Morning Market, Monday 2nd June 2008

The FTSE started thre week on a bit of a downer, and was down 48 points in its first hour at 6,011, whilst the FTSE 250 was down 123 points at 9,929. We don’t see this as positive, as a break under 6,000 will become a resistance level, we feel.

Over the pond on Friday, the DJI closed down nearly 8 points at 12,638.32, whiclst the S&P500 closed up just over 2 points at 1,400.38, and the Nasdaq up 14.34 points at 2,522.66.

In the Far East today the Nikkei 225 closed up 101.60 points at 14,440.14, whilst in Hong Kong the Hang Seng recently closed at 24,831.36, up 298.24 points on the day.

Back here in London, the banks were taking a hit again after the Bradford & Bingley news.  The bank issued a profit warning and then said that it was going to have to lower the price of the rights issue, down to 55p from 82p. The bank also said that US private equity firm, Texas Pacific Group, will be investing £150m for a 20% stake in the bank.  It then finished by the small mention of the CEO was stepping down. Needless to say B&B shares fell, and were down nearly 20p at 69p. Peers fell too as a reaction, with Lloyds TSB down 11p at 373p, Alliance & Leicester down 26p at 399p, HBOS down 22p at at 378, Barclyas off 12p at 363p, and RBS down 7p at 2211.

On to utilities, where Severn Trent was down 23p to 1,434 after weekend press reports that it could be forced to pay up to £70m following a criminal investigation by the Serious Fraud Office (”SFO”) over allegations that it provided false data on leaks to Ofwat, the industry regulator. Peers fell as a reaction, with Northumbrian Water down 4p at 323p.

Tesco was down over 8p at 406.6p after weekend press reports that it is close to finalising a £1 bln buy out of RBS’s share of their Tesco Personal Finance joint venture.

Unilever was down a pennyat 1,670p after weekend press reports that the company has sold its Sainsbury’s in-store dry cleaning company that had gone in to administration to the shoe repair outfit Timpson.

The miners had a better start, with commodity prices gaining interst again. BHP was up 30p at 1,944, and Rio Tinto up 70p at 6,125. Rumours say that these two giants will be getting something like a 70% increase on their iron ore sales from China. It is said that the Chinese will pay a decent freight premium as it is much cheaper to ship the iron ore from Australia than from Brazil, where China gets lots of ore from Vale. Peer Anglo American was up 25p at 3,444p, and Xstrata up 7p at 3,996. One casualty in the mining sector was Vedanta Resources, who were down 40p at 2,459p after it said one of its subsidiaries had agreed to purchase the operating assets of Asarco, the US-based copper producer, for US$2.6 bln cash.

Oil was down on concrens of worlkd economy, with Light Sweet (Jul del) down to US$127.3 bbl, and Brent crude (Jul del) actually higher at US$127.9 bbl.

The oil heavyweighhts reacted, with BP down 8p at 6-quid, and RD Shell down 12p at 2,138p. Then news from BG Group, who were down 30p at 1,236p, said that Origin Energy, the Aussie power unit, had rejected its A$13.6 bln bid.

Pub group Mitchells & Bulters was down 8p pence to 316p after Goldman Sachs reminded everyone of its ’sell’ rating and 290p target.