FTSE 100 index down 0.4%; Banks pressure London's top share index
Rio Tinto shares advanced in a modestly lower London market Wednesday, as speculation intensified that the mining giant may be near a deal to cut its debt.
Rio Tinto shares climbed 5.9%.
"Ahead of tomorrow's 2008 results from Rio Tinto, there is plenty of speculation surrounding disposals and fund-raising as the group seeks to achieve its debt reduction target," noted analysts at Killik & Co. stockbrokers.
Analysts at Evolution Securities said that they're expecting the firm to post net earnings of $9.4 billion, within a consensus range of $9.1 billion to $10.4 billion.
"Of more interest will be how the company chooses to raise the finance to cover debt repayments this year and next and at what cost," they said.
Rio Tinto is aiming to cut its debt by $10 billion this year. It recently said that it was holding talks with stakeholder Chinalco over the possible sale of mining operation stakes and an investment in convertible instruments.
The Wall Street Journal reported Wednesday that Chinalco may invest up to $20 billion in the Anglo-Australian miner.
"The market has anticipated a deal with Chinalco for so long that the group almost has to announce something tomorrow," the Evolution analysts said.
Additionally, the Herald Sun newspaper in Australia reported Wednesday that Rio Tinto is talking to Japanese power companies about the possible sale of its 68% stake in uranium mining firm Energy Resources of Australia (AU:ERA: news , chart , profile ) .
"We are encouraged to read that both BHP Billiton and Japan's Mitsui & Co have shown interest in acquiring assets from the company. At a time when Rio is perceived to be a distressed seller, a bit of competition is very helpful," said the Killik & Co. analysts.
FTSE 100 slips
Overall, the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 0.4%, or 16.87 points, to 4,195.96. Other European shares were also lower. See Europe Markets.
U.S. stock futures were higher, pointing to a slight rebound for U.S. shares after Tuesday's rout. See Indications.
Shares fell sharply on Tuesday, both in Europe and the U.S., as details about the U.S. government's plan to use mostly private money to create a fund of at least $500 billion to recapitalize banks and another fund of $1 trillion to support consumer and business lending remained thin on the ground. Read more on bank rescue plan.
"The market's negative reaction is widely attributed to the lack of detail -- both on how the new stress test will be applied but, more importantly, how those assets eligible for the 'bad bank' will be priced. The absence of any broader loan guarantees has also contributed to the negative reaction," noted analyst at Davy Stockbrokers.
Banks were lower in London, with Royal Bank of Scotland shares climbed 5.9%.
"Ahead of tomorrow's 2008 results from Rio Tinto, there is plenty of speculation surrounding disposals and fund-raising as the group seeks to achieve its debt reduction target," noted analysts at Killik & Co. stockbrokers.
Analysts at Evolution Securities said that they're expecting the firm to post net earnings of $9.4 billion, within a consensus range of $9.1 billion to $10.4 billion.
"Of more interest will be how the company chooses to raise the finance to cover debt repayments this year and next and at what cost," they said.
Rio Tinto is aiming to cut its debt by $10 billion this year. It recently said that it was holding talks with stakeholder Chinalco over the possible sale of mining operation stakes and an investment in convertible instruments.
The Wall Street Journal reported Wednesday that Chinalco may invest up to $20 billion in the Anglo-Australian miner.
"The market has anticipated a deal with Chinalco for so long that the group almost has to announce something tomorrow," the Evolution analysts said.
Additionally, the Herald Sun newspaper in Australia reported Wednesday that Rio Tinto is talking to Japanese power companies about the possible sale of its 68% stake in uranium mining firm Energy Resources of Australia (AU:ERA: news , chart , profile ) .
"We are encouraged to read that both BHP Billiton and Japan's Mitsui & Co have shown interest in acquiring assets from the company. At a time when Rio is perceived to be a distressed seller, a bit of competition is very helpful," said the Killik & Co. analysts.
FTSE 100 slips
Overall, the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 0.4%, or 16.87 points, to 4,195.96. Other European shares were also lower. See Europe Markets.
U.S. stock futures were higher, pointing to a slight rebound for U.S. shares after Tuesday's rout. See Indications.
