UK MARKET TALK ROUNDUP: SHARES GAINING

Stocks on the rise in the UK today. Compiled by Dow Jones Newswires Markets Desk, markets.eu@dowjones.com Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com 0758 GMT [Dow Jones] Expectations that a stress test on U.K. banks will show positive results, added to good banking earnings news from the U.S., are lifting banks, analysts say. "The (test) results may turn market sentiment around by increasing the visibility for the EU banking sector, where uncertainties have grown following the sovereign debt crisis," Daiwa says. Banks are also reacting to news that State Street Corp. (STT) will report better-than-expected 2Q results as earnings season kicks in. Lloyds Banking (LYG) biggest gainer, +4.5% at 61p. Standard Chartered (STAN.LN)--only large U.K. bank not participating in stress test--is up 0.9% at GBP17.09. (patricia.kowsmann@dowjones.com) 0735 GMT [Dow Jones] Babcock's (BAB.LN) trading update shows that since the beginning of March the order book has remained stable at GBP8.3B and the bid pipeline has remained healthy at around GBP3.3B, says Seymour Pierce. Says all existing contracts are performing in line with expectations, while cash generation remains strong. Expects VT Group (VTG.LN) acquisition to go through today. Keeps buy rating, saying all Babcock's key markets remain resilient and the company has stated that there are significant growth opportunities from further outsourcing in the UK and overseas. Shares +0.4% at 621p. (peter.nurse@dowjones.com) 0717 GMT [Dow Jones] AB Foods (ABF.LN) trading remains robust, says Charlie Mills at Credit Suisse, with the standout division being Primark. Says same-store sales growth looks to still be around 7%-8%, while margins have grown, "so retail profits look set to be well ahead of our estimates." He raises his FY pretax profit expectations GBP10M to GBP805M, "though we don't expect the consensus to move materially." Rates at neutral, with 1030p target price. Shares +1.6% at 996p. (michael.carolan@dowjones.com) 0712 GMT [Dow Jones] Hays' (HAS.LN) 4Q '10 results show a return to year-on-year growth for the first time in two years, which is clearly a good sign, says Seymour Pierce. Notes on a like-for-like basis net fee income was up 8%, compared with the same period last year, driven by Asia Pacific. Nevertheless, says growth rates are slightly disappointing compared to those reported by peers such as Robert Walters (RWA.LN). Adds UK conditions remain tough. From a valuation perspective, says there is better value in small cap stocks such as Harvey Nash (HVN.LN), which it rates at buy. Has Hays at hold, with 100p price target. Shares +3.9% at 94p. (michele.maatouk@dowjones.com) 0700 GMT [Dow Jones] Babcock (BAB.LN) has reported a good start to the year, with cash generation remaining strong and debt reducing, says Arden Partners. Notes the order book has remained stable at GBP8.3B, with no changes to workload coming through. Says the VT Group (VTG.LN) bid is expected to complete Thursday following a final court hearing and the increased scale and capabilities are expected to enhance the group's growth opportunities. "The shares remain fundamentally undervalued compared to other major support services companies." Has the stock at buy. Shares +0.8% at 624p. (michele.maatouk@dowjones.com) Contact us in London. +44-20-7842-9288 Markettalk.eu@dowjones.com (END) Dow Jones Newswires July 08, 2010 03:58 ET (07:58 GMT)