| The Markets Thursday saw the UK equity markets whipsaw between gains and losses as investors absorbed news that both that the European Central Bank (ECB) and the People's Bank of China had cut their key interest rates. The ECB lowered Eurozone-wide borrowing costs by a quarter percent to 0.75% while China's central bank cut its interest rate for the second time in a month, by 31 basis points to 6%. Both moves were widely speculated, the ECB's move in a bid to stop the Eurozone falling into a recession and China's based on some poor manufacturing statistics released in June. Meanwhile the Bank of England boosted quantitative easing by a further 50 billion pounds, bringing the total stimulus injected by the bank to 375 billion pounds, but left its base rate at 0.5%. At the London close the Dow Jones was down by 15.33 points at 12,928.49 and the Nasdaq was up by 8.41 points at 2,654.25.
In London the FTSE 100 rose by 8.16 points to 5,692.63; the FTSE 250 finished 30.34 points behind at 11,130.87; the FTSE All-Share gained 2.62 points to 2,952.19; and the FTSE AIM Index declined by 0.52 points to 695.27. 
Broker Notes N+1 Brewin reiterated its "reduce" recommendation for Yule Catto (YULC) with a lower target price of 130p, from 160p. The broker was surprised by the chemicals manufacturer issuing a profit warning just six weeks after an in-line interim management statement, suggesting a rapid decline in the firm's outlook. Brewin noted that the group's Asian nitrile business is facing increased competition and raised concern over its high reliance on demand from the west. The shares sank by 6.5p to 138.7p. With UK conditions remaining weak, Panmure Gordon has cut its rating for Interior Services Group (ISG) from "buy" to "hold" with a significantly reduced target price of 112p, from 189p. The broker believes that the office refurbishment company is facing growing pressure on its margins and has therefore lowered its pre-tax profit forecasts by 6% for 2012 to 7.5 million pounds and by 24% to 8 million pounds for 2013. Additionally, Panmure warned that the dividend may well be cut from 15.1p to 9p, although noted that the firm retains a strong net cash position of 25 million pounds. Shares in Interior Services Group tumbled by 7p to 109.5p. 
Fox-Davies retained its "buy" stance on Paragon Diamonds (PRG) with a 24.38p target price. The precious gems miner completed a 1,600 tonne sampling programme at its Motete Dyke in Lesotho, with the broker noting that the results averaged well below forecasts of 90 carats per hundred tonnes, at just 45.5 cpht. However, Fox-Davies added that this is a relatively small sample and that it will not adjust its discounted cash flow valuation (based on 88cpht) until a larger sample is taken. The shares advanced by 0.625p to 25.125p. Northland Capital kept its "buy" recommendation for Hyder Consulting (HYC) with a 500p target price. The firm's order book has increased by 16% year-on-year to 363 million pounds, which the broker noted puts it at its highest level since March 2009. Northland noted that 72.9% of the engineering advisory group's revenues come from outside the UK, adding that Australasia offers much higher margins than in Europe. On the broker's forecasts, the shares trade on a prospective earnings multiple of 8.5 times for 2013, falling to 8.1 times in 2014. Hyder shares sank by 19p to 381p. Blue-Chips In order to develop its aerospace division, engineering firm GKN (GKN) announced that it will buy aircraft engine turbine manufacturer Volvo Aero for 633 million pounds. The target operates in Sweden, Norway and the US and is expected to be immediately earnings enhancing. The acquisition will be part funded through a 140 million pound equity placing, equivalent to around 4% of its current market cap, and new debt and is expected to be completed during the third quarter. GKN shares leapt by 24.4p to 211p. 
As it looks to simplify its business, Aviva (AV.) announced plans to sell 16 of its divisions that are not expected to achieve its required rate of return of around 11%, including its South Korean operations and UK large-scale bulk purchase annuities. The insurance provider currently operates 58 individual business, which it believes has led investors to consider it to be overcomplicated and bureaucratic. The group added that it would look to cut the number of management layers between its chief executive and operating staff from nine to five. The shares grew by 3.2p to 284.6p. Mid-Caps Dunelm Group (DNLM) reported revenues of 603.7 million pounds for the year ended 30th June 2012, up 12.1% on the prior year, including like-for-like growth of 3.1%. The home furnishing company added that it expects to report pre-tax profits of around 96 million pounds, beating consensus forecasts of around 92 million pounds, attributing the strong performance to exceptional weather during the second half of the financial year. The group opened 14 new stores during the year, including two relocations, bringing the total number to 115. Dunelm shares rose by 19p to 531p. 
