| From UK-Analyst.com: Wednesday 15th May 2013
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The Markets In its latest report the Bank of England (BoE) provided a glimmer of hope for the troubled UK economy. The Bank's Quarterly Inflation Report gave no sign that the organisation will embark on further rounds of quantitative easing and predicted that the UK will likely hit its 2% inflation target in two years' time. However, the report also suggested that UK GDP was more likely to remain below its pre-crisis level for around another year, in a continuation of a slow and sometimes faltering economic recovery. Bank of England Governor Mervyn King - heading up his last Quarterly Inflation Report before he hands over to Mark Carney - was positive yet cautious on the report's findings and said, "Today's projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago. That's the first time I've been able to say that since before the financial crisis. But this is no time to be complacent. We must press on to ensure a recovery and to bring down unemployment." According to the Office for National Statistics, the number of unemployed people in the UK rose by 15,000 to 2.52 million over the first three months of the year, increasing the unemployment rate from 7.7% to 7.8%. Meanwhile, the squeeze on real earnings has intensified, with average earnings including bonuses falling by 0.7% year-on-year in March - the first drop since 2009. Positives amongst the data included a record number of women in work, a reduction in youth unemployment and more job vacancies. However, the headline increase in unemployment will inevitably pile more pressure on Chancellor George Osborne to stimulate economic growth by cutting back on austerity measures. Ross Walker, Chief UK Economist at the Royal Bank of Scotland, warned, "What you are seeing is a slight deterioration in the employment data. Its not collapsing, but the underlying picture is weak." The Eurozone recession has continued, with data released today revealing that the bloc's economy shrank by 0.2% between January and March, following a 0.6% contraction in the previous three months. The figures mark the longest recession since the euro currency was launched back in 1999. France proved to be a significant drag on the wider Eurozone figures as its economy shrank by 0.2% over the period - worse than the 0.1% reduction which was widely expected by analysts. The largest economy in the Eurozone, Germany, managed to generate growth of only 0.1%, below the 0.3% growth figure which was projected by analysts. Market Strategist, Ishaq Siddiqi, from ETX Capital said, " Despite some positive data signals from the Eurozone, such as industrial output released in the prior session, markets have had a reminder that troubles in the Eurozone are far from over." At the London close the Dow Jones was up by 23.85 points at 15,239.10 and the Nasdaq grew by 6.71 points to 3,002.76. In London the FTSE 100 grew by 7.49 points to 6,693.55; the FTSE 250 finished 98.32 points higher at 14.476.01; the FTSE All-Share swelled by 7.00 points to 3,526.54; and the FTSE AIM Index was up by 7.40 points to 724.69.  Broker Notes Panmure Gordon retained its "sell" recommendation on cinema operator Cineworld (CINE) with a 325p target price. The broker does acknowledge that there is a strong line-up of films for the rest of H1 and that there is good 3D product in H2 which should boost average ticket prices. However, Panmure notes that Cineworld trades on a 2013E adjusted EV/EBITDA of 8.1 times and yields 4% but feels that current trading, earnings trajectory and the group's return profile do not support this rating. The shares slid by 0.25p to 325p. Canaccord Genuity maintained its "buy" recommendation on Restaurant Group (RTN) with a 540p target price. The broker feels that the group is benefiting from the structural dynamics that are favourable in terms of the shift away from the high street to out-of-town leisure and retail parks. Moreover, Canaccord is of the opinion that the Restaurant Group remains best positioned to take advantage of this trend with many landlords converting existing retail space to leisure activity. The shares increased by 33.1p to 519p. N+1 Singer retained its "buy" recommendation on medical group EKF Diagnostics (EKF) with a 35p target price. The broker expects 27% revenue growth this year, which, according to N+1 Singer, is achievable and not overly dependent on any one specific area of the business. Furthermore, the broker notes that regulatory approvals for the use of some of its products in clinical settings are expected next year, which should enable EKF to target the much larger market opportunity in the rapidly growing field of companion diagnostics. The shares were down by 0.5p at 29.75p. 
