Diageo, Rexam, Vedanta and RSA boost FTSE 100, Morrison fails to impress

Continued expectations of a hung parliament after today’s elections in the United Kingdom did little to dampen the FTSE 100 this morning after a raft of results from blue chip companies lifted sentiment and strengthened commentators views that the British economy is pulling itself out of recession.

By 10 am the FTSE 100 was 20 points ahead at 5364, rebounding from pre-market trading which pointed to a 60 point drop.  The FTSE 250 and FTSE AIM put in similar performances, opening in the red but quickly bouncing into positive territory.

Last night US markets ended lower again, but did recover from their intraday lows, which did weigh on European markets this morning.

It was strong results from a number of blue chip companies in the FTSE 350 that helped turnaround the markets.

In its Q3 interims, Diageo (LSE: DGE) reported organic net sales growth of 12%, with net sales up 2% for the whole nine-month period. Despite the better-than-expected Q3 result, the Guinness and Smirnoff brand-owner remained fairly cautious on the full-year outlook. Diageo maintained guidance for a low single digit organic operating profit growth for the year ending 30th June 2010. ‘While we have seen some signs of recovery, albeit fragile in the mature markets and stronger in the emerging markets’, Diageo Chief Executive Paul Walsh said.

The world’s largest beverage can manufacturer, Rexam (LSE: REX) also reported its first quarter results, beating its own expectations. The FTSE100 constituent revealed improved volumes for ‘Beverage Cans’ unit, and said that the ‘Plastic Packaging’ business is performing in line with the company’s plans.  Furthermore, cost reduction initiatives are reported to have remained on-track.  Rexam climbed 2%.

With its Q1 results, the RSA Insurance Group (LSE: RSA) said it made a good start to the year, with net written premiums up 5% to £1.9bn for the three months to 31st March 2010. RSA tacked on nearly 3%.

Whilst Randgold Resources (LSE:RRS) failed to live-up to the previous quarter’s record-breaking results, the South African gold miner reported, in its Q1 interims, that it continues to better the previous year’s comparatives, by a considerable margin. In Q108, Randgold produced 112,663 attributable ounces gold, and reported an 83% increase in year-on-year profit to US$23.9m, however on quarter-on-quarter basis, profit fell some way from US$38.7m in Q409. Randgold was little changed after the update.

Fellow gold miner, Petropavlovsk (LSE:POG) also released its Q1 interims this morning, the FTSE250 constituent reported a 37% decline in year-on-year production to 65,600oz (Q109: 104.6oz). Petropavlovsk said the results are in line with its mining plan for 2010, and reflect a transitional period in its development. The company remains on track to achieve its 2010 production target of 670,000-760,000oz. Shares in Petropavlovsk rose nearly 5%.

India focused copper mine Vendanta (LSE:VED) was one of the best performing stocks in the FTSE 100 after its results easily beat analyst expectations. Copper producers around the globe have benefited from a strong rebound in demand and prices for the metal, with many analysts forecasting demand to continue well into 2011 and beyond.   Even Australian heavyweights BHP Billiton (LSE:BLT) and Rio Tinto (LSE:RIO) moved higher this morning, despite continued concerns over a new mining tax to be imposed on Australian mines. 

Wm Morrison Supermarkets (LSE:MRW) results this morning failed to impress however.  The UK’s fourth largest supermarket told investors that it has continued to grow market share in the first quarter, despite the anticipated slowdown in the market. The FTSE100 retailer reported a 5.9% increase in total sales (ex Fuel) in the 13 week period to 2nd May 2010.

Small Cap Stocks

Meanwhile on AIM, Nyota Minerals (AIM, ASX:NYO) announced that it had doubled the JORC inferred resource at the Tulu Kapi gold project in Ethiopia from 690,000 ounces to 1.38 million ounces.  The new JORC resource represents a 38% increase on Nyota's previously stated objective of a 1 million ounce resource target and a 100% increase on the maiden inferred resource announced in September 2009.  Shares in Nyota jumped 6%.

Small cap oil company, Leni Gas & Oil PLC (AIM:LGO) was also on the move this morning after the group announced completion of a heads of agreement with BP’s (LSE: BP) Spanish unit to negotiate a crude oil sales agreement to off take its current and future Spain production to BP's Castellón refinery on the east coast of the country. The planned agreement is for at least five years and shall include the currently producing 100 percent owned Ayoluengo oilfield and future production from other development assets across LGO’s petroleum production and exploration acreage in northern Spain which covers an area of over 550 square kilometres.

Diamondcorp (AIM:DCP, JSE:DMC) continued its recent form, moving 2.5% higher after confirming it has strengthened its management team with the appointment of Keith McCulloch as general manager of the Lace mine in South Africa. McCulloch’s primary responsibility will be the implementation of the decline and mine development plan designed by Snowden Mining Industry Consultants. Production at Lace is scheduled to increase to 1.2 million tonnes per annum once the existing 6x2.7m vertical shaft is re-equipped during 2011 for primary ore hoisting.

Allocate Software (AIM:ALL)  climbed in early deals on news that it agreed a deal to acquire Dynamic Change, a UK-based Software as a Service (SaaS) provider, for up to £9m paid over three years. The company will make a £5m upfront payment, £4.9m in cash and £100,000 in shares, which will be followed by contingent payments up to a maximum £4m payable in cash subject to certain conditions.

Deltex Medical (AIM:DEMG) rose nearly 8% after it announced the award of a new contract to a US hospital to supply more disposable probes used with its CardioQ-ODM monitor.   The contract is worth US$204,000 over six months.

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