Pennon Group (PNN) has agreed to buy recycling business JWT Holdings for a net consideration of 6.58 million pounds. The target handles 70,000 tonnes of waste material per annum and its fleet of 29 vehicles will be incorporated into the waste management company's existing Viridor division. The resources will be used to help supply the UK's largest waste fired heat and power facility at Runcorn, near Manchester, when the first phase becomes operational in 2013. The shares inched down by 2p to 759p. Engineering support services firm Babcock International (BAB) said that its target market remained strong during the three months ended June, with customers looking to outsource more of their engineering requirements. The group added that its bid pipeline increased from 9.5 billion pounds in May to 13 billion pounds, including competition for the decommissioning of the Magnox and Research nuclear reactors which are expected to be awarded in 2014. The firm's order book remained level at 13 billion pounds, providing 80% revenue visibility for the 2013 financial year. Babcock shares crept down by 4.5p to 866.5p. Small Caps, AIM and PLUS After mulling over its strategy on how to move forward, Media Corporation* (MDC) announced that websites www.onthebox.com and www.flightcomparison.com, which it sold in April 2012 will now be held onto. The firm believes the websites it has reacquired have the potential to be profitable and thus it will be focusing resources on ensuring maximum value is created from the sites for shareholders. The group added that it would receive a cash settlement of 196,000 pounds as part of the agreement to repurchase the sites, and noted that circa 80,000 pounds of liabilities, related to separate matters, would be removed from its balance sheet. Media Corporation shares climbed 0.025p to 0.675p. Sierra Rutile (SRX) unveiled year-on-year rutile production growth of 60% to 21,917 tonnes in the three months to June at its mine in Sierra Leone, continuing the positive production trend seen over the latter half of 2011. The figure installed confidence in the miner that it can meet its full-year rutile production target of 80,000 tonnes The company added its processing plant construction was advancing on time and on budget, meaning the estimated opening date for the site will be towards the end of 2012. Sierra shares surged by 10p to 75.25p. Staying in Sierra Leone, Stellar Diamonds (STEL) confirmed the commencement of its phase-2 resource expansion drilling programme at the Tongo diamond project. The objective of the programme is double the existing inferred diamond resource which currently stands at 660,000 carats, and will do this by completing up to 3,000 metres of drilling across ten holes. Stellar shares crept 0.125p higher to 3p. 
Shares in Aurelian Oil and Gas (AUL) plummeted by 3p to 11.25p upon the news that its first exploration well in the Zechstein region of the Torzym concession, Poland, did not flow when perforated thanks to the existence of brine deposits in the well. The company believes this may be down to the fact that reservoir pressure is lower than the pressure exerted by the column of brine. The rig was released on Wednesday and Aurelian will now undertake additional analysis of the well and consider further testing options. Horticulture products business William Sinclair Holdings (SNCL) admitted that since its interim statement in early June, extreme wet weather conditions have continued to affect demand for its peat products. With its main selling season drawing to an end, the firm conceded it was unlikely that it would recover the shortfall in sales before the end of the season. The group also noted that its peat bogs have felt the full effect of the high rainfall and its harvest has suffered as a consequence. The shares fell by 15p to 152.5p. International construction consultancy Driver Group (DRV) announced it has increased its footprint in Africa via the award of an additional 4 million dollar contract, the details of which it has kept confidential. Management did reveal however that it was 'delighted' with the continued progress in its African business, which demonstrates the strengthening of its operations in the region. With the shares rising by 9.5p to 63,5p, they have now more than doubled from the 30p share price seen at the turn of the year. * Media Corporation is a corporate client of Rivington Street Holdings, the ultimate owner of UK-Analyst. | 
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