| From UK-Analyst.com: Tuesday 30th April 2013
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The Markets The Eurozone unemployment rate hit a record high of 12.1% in March according to European statistics agency Eurostat - up from February's reading of 12%. The figures masked vast differences in unemployment levels across different countries however. Greece and Spain recorded the highest unemployment rates in the Eurozone, at 27.2% and 26.7% respectively, while Austria, at 4.7%, and Germany, at 5.4%, demonstrated the lowest rates in the region. Separately, data released today revealed that inflation in the Eurozone fell to 1.2% in April - significantly below the ECB's target of close to, but below 2%, intensifying pressure on the central bank to stimulate growth by cutting interest rates. Sarah Hewin, a Senior Economist at Standard Chartered Bank, gave her thoughts on a potential rate cut and said, "It's a close call, but we expect a rate cut this week. With inflation weaker than expected, unemployment rising yet again and signs of a longer recession, it would be a confidence boost." Staying in Europe, Spain - the Eurozone's fourth largest economy - slipped further into recession, with data from the Spanish Statistics Institute exposing a 0.5% contraction in the nation's GDP over the first three months of the year. The figures mark the seventh successive quarter Spain has seen its economy contract and reveals a huge slump in domestic demand. The uninspiring news comes just a week after Spain's government cut its growth forecast for 2013, projecting the economy to shrink by 1.3% after previously forecasting a contraction of 0.5%. Although the data does not look fantastic, analysts do see an improvement taking shape next year, with Silvio Peruzzo, an analyst at Nomura, commenting, "We recognise the reforms of the government have been significant, but the problem is the starting position of the Spanish economy was much worse than any other European economies and adjusting in this environment is a lengthy process." Here in the UK, Chancellor George Osborne has suggested that the Financial Policy Committee (FPC) should attempt to ensure that that the drive for longer-term economic stability does not impede an economic recovery. Up to now the FPC has already shown some flexibility by allowing British banks to lower the minimum amount of cash they must hold to operate if the extra money is lent to business and other parts of Britain's sluggish economy. However, the committee has not budged on longer-term capital and last month ordered banks to plug a capital hole of 25 billion pounds by the end of this year. Osborne stressed, "It is particularly important, at this stage of the cycle, that the Committee takes into account, and gives due weight to, the impact of its actions on the near-term economic recovery." ADVERTISEMENT
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At the London close the Dow Jones was down by 18.8 points at 14,799.95 and the Nasdaq was up by 9.24 points to 2,876.19. In London the FTSE 100 fell by 27.90 points to 6,430.12; the FTSE 250 finished 42.93 points lower at 13,949.87; the FTSE All-Share was down 13.36 points to 3,390.18; and the FTSE AIM Index slipped by 0.35 points to 706.74.  Broker Notes Panmure Gordon retained its "buy" recommendation on construction group Balfour Beatty(BBY) with a 223p target price. The broker acknowledges that yesterday's trading update was disappointing, with UK construction problems resulting in earnings downgrades. However, Panmure maintains that Balfour Beatty remains a major operator in the global infrastructure arena and is impressed with management's swift reaction to the unfavourable trading conditions in the UK. The shares slipped by 7p to 215.9p. Canaccord Genuity maintained its "buy" stance on Goals Soccer Centres (GOAL) with a 145p target price. The broker feels that the increased focus on operational efficiencies as opposed to roll-out, investment into IT and enhanced management structures, should begin to deliver an improving performance as the year progresses. In particular, Canaccord envisages 30% equity growth from debt reduction alone, with additional upside coming from growing like-for-like sales. The shares remained unchanged at 136p. N+1 Singer re-iterated its "sell" stance on pig semen group Genus (GNS) with a 1,348p target price. The broker noted today's IMS which indicated that market conditions for Genus continue to be challenging, characterised by pressure from feed prices. Furthermore, the update has done nothing to ease N+1 Singer's fears on reported higher costs and a worsened agricultural outlook, two factors which underpin its "sell" stance. The shares dived by 43p to 1,355p. 
Blue-Chips
Oil giant BP (BP) revealed that replacement cost profit - which strips out the effect of the oil price - grew from $4.78 billion (3.07 billion pounds) to $16.6 billion (10.67 billion pounds) over the first three months of the year, largely due to the proceeds of the TNK-BP joint venture sale. However, profits were down by 8.7% at $4.2 billion (2.7 billion pounds) ignoring one-off effects, such as the aforementioned asset sale. The group also confirmed that underlying oil and gas production was 4% higher than in the previous quarter in an increase boosted by hikes in production from major projects in Angola and the North Sea. The shares climbed by 9.65p to 466.4p. Imperial Tobacco (IMT) announced a 4.2% drop in revenues to 13.38 billion pounds for the 6 months ended 31st March while operating profits fell by 9.7% to 1.2 billion pounds. The group attributed this downturn to a poor trading performance in Europe, particularly Spain where illicit trade is on the rise in the face of rising unemployment. The Lambert and Butler brand owner also admitted that a revised pricing strategy in the US, coupled with reduced trade stock levels, saw tobacco revenues fall in the country. The shares edged up by 1p to 2,300p. Premier Inn and Costa Coffee owner Whitbread (WTB) reported a 11.4% rise in pre-tax profits to 356.5 million pounds for the year ended 28th February on a revenue increase of 14.2% to 2.03 billion pounds. The bulk of the increase came in the form a 29% uplift in profits for Costa Coffee as the relatively cold weather over the period boosted demand for hot drinks. The update prompted broker Liberum Capital to maintain its "buy" stance on the group, which fell by 56p to 2,555p.