Shares fell sharply on Tuesday, both in Europe and the U.S., as details about the U.S. government's plan to use mostly private money to create a fund of at least $500 billion to recapitalize banks and another fund of $1 trillion to support consumer and business lending remained thin on the ground. Read more on bank rescue plan.
"The market's negative reaction is widely attributed to the lack of detail -- both on how the new stress test will be applied but, more importantly, how those assets eligible for the 'bad bank' will be priced. The absence of any broader loan guarantees has also contributed to the negative reaction," noted analyst at Davy Stockbrokers.
Banks were lower in London, with Royal Bank of Scotland shares climbed 5.9%.
"Ahead of tomorrow's 2008 results from Rio Tinto, there is plenty of speculation surrounding disposals and fund-raising as the group seeks to achieve its debt reduction target," noted analysts at Killik & Co. stockbrokers.
Analysts at Evolution Securities said that they're expecting the firm to post net earnings of $9.4 billion, within a consensus range of $9.1 billion to $10.4 billion.
"Of more interest will be how the company chooses to raise the finance to cover debt repayments this year and next and at what cost," they said.
Rio Tinto is aiming to cut its debt by $10 billion this year. It recently said that it was holding talks with stakeholder Chinalco over the possible sale of mining operation stakes and an investment in convertible instruments.
The Wall Street Journal reported Wednesday that Chinalco may invest up to $20 billion in the Anglo-Australian miner.
"The market has anticipated a deal with Chinalco for so long that the group almost has to announce something tomorrow," the Evolution analysts said.
Additionally, the Herald Sun newspaper in Australia reported Wednesday that Rio Tinto is talking to Japanese power companies about the possible sale of its 68% stake in uranium mining firm Energy Resources of Australia (AU:ERA: news , chart , profile ) .
"We are encouraged to read that both BHP Billiton and Japan's Mitsui & Co have shown interest in acquiring assets from the company. At a time when Rio is perceived to be a distressed seller, a bit of competition is very helpful," said the Killik & Co. analysts.
FTSE 100 slips
Overall, the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 0.4%, or 16.87 points, to 4,195.96. Other European shares were also lower. See Europe Markets.
U.S. stock futures were higher, pointing to a slight rebound for U.S. shares after Tuesday's rout. See Indications.
Shares fell sharply on Tuesday, both in Europe and the U.S., as details about the U.S. government's plan to use mostly private money to create a fund of at least $500 billion to recapitalize banks and another fund of $1 trillion to support consumer and business lending remained thin on the ground. Read more on bank rescue plan.
"The market's negative reaction is widely attributed to the lack of detail -- both on how the new stress test will be applied but, more importantly, how those assets eligible for the 'bad bank' will be priced. The absence of any broader loan guarantees has also contributed to the negative reaction," noted analyst at Davy Stockbrokers.
Banks were lower in London, with Royal Bank of Scotland down 2.5% and Lloyds Banking Group down 3%.
The economic backdrop remains gloomy, with the Bank of England stating in its latest quarterly inflation report that the British economy is experiencing a near-term contraction "substantially deeper" than forecast in November.
The Bank will begin buying assets this week in an effort to boost corporate lending and is also prepared to take actions aimed at boosting the money supply in order to stimulate spending, Governor Mervyn King said in a news conference.
Further easing of monetary policy "may well be required" King said. Sterling traded down 1.2% at $1.4361. See full story.
Reckitt Benckiser profit up
On the plus side, shares of household products firm Reckitt Benckiser (UK:RB: news , chart , profile ) rose 4.7%.
The maker of Finish dishwasher detergent said that its fourth-quarter net income rose 36% to 393 million pounds. Net revenue climbed 33% to 1.8 billion pounds, reflecting broad-based performance across the group.
The group will pay a final dividend of 48 pence per share, up 60% from last year's payout.
"Over-the-counter healthcare would appear to be the major positive. It is not going to get any easier in the coming quarters, but Reckitt's recent material share price outperformance seems wholly justified with these results in mind," noted analysts at Citigroup.
Shares of SABMiller (UK:SAB: news , chart , profile ) fell 2.9% after Merrill Lynch downgraded the brewer to underperform from neutral and cut fiscal-year 2009 and 2010 earnings per share estimates by 3% and 5%.
"On our new estimates, SABMiller now trades at the high end of its peer group on a price-to-earnings and free cash flow yield basis," the broker said.
