Upgrades, results sprinkled through sector; retail news not as bad as thought Man Group got a 10% bump in London on Tuesday, and other beaten-down financials also were stronger as the hedge fund operator was upgraded to buy from sell by Citi. The broker said the firm is "fundamentally mispriced," with a strong balance sheet and compelling low valuation, saying Man's AHL asset management unit was alone worth 158 pence a share. So add 56 pence for surplus capital and 17 pence for forecast final dividend and that puts Man's valuation 52% above the share price, Citi analysts said. However, shares of Man Group (UK:EMG: news , chart , profile ) , last up 171 pence, or 10% are rallying off some pretty steep lows. Shares are down about 67% over the last 12 months. Other financials also advanced. Shares of insurers Legal & General (UK:LGEN: news , chart , profile ) , Old Mutual (UK:OML: news , chart , profile ) and Standard Life (UK:SL: news , chart , profile ) were all up over 7%. Banks were also up across the board, with Barclays (UK:BARC: news , chart , profile ) up 7% and Lloyds Banking Group (UK:LLOY: news , chart , profile ) up over 5%. More broadly, the U.K. FTSE 100 (UK:UKX: news , chart , profile ) rose under a half percent, or 14 points, to 3,556.85. European stocks were also showing signs of life, backing off 12-year lows thanks to gains for the auto sector, inspired by a double upgrade for Daimler. See Europe markets On Monday, U.S. markets fell to their lowest marks in more than 12 years, though stock futures advanced on Tuesday. "Markets this morning seem just a bit more optimistic with the FTSE and the Dax ignoring the sell-off in the States last night and coming just on the side of the angels," said Andrew Wilde, managing director of Capital Spreads. "The weakness in gold might also be something of a short term bull indicator for equities as investors start to offload the yellow metal in favor of return." Wilde noted that gold has fallen $35 from the high on Friday and the odds on another attempt on the $900 level have "shortened significantly." Gold futures were recently down $6.30 to $911.70 on Tuesday. The mining sector was another big contributor to positive sentiment on Tuesday. Shares of Rio Tinto rose nearly 7%, and Kazakhmys was up nearly 5%. On the economic front, the British Retail Consortium reported a 1.8% fall in same-store retail sales, and said clearly the surprise year-on-year sales rise in January was "just a discount-driven blip." Retailer Next lost around a full percent. Still, it could have been worse, said analysts at Numis. "While we expect retail sales to fall away as we progress through 2009, we think the data is supportive of the view that we have at least started 2009 from a higher base," the analysts said in a note to investors. Elsewhere, shares of food and industrial ingredients group Tate & Lyle were up nearly 5%. Merrill Lynch on Tuesday upgraded the company to neutral from underperform, saying the pullback in valuation appropriately discounts the risks they see. The investment bank is also forecasting a final dividend of 17 pence. Outside the FTSE 100, inter-dealer broker Tullet Prebon got a 20% boost in shares after the company said volatility in interest rates and exchange rates is driving volumes, after reporting a 29% rise in 2008 net profit and a 25% bump in revenue. Fellow interdealer-broker Icap was up 5%. However, for spread-better IG Group volatility is apparently turning into a problem. Shares tumbled 27% after the group said clients are becoming "increasingly accustomed" to volatility for equity markets. As a result, IG said that's cutting into the uplift of revenue the company normally sees on higher volatility days, specifically making growth tougher in the group's two most established businesses in the U.K. and Australia.

Source