U.K. Stocks Rise, Led by Psion, Sage; Unilever, Shire Decline
By Nick Nabarro and Alistair Barr
London, Dec. 11 (Bloomberg) -- U.K. stocks rose, led by Psion Plc and Sage Group Plc, amid optimism recent declines have left computer-related companies cheap relative to earnings.
``The market is discounting not only the bad news we've had, but even some more bad news to come,'' said Mike Felton, who manages about 650 million pounds ($945 million) at Royal & Sun Alliance Investment Management. ``Companies that only shave their expectations, rather than issue shock profit warnings, shouldn't be hit too much now.''
Unilever Plc and other food companies fell after Deutsche Bank AG downgraded the industry. Carlton Communications Plc gained after Thomson Multimedia SA agreed to buy its film-technology and duplication business.
The benchmark FT-SE 100 Index rose 82 points, or 1.3 percent, to 6370.30, climbing for a second day. Three shares advanced for every two that declined in the FT-SE All Share Index, which added 24.69 points, or 1.2 percent, to 3045.96.
Psion, Europe's biggest maker of hand-held computers, added 49.5p, or 16 percent, to 354.5. Sage, the U.K.'s biggest maker of accounting software, advanced 16.5p, or 4.2 percent, to 413.
The FT-SE information-technology hardware group climbed 7.3 percent, led by Psion. The index has declined 27 percent this year and 33 percent since the beginning of September. The software and computer-services group added 5.1 percent, led by Surfcontrol Plc. That's still down 39 percent for the year.
Banks Advance
Royal Bank of Scotland Group Plc and other lenders gained amid optimism lower interest rates may ensure a controlled slowdown in the U.S. economy, easing concerns about bad loans.
Royal Bank of Scotland rose 105p, or 7.3 percent, to 1,545. ``Some tightening of our credit appetite in response to changing economic conditions'' hasn't reduced income or led to higher debt provisions, the biggest Scottish bank said.
Egg Plc, the biggest standalone U.K. Internet bank, gained 4p, or 3.9 percent, to 106. Standard Chartered Plc, which is listed in London and has most of its assets in Asia, rose 28p to 986. Barclays Plc rose 46p to 2,029.
Strategists at Schroder Salomon Smith Barney said they expect equity markets to rise 20 percent by April 2001 and banks to be among the main beneficiaries as opportunities for share sales return.
``If you're looking for lower rates and an equity-market recovery, banks will be there,'' said Peter Cogliatti, a trader at Williams de Broe in London. ``Worries about bad loans have seen banks come back a little recently.''
Abbey National Plc advanced 52.5p, or 4.8 percent, to 1,144.5 and Bank of Scotland rose 3p to 690. Abbey National, the No. 2 U.K. mortgage lender, and the No. 2 Scottish bank today began a fifth week of merger negotiations that may form a bank valued at 24 billion pounds ($34.7 billion), as Lloyds TSB Group Plc considers a hostile bid for Abbey National.
Lloyds TSB, the fourth-biggest U.K. bank, gained 29p, or 4.5 percent, to 676.
The following stocks made significant gains or losses in U.K. markets today. Stock symbols are in parentheses after the company. Unless otherwise indicated, information is taken from company statements released on the Regulatory News Service.
British Sky Broadcasting Plc (BSY LN) gained 48p, or 4.3 percent, to 1,141. Goldman, Sachs & Co. raised earnings estimates for Europe's No. 2 pay-television company and placed the shares on its ``European Recommended List,'' citing optimism about BSkyB's pay-TV strategy.
Carlton Communications Plc (CCM LN) rose 38p, or 6.6 percent, to 615. Thomson Multimedia SA, maker of RCA televisions, agreed to buy Carlton's film-processing and distribution unit for $2.1 billion in cash and shares.
Euro Telecom Plc (ETE LN) slumped 32p, or 28 percent, to 83. The distributor of wireless communications products said it lost 3.56p per share in the six months to Sept. 30, compared with a profit of 2.59p a share in the same period a year earlier.
Financial Objects Plc (FIO LN) gained 17.5p, or 18 percent, to 116, extending a 6.5 percent advanced on Friday, after the banking software and services provider was tipped last week in TechInvest, a newsletter based in Dublin, Ireland.
Marconi Plc (MONI LN) rose 69p, or 8.8 percent, to 856. The biggest U.K. phone-equipment company formed a joint venture with South Korea's LG Electronics Inc. to build a new wireless network that will enable users to access the Internet and data information via mobile phone.
Medisys Plc (MDY LN) rose 9.5p, or 7.5 percent, to 137. The medical-device developer said it signed a contract with U.S.-based Nypro to produce Medisys's Futura safety syringe at an agreed unit price. Medisys also said it's ``enthusiastic'' about its growth prospects.
Arthur Shaw Plc (SAW LN) rose 0.71p, or 23 percent, to 3.81. The metal-components maker and Internet broadcaster was cited by the Mail on Saturday newspaper as a beneficiary of growth in Internet broadcasting after 9 million people watched an Internet broadcast of Madonna's U.K. concert last month.
Shire Pharmaceuticals Group Plc (SHP LN) dropped 194p, or 16 percent, to 1,035. The company agreed to buy Canada-based BioChem Pharma Inc. for $4 billion in shares, a 40 percent premium to Friday's closing share price. Shire gains BioChem's HIV and cancer treatments as it seeks to lessen its dependence on hyperactivity drugs, which generate almost half its sales.
Unilever Plc (ULVR LN) shed 14.75p, or 2.8 percent, to 519.25. John Parker, an analyst at Deutsche Bank, downgraded the maker of Dove soap and Lipton teas to ``underperform'' from ``market perform.''
Deutsche also cut the food-manufacturing industry to ``underweight'' from ``overweight'' on expectations its inability to raise prices and high raw-material costs will crimp profit.
Tate & Lyle Plc, the biggest starch and sweeteners company, dropped 15.75p, or 6.1 percent, to 241.75. Associated British Foods Plc shed 11.75p, to 2.5 percent, to 455.
Vodafone Group Plc (VOD LN) gained 9p, or 3.4 percent, to 274. The largest wireless-network operator agreed to buy 15 percent of Japan Telecom Co. for about $2.5 billion in cash, people familiar with the talks said. A purchase would give Vodafone a stake in Japan's third-largest mobile-phone operator equal to stakes owned by British Telecommunications Plc and AT&T Corp. Vodafone already owns about 26 percent of J-Phone, Japan Telecom's wireless unit, and BT holds 20 percent. BT was unchanged at 661p.
George Wimpey Plc (WMPY LN) fell 12.5p, or 8 percent, to 145.5. The U.K.'s biggest homebuilder said profit in the first half of 2001 will likely be below current-year results because delays in planning will mean a lower number of sales outlets at the start of next year. The company also said it will merge its two U.K. businesses to save money.
Windsor Plc (WNDR LN) rose 1p, or 6.1 percent, to 17.5. The provider of insurance and reinsurance services said pretax profit climbed 26 percent to 2.4 million pounds in the financial year ended Sept. 30.
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