Hot small caps: Devro gains on update

LONDON (Reuters) - The following is a round-up of key small cap movers on the London stock market on Monday.

3.44 p.m -Devro gains on update

Shares in Devro (DVO.L) gain as much as 5.9 percent after the sausage skin maker's third quarter interim management statement (IMS) pleases, with house broker Investec raising its target price to 85 pence from 74.

Investec says Devro's Q3 IMS reads positively, with the group's board stating that it is confident full year performance will meet its expectations.

The broker says Devro's sales generally continue to show good growth and the firm is still showing a positive trend in pricing versus last year, while costs are in line with the broker's expectations.

Investec says it is leaving its full year forecasts for Devro unchanged after the trading update, but has increased its target price in line with a general improvement in sector ratings. The broker has a "buy" rating on the shares.

2:00 p.m. - Carphone falls on outlook, demerger worries

Shares in Carphone Warehouse (CPW.L) fall over 10 percent to as low as 127.25 pence on worries of a gloomy outlook statement from Europe's biggest independent mobile phone retailer at its interim results on Tuesday and concerns that any demerger of its telecoms business might be a long time in coming.

"With all the best will, you can't see how the company would be bucking the trend in terms of retail and then (mobile handset maker) Nokia had a profit warning last week," said Daniel Stewart analyst Mike Jeremy.

He also pointed to newspaper reports which say Carphone will announce plans to separate its telecoms business from its retail joint venture with U.S. electricals group Best Buy (BBY.N), but that the demerger might not occur for some time because of turbulent market conditions.

Carphone has declined to comment on the possible demerger.

12:55 p.m. - HBOS and Lloyds TSB down on weak economy

Shares in Lloyds TSB (LLOY.L) and takeover partner HBOS HBOS.L fall by 9.8 pct and 11.3 percent respectively, weighed by downbeat economic news and lingering uncertainty over whether their tie-up will succeed.

"This is mainly about the constant flow of negative news regarding the economy," says Fox-Pitt, Kelton analyst Leigh Goodwin.

"With regard to the Lloyds-HBOS takeover, there's a little bit of uncertainty about the deal. The rebel camp got a bit of impetus on Friday."

Goodwin says HBOS' estimate on Friday that it would need fresh capital of 12 billion pounds it were to remain independent. This is less than most analysts expected, and provides a boost to Scottish ex-bankers George Mathewson and Peter Burt, who are campaigning to block the deal.