U.S. crude pipeline. The yen slipped against the U.S. dollar and the euro as Japan's central bank intervened to sell its
currency for the first time in six years. By 1459 GMT, U.S. crude for October was trading $1.19 lower at $75.61 a barrel, having fallen
more than $2 earlier. European market Brent dipped by 40 cents to $78.76. Crude oil inventories in the United States, the world's top oil
consumer, fell 2.49 million barrels in the week to Sept. 10, mostly in line with analysts' forecast, weekly data from the U.S. Energy
Information Administration showed.

 Gold hovered near record highs on the second anniversary of the collapse of Lehman Brothers, holding flat on the day in dollar terms,
yet hitting two-month highs in yen after Japanese currency intervention. Spot gold was little changed at $1,268.60 an ounce by 1530
GMT, after having surged more than 2 percent to a record $1,274.75 the day before. U.S. gold futures for December delivery were down
$1.70 an ounce at $1,270.10. Gold in yen terms rose to a high of 108,737 yen an ounce on Wednesday, showing a three-percent gain on
the day and rising to its highest since early July, echoing a sharp fall in the yen.
THE ECONOMIC MONITOR - U.K.

COMPANY NEWS ECONOMY NEWS

Next lift H1 profits rise Jobless claims rise in August, first time since Jan
U.K. clothing retailer Next has announced its first The number of workers claiming jobless benefits increased by 2,300 to 1.4663
half results with 12 percent rise in its net profit. million in August, according to the data from Office for National Statistics. It is
Next reported the net profit of 155 million pounds first monthly rise since January. Economists had expected a fall of 5,000. Persons
($241 million) and revenue growth of 5 percent at claiming benefits was 4.5% of the workforce, unchanged from July. The
1.59 billion pounds. The group reported growth in unemployment rate for the three months ending in July was 7.8%, down from
its catalog business, with addition of new space in 7.9% in the previous three months. Unemployment fell by 8,000 over the quarter
its retail arm but announced 1.5 percent fall in to 2.47 million, the ONS said. Average earnings, excluding bonuses, over the May
comparable sales during the period. Pretax profit -July period rose at an annual rate of 1.8%.
rose 15 percent to 213.3 million pounds, in line
with the group's guidance, and lifted its interim dividend by 6 pence a share to
25 pence. For the year as a whole, the company expects Next brand sales to be
Monetary policy is the best tool: King
between flat and 2% higher than a year earlier.
Bank of England Governor Mervyn King said the
government had no choice and had to cut the deficit. He
SSE launches ‘iplan’ emphasized on monetary policy being the best tool to
manage the economy. In his speech to a meeting of the
The Scottish & Southern Energy (SSE) has announced the nationwide launch Trades Union Congress in Manchester, he said vague
of a smart energy kit called „iplan‟. The kit enables customers to track their en- promises by the government to reduce the deficit would
ergy use in real time and provides archived information on energy usage. not have been enough. King said since monetary policy
can be changed in either direction every month, it is the best tool for managing
Alistair Phillips-Davies, Energy Supply Director of SSE said, “The development the economy in the short run.
of new products is central to success in Britain's competitive energy supply mar-
ket. The iplan will transform the amount of information that customers have China closely watches BHP's bid for Potash
about their energy consumption, by giving them a user-friendly presentation of
energy data at their individual level.” China's Ministry of Commerce will closely watch the BHP Billiton's bid for
Potash Corporation. According to China ministry spokesman Yao Jian the deal
Resolution adds AXA men to board between the two big firms will draw global attention and impact China. The
ministry will review BHP's bid for Potash if a formal application gets submitted.
Resolution has made a number of manage-
ment changes after completing the £2.75 bil- REGULATORY NEWS
lion acquisition of French insurer AXA’s life
insurance businesses.
FDA delays AstraZeneca's drug Ticagrelor
The firm keeps Trevor Matthews as boss of
Friends Provident. Matthews will be joined on AstraZeneca today announced that the U.S. Food and Drug Administration has
the board of Resolution unit Friends Provident increased the time span for the review of anti-clotting drug ticagrelor (trademark
Holdings by former AXA men David Hynam name Brilinta). The FDA has delayed the Prescription Drug User Fee Act date
and Andy Parsons. Hynam becomes executive director of operations, while the from September 16 to December 16. AstraZeneca would continue to work
role of chief financial officer will be split between Parsons, as executive director of closely with the agency on this matter. Ticagrelor is under regulatory review in
finance, and ex-Friends CFO Evelyn Bourke who‟s now responsible for strategy, nine territories around the world, including the EU, Canada and Brazil.
capital and risk. Graham Harvey and Paul McMahon have been brought over
from AXA to lead market facing business units covering individuals and corpo-
rate. Uncomfortably high inflation at the moment: David
Bank of England policymaker David Miles said that inflation is uncomfortably
STM profits take off high at the moment. The BoE wants further loosening of the monetary policy, if
recovering economy falters but high inflation has led one policymaker, Andrew
STM hopes the surge in half-year profits following a reorganisation and pro- Sentance, to vote for a rise in interest rates from a record low of 0.5 percent.
gramme of cost-cuts has brought its terrible run of form to an end.