Blue-Chips Exchange operator London Stock Exchange (LSE) announced a 5% fall in pre-tax profits to 380.7 million pounds for the year ended 31st March despite a 7% increase in revenues to 726.4 million pounds. The primary driver of this squeeze in profits was a 14% annual uplift in costs as the impact of acquisitions took effect, particularly the acquisition of GateLAB, a company supplying advanced technology for trading and post trade services. Brokers and investment banks seem to be reluctant to allocate the LSE with an aggressive buy or sell stance of late as Barclays and UBS last week retained their "overweight" and "neutral" stances respectively. The shares were up by 71p at 1,406p. easyJet (EZJ) revealed a 9.3% increase in revenues to 1.6 billion pounds for the six months ended 31st March, which helped reduce the group's pre-tax loss by 45.5% to 61 million pounds. The group attributed its success to a focus on maintaining its cost advantage, combined with competitor capacity reductions and the favourable timing of Easter this year. Looking ahead, the group revealed that the impact of airport charges in Spain and Italy means that it expects its cost per seat to increase by around 4% in the second half of the financial year. The shares flew up by 94p, finishing the day at 1,224p. Broadcaster ITV (ITV) claimed that revenues for the first three months of the year were up by 2% at 666 million pounds, boosted by strong gains from the Broadcast & Online arm, which offset contraction within ITV studios. The broadcaster, which recently penned a lucrative deal to show England football qualifiers for Euro 2016 and World Cup 2018, outperformed the advertising market by 2% over the first three months of the year. However, management remains grounded and has a cautious outlook on TV advertising for the rest of the year. The shares fell by 2.5p to 129.2p.
Mid Caps Keller (KLR), the construction group, revealed that trading levels so far this year have been above expectations despite "mixed" conditions worldwide. The main driver in the positive performance has been the underlying growth in the construction markets in North America. Moreover, the performance of the group in Europe has been resilient against a backdrop of government cuts with projects such as Crossrail and Victoria Station Upgrade contracts in the UK boosting activity in the region. In response to the announcement, broker Jefferies raised its target price on the shares from 820p to 1,050p, retaining its "buy" recommendation. The shares climbed by 67p to 934p. International infrastructure group Balfour Beatty (BBY) announced that its joint venture with Skanska, MWH Global and SMB has been awarded a seven year contract from Thames Water for maintenance work on water infrastructure in London and the South East. The contract is thought to be worth up to 1.5 billion pounds to the joint venture, with work due to begin later this month. The shares increased by 5.1p to 227.8p. Oil producer EnQuest (ENQ), declared that growth remains consistent with expectations for the year and confirmed that it has acheived its production target of between 22,000 and 27,000 barrels of oil equivalent per day. Over the first four months of the year production averaged 20,494 boepd compared to 20,976 in the same period in 2012, reflecting third party shutdowns of the Brent pipeline over the period. The shares slipped by 0.7p to 132.3p. Small Caps Lonrho (LONR), the owner of a diverse range of businesses in Africa, has agreed to a cash offer from FS Africa Limited, a company owned by Swiss billionaire Thomas Schmidheiny and hedge fund manager Rainer-Marc Frey. Under the terms of the deal, Lonhro shareholders will receive 10.25p cash per share, which is a premium of 97.1% to yesterday's closing price of 5.2p and a premium of 38.2% to the company's average price for the previous six months. The shares soared by 4.7p to 9.9p. Eleco (ELCO), the buildings and software group, announced a 10.2% decrease in revenues to 34.2 million pounds for 2012, as well as an increase in the group's loss before tax from 0.3 million pounds to 2.4 million pounds. The group attributed the downturn in performance to difficult trading conditions for its UK building systems businesses which were forced to consume "substantial cash resources". The shares slid by 1.125p to 7p. Gold exploration firm Noricum Gold (NMG) revealed that recent tests suggest good levels of prospective gold at its Rotgulden project in Austria. These results will provide support to this year's drilling programme which is targeting a JORC resource. Noricum went on to explain that the new data will assist in targeting resource drilling at Rotgulden, which is fully funded. The shares grew by 0.075p to 0.48p. 
Health consultancy firm PHSC (PHSC) announced a 30% increase in revenues for the year ended 31st March, while EBITDA increased by 35%. PHSC stressed that the improvement in both revenue generation and profitability has come about as a direct consequence of diversifying away from its core activities into areas such as outsourcing. The group went on to say that its subsidiaries are currently "reasonably confident that they can continue to deliver satisfactory results". The shares inched up by 2p to 27.5p. Recruitment software specialist Bond International Software (BDI) confirmed that it has secured a contract worth over 1 million pounds with Academic Work, a temping agency specialising in Young Professionals in the Nordics. As part of the agreement, Bond International will constantly maintain and upgrade the software used by Academic Work in an attempt to support the growth ambitions of the company. The shares crept up by 1p to 67p. Oil producer Sefton Resources (SER) produced a total of 3,874 barrels of oil in the month of April, a 25% increase on the previous month after a resumption in production from two idle wells at Eureka in the US. Significantly, the group also revealed that rig availability has improved in California recently, so the company should not have any problems securing a rig to drill the proposed Hartje #21 well and the Hartje #20 well when required. The shares were up by 0.05p to 0.5p. | 
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