Mid Caps Transport operator Stagecoach (SGC) claimed that overall profitability has been "good" over the current financial year, with like-for-like revenues up by 3.6% within its UK Bus operations over the 48 weeks ended 31st March. The group also revealed that revenues generated from within its North American operations climbed by 9.7% in the 11 months ended 31st March. The North American figure includes Megabus.com and excludes its disposed Wisconsin school bus business. The shares crept upwards by 0.6p to 307.5p. Medical group NMC Health (NMC) announced an 11% growth in revenues to $139 million (89.4 million pounds) for the three months to March after strong growth across all of its divisions. The group's healthcare division grew turnover by 11%, benefiting from increased demand for clinical services while its distribution division demonstrated revenue growth of 10.7% in an increase driven by a strong trading performance in the UAE, combined with the introduction of new product lines. The shares were down by 27.8p at 310p. Oil exploration group Heritage Oil (HOIL) revealed an increase in pre-tax losses from $63 million (40.5 million pounds) to $182 million (117 million pounds) for 2012 as petroleum revenues dipped slightly from $9 million (5.8 million pounds) to $8.8million (5.65 million pounds). The group attributed this increase in losses to acquisition costs, including a $72.3 million (46.5 million pounds) charge in relation to its acquisition of interests in Nigeria which are now producing 12,350 bopd net to Heritage. Recent consensus on the stock has been marginally positive amongst brokers, with Fox-Davies retaining its "buy" recommendation earlier this month. The shares decreased by 10.2p to 160p. 
Small Caps Metals miner Vane Minerals (VML) expects revenues from its gold and silver operations at its joint-venture in Mexico to be approximately 20% lower than previously forecast. The company blamed a combination of declining commodity prices, lower grades of gold and silver being mined and the appreciation in the exchange rate of the Mexican Peso against the U.S. dollar. The group also confirmed that is now investigating its options with regards to a potential sale of its uranium assets as it looks to streamline its business. The shares slid by 0.05p to 0.5p. Diagnostic tool manufacturer Avacta (AVCT) posted revenues of 1.15 million pounds for the 6 months ended 31st January, down from 1.72 million pounds a year previously. Pre-tax losses subsequently grew from 506,000 pounds to 907,000 pounds over the period. The group blamed this drop off in performance to the introduction of its second generation Optim product, an analytical instrument, and the time spent training staff at sales partner ForteBio. The shares finished 0.03p down at 1.13p. Online retail group Asos (ASC) revealed that group revenues were up by 33% to 359.7 million pounds for the six months ended 28th February, while pre-tax profits grew by 19% to 25.7 million pounds. The increase was attributed to a huge uplift in sales in the US, with retail sales up by 54% to 35.5 million pounds . The company - currently the largest on AIM, valued at around 2.6 billion pounds - went on to confirm that the widely anticipated launches of its Russian and Chinese websites are on track to go ahead this year. The update prompted brokers Oriel Securities, Investec and Canaccord Genuity all to retain their "buy" stances, while Espirito Santo Execution took a different view and maintained its "sell" stance. The shares jumped by 124p to 3,200p. 
Software group Sanderson* (SND) revealed that profit from operating activities grew by more than 10% to around 0.9 million pounds for the six months ended 31st March. The group also stressed that its order book remains "strong" while gross margins have improved to almost 88% compared with 85% in the comparable period last year and 82% in the previous year. However, the group warned that it has not detected a noticeable improvement in general UK economic trading conditions which remain "challenging" and highlighted the sluggish trend in the traditional mail order fulfilment markets. The shares dropped by 0.5p to 49p. Miners Scotgold Resources (SGZ) announced that recent studies have confirmed that its Cononish project near Tyndrum in Stirlingshire is economically viable, with forecasts suggesting that the mine will generate 26.3 million pounds in pre-tax cash flow over its life cycle. However, given the relatively low current gold price, the gold miner has decided to delay any decision to raise equity finance for the project. Westhouse Securities re-iterated its "buy" recommendation on the back of the news and maintained its target price of 9p. The shares lost 0.625p and finished at 1.5p. Software supplier Zoo Digital (ZOO) expects to report revenues in the range of $10.3 million (6.6 million pounds) to $10.4 million (6.7 million pounds), with adjusted EBITDA of approximately $0.7 million (0.45 million pounds) and an adjusted loss before tax of approximately $1.2 million (0.77 million pounds). The group said it has been able to deliver such results because it reacted quickly to cut its cost base against a backdrop of "turbulence" in the home entertainment market. The shares gained 0.25p, ending the day at 7p. * Sanderson is a corporate client of Rivington Street Holdings, the ultimate owner of UK-Analyst. | 
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