UK WINNERS & LOSERS: Banks Under Stress After EU Test Results

LONDON (Alliance News) - The following stocks are amongst the biggest risers and fallers within the main London indices mid-morning Monday.
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FTSE 100 WINNERS
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TUI Travel, up 2.1%; Intercontinental Hotels Group, up 2.4%; Carnival, up 0.4%. The travel sector is enjoying some respite as the global effort to counter the Ebola outbreak appears to have been stepped up and there was no news of a further spread into Europe or the US over the weekend. The Texas nurse that had the first US case received the all-clear on Friday, and the US is implementing quarantine measures for health workers returning from Ebola effected nations.
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FTSE 100 LOSERS
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Lloyds Banking Group, down 2.6%; Royal Bank of Scotland, down 1.7%; Barclays, down 1.5%; HSBC Holdings, down 0.8%. The banking sector has come under pressure Monday following the publication Sunday of the EU Asset Quality Review, or stress test, results. Out of the UK banks, Lloyds was the worst performer, passing the test, but with a capital ratio only marginally higher than the minimum required level when subject to the stressed scenario. This bodes poorly for Lloyds given that on December 16 it will be subject to another round of testing from UK regulators. The UK testing will be stricter, for example testing the banks' balance sheets against a 30% fall in house prices, compared with the 15% fall tested in the European model. Lloyds and Royal Bank of Scotland are thought to be most at risk from the UK testing, given their stronger focus on the UK mortgage market. Jefferies has cut Lloyds to Underferform from Hold on the back of the stress test results.

Smiths Group, down 1.5%. The engineering company has seen its shares fall after saying that Finance Director Peter Turner will step down to pursue other opportunities, although he will stay on for another six months while the company looks for a successor.

Rolls-Royce Holdings, down 1.5%. The engineering group has suffered a number of negative broker notes Monday. Exane BNP has cut its price target to 930p from 1,350p, and CitiGroup has cut its target to 850p from 1,038p. Rolls-Royce closed Friday at 795p. The downgrades follow a profit warning from the company on December 17.
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FTSE 250 WINNERS
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Renishaw, up 3.5%. The electronics group has seen its shares rise after saying it expects the revenue growth trend it experienced in the first quarter to continue through the second half of its financial year, extending the guidance it gave for the second quarter.
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FTSE 250 LOSERS
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Ophir Energy, down 3.7%. The energy company is one of two companies that is in talks with FTSE Small Cap-listed Salamander Energy over a potential takeover offer. Salamander confirmed press speculation that it has entered talks with both Ophir Energy and a consortium led by Spanish energy group Compañía Española de Petróleos, or CEPSA, and investment group Jynwel Capital. Liberum Capital has said that, "at first sight, it is difficult to see where significant value could be added" for Ophir. Separately, Ophir said it has entered a deal to buy seven deepwater production sharing contracts in Indonesia from Niko Resources, expanding its South East Asia presence. Ophir will pay USD31.3 million for interests in the seven contracts, six of which it will operate itself. Salamander Energy shares are up 21% on the merger and acquisition news.

Petra Diamonds, down 3.4%. The diamond miner has seen its share fall despite saying its revenue grew by more than half in its fiscal first quarter, buoyed by higher production and the proceeds from the sale of an exceptional blue diamond. VSA Capital notes that Petra shares have risen by 48% since the start of the year and that the diamond market is exhibiting expected seasonal weakness. Petra noted in its statement Monday that its first quarter sales were 532,250 carats, down 10% from 589,233 carats in the first quarter of its last financial year.
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AIM ALL-SHARE WINNERS
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Totally, up 27%. The publishing company is one of the best performers in London's junior market after saying its Totally Health subsidiary has been awarded a contract by NHS Hartlepool and Stockton-on-Tees Clinical Commissioning Group to handle clinical health coaching programmes with a focus on long-term conditions. The initial 12-month contract will see Totally Health work with up to 100 patients with Chronic Obstructive Pulmonary Disease and/or Coronary Heart Disease, the company said. Totally said the initial contract is expected to be worth around GBP125,000.

Physiomics, up 15%. The UK based systems biology company said it has signed an extension project with a "major global" pharmaceutical company. The extension to the Virtual Tumour project will cover predicting optimal regimens for a further candidate compound, which it said should be completed by the end of 2014.
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AIM ALL-SHARE LOSERS
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Synectics, down 29%. The surveillance technology and networked security systems provider warned that it expects its underlying profit for the second half of its financial year to be "significantly" below market expectations of GBP5.0 million, after it was hit by contract award delays and extended delivery periods for contracts it had already won, the company's third profit warning of the year. The company said it has been experiencing continued delays both in the award of large expected contracts and from the extension by customers of delivery periods for contracts already won, primarily in the oil & gas market sector. Additionally, its UK security integration activities in the fourth quarter is now likely to be below its previous expectations, mainly due to the lengthening of procurement cycles for larger projects, mostly within the UK public sector.

Oilex, down 20%. The oil and gas exploration company has seen its shares fall after saying it has started preparations on the production test on the Cambay-77H well. The company said an analysis undertaken by oil and gas consulting firm RISC showed the Y zone flow parameters for the well were within its expectations, but said that as the well is the first of its type in India, the duration required to complete flow back operations is unknown as there is no reference point for the reservoir.
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By Jon Darby; jondarby@alliancenews.com; @jondarby100

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