The company, which helps individuals and businesses with tax, legal, trust and
Green growth may boost U.K. economy
pensions needs, bumped up pre-tax profit to £679,000 in the first six months of
Britain's plan on new low-carbon programme for the development of wind farms
2010 from £182,000 a year ago. It generated £3.45 million, more than 70% of
and promotion of green jobs will lead to the growth of the economy by 1.5 to 2
total group revenue, during the period, up from £2.46 million last time. percent, according to the energy and climate minister. Investment to build wind
turbines and green deal to insulate homes will offset the fiscal tightening. Next
Terra Firma is set for EMI buy out dispute trial month government will provide details of austerity measures with many depart-
ments to help cut a record budget deficit of 11 percent of GDP.
Guy Hands’ private equity firm Terra Firma Capital has been granted the right
to take Citigroup to trial over the advice it gave on the acquisition of music EU sets news rules for short-selling
company EMI. Terra Firma acquired EMI in 2007 and it argues that Citigroup
inflated the price of EMI by not revealing to Terra Firma that it was the only bid-
European Union has set out new rules to curb short-selling as it tries to tighten
der. its grip on the activities it partly blames for aggravating the Eurozone‟s financial
crisis. In future, firms will have to tell EU regulators about significant short posi-
BP's North Sea record under scrutiny tions in any stock or European government bond, while authorities will have the
power to temporarily ban short selling in exceptional circumstances. Naked short
BP’s safety record in the North Sea has come under more scrutiny after publica- -selling will face even tighter rules. Greater disclosure will also be required for
tion of a letter from the Health and Safety Executive that criticised four of the firms that short European sovereign bonds, with a requirement to give details of
positions in bonds insurance or credit default swaps. The European Commis-
firm‟s installations for oil spill procedures in 2009.
sion today said it wants to create “a harmonised framework for coordinated
action at the European level.” The Commission also said in future it will require
The inspectorate also said that BP “did not appear to identify the significance of
trades in over-the-counter derivatives to be reported with standard contracts
issues raised by the complainant once they were put to you by HSE”. BP replied
cleared through a central counterparty. The proposal mirrors new US guidelines
to the HSE that its processes had been reviewed and improved by November. and is designed to enable regulators to measure counterparty risk and the expo-
sure of firms at any one time.
THE ECONOMIC MONITOR - U.K.

ECONOMIC INDICATOR WATCH MARKET PERFORMANCE

Retail Sales Monthly (Aug) FTSE 100

Forecast 0.3% ; Prior +1.1%

Retail Sales Yearly (Aug)

Forecast 2.0%; Prior +1.3%

The Office for National Statistics will release U.K. monthly and
yearly retail sales figures at 1400 LST. In July, Retail sales rose
unexpectedly by a seasonally adjusted 1.1%, after increasing
0.7% in June. Analysts had expected retail sales to rise by 0.4% in
July. Year on year, the volume of retail sales in July was 1.3 per
cent higher than in July 2009. Predominantly food stores
decreased by 1.7 percent, while non-food stores increased by
4.1 per cent. Within predominantly non-food stores there were
rises across all sectors, the largest being non-specialized stores
at 9.7 per cent. Non-store retailing increased by 16.7 per cent.

CBI trends orders (September)

Forecast -13.0; Prior -14.0% A. Clothes retailer Next was the top riser in a flat FTSE 100
after profit before tax increased 15% to £213.3m from
The Confederation of British Industry will release its trends
£185.5m a year ago on revenue up 5% to £1.59bn. Miners
orders survey for the month of September at 1530 LST. In
were among the fallers as commodity prices slip. African
August, the U.K.‟s manufacturing sector saw an improvement in
Barrick Gold was at the bottom of the pile. FTSE 100 up 5
total orders and output volumes, as demand for its goods
continued to improve. The total orders balance rose to -14 in at 5,573.
August from -16 in July, its least negative outturn since August B. Retailers were going well after fashion chain Next posted
2008. Export orders played a key role in the improvement, with strong results. The stock was the top riser, with fellow
the export balance climbing to -1 from -12. The total orders clothes retailer Marks & Spencer also in demand.
outturn was better than analysts‟ had expected. The output Kingfisher, the company behind the B&Q DIY chain, was
volume balance rose to 10 from 6 in July. higher ahead of first half results tomorrow. Among the
fallers was AstrZeneca after the U.S. FDA extended the
review timelines for the pharma giant's new heart medicine
CORPORATE RESULTS Brilinta. FTSE 100 down 10 at 5,557.
DATE - 16/September/2010 C. Index perked up after an improvement on Wall Street, but is
COMPANY NAME EVENT still a few points in the red. Miners such as ENRC and
Kazakhmys were among the heaviest fallers here.
Chemring Group Interim Management Statement

Kingfisher Interim 2010

City of London Investment Trust Preliminary 2010 ECONOMIC CALENDAR

Kier Group Preliminary 2010
DATE LST INDICATOR F’CAST PRIOR
Shore Capital Group Interim 2010
THU 09/16 1400 Retail sales mm 0.3% 1.1%
Henderson Morley Preliminary 2010
1400 Retails sales yy 2.0% 1.3%
Global Energy Development Interim 2010
1530 CBI trends -13 -14
Investec Pre-Close Briefing
FRI 09/17 N/A No major indicators N/A N/A
Kesa Electricals Q1 2009/2010
MON 09/20 1400 Money Supply M4 -- 0.4 %
Centaur Media Preliminary 2010
TUE 09/21 1400 PSNB, mm GBP -- 3.17b
Ecommerce Alliance Q2 2010
1400 PSNCR, mm GBP -- -4.13b
Booker Group Q2 Trading Update

Islamic Bank of Britain Interim 2010

Ceres Power Holdings Preliminary 2010

Gulfsands Petroleum Interim 2010

BlueBay Asset Management Preliminary 2010

Dunelm Group Preliminary 2010

THE ECONOMIC MONITOR - U.K.

NEXT TRADING DAY NEXT TRADING DAY (contd...)

Economic Events profit is expected at £1 per share, while capital expenditure at £2.16
million. Net debt is expected to be at £0.82 million.
Bank of England's governor gives evidence to MPs on Inflation Dunelm Group, a construction company to declare its final results and
Report. The report is produced on a quarterly basis by Bank of England is expected to post an increase in profit and revenue at £26.21 per share
staff under the guidance of the members of the Monetary Policy and £490.78 million respectively. Full year capital expenditure is
Committee (MPC). expected to rise to £23.64 million as compared to £22.2 million.
The report provides a comprehensive and forward-looking framework Kier Group is expected to announce its final results and is expected to
for discussion among MPC members and to allow the Bank to share its report a profit (pre amortization) of £106.38 per share. Company‟s full
thinking. To further enhance transparency and understanding around year revenue is expected to fall to £2,058.7 million as compared to
the Bank's decisions on monetary policy, the Treasury Committee £2,140.67 million. Capital expenditure for full year is also expected to fall
questions the Governor of the Bank and other MPC members on their
to £10 million, from £15 million in the previous year.
recent decisions and on the outlook for monetary policy going forward.
Quayle Munro, an international merchant bank will release its yearly
Pope Benedict XVI will visit England and Scotland from September 16- results. Analysts expect the company to report a loss of £3.4 per share,
19 and will meet and meets Britain's Queen Elizabeth . He will also meet down from a previous year profit of £44.6 per share. Company‟s full
the Archbishop of Canterbury Rowan Williams, spiritual head of the year revenue is also expected to fall to £8 million, from £8.6 million in
world's 77 million Anglicans, and will hold a public mass in Glasgow and
the previous year.
a prayer vigil.

It will be the first state visit to the United Kingdom by a pontiff, the
Foreign Office said, noting that Pope John Paul II's 1982 trip was
officially a pastoral visit, while Benedict's is a "papal visit."

The official announcement comes as the Vatican reels from accusations

that it did not do enough to stop child abuse by priests, nuns and other
Catholic authority figures across Europe for decades.

Rwanda President Paul Kagame visits United Kingdom on Thursday

16 September and will deliver the 2010 Oppenheimer Lecture at
12pm. His was re-elected as President of the Republic of Rwanda for a
second seven-year term on 9 August 2010.Kagame assumed the
presidency in March 2000, after being elected by the Transitional
National Assembly. He began his first seven-year presidential term in
August 2003, after winning the country‟s first democratically contested
multi-party elections.

Economists emerging market summit last day conference at The

Connaught Rooms, London.

The Emerging Markets Summit is an unrivalled opportunity to really

uncover the true potential of new high growth economies. The
Emerging Marketing summit in 2009 attracted attendance from over 40
countries with three heads of state, and over 73% of corporate
attendees at director level or above.

High-Profile Speakers at this Event Include U.K.'s Cabinet Minister for

Business, Innovation & Skills Vince Cable, South Africa's Deputy
President Kgalema Motlanthe, IADB President Luis Alberto Moreno
and Brazil and Nigeria Central Bank Governors.

Corporate Events

Kingfisher is expected to report its interim results with a revenue of

£2,840 million, down from £2, 861 million. Company's full year revenue
is expected to be at £10,627.60 million as compared to £10,535.23
million. Full year profit is expected to rise to £18.86 per share, from
£16.07 in the previous year.
This report is produced by
BlueBay Asset Management is expected to report its final results.
International Business Times
Analysts expect the company to report a full year profit of £18.57 per
For questions or comments
share, up from £7.37 per share. Company‟s revenue is also expected to
reach us at
rise to £139.53 million as compared to £106.23 million a year ago. Net
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debt is expected to be at £81 million, while its capital expenditure is
expected at £5 million. For more information about
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Centaur Media, a publishing company is expected to announce its
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yearly results, Its revenue is expected to fall slightly to £60.02 million as
compared to £63.95 million in the previous year. Company‟s full year
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