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FTSE comfortably higher
Business Financial Newswire
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Headline shares closed higher, at the session peak, today, rallying strongly after good early gains on Wall Street.
At the close of play, the FTSE100 was up 30.9 points at 6,220.3 with the FTSE250 ahead 20.6 points at 11,459.3 and the FTSE Smallcaps a point lower at 3,948.9. Volume was good with 3.305 billion shares changing hands in 544,767 deals.
On Wall Street by London's close, the DJIA was 50.80 points stronger at 12,277.00, while the Nasdaq Composite was 15.53 points firmer at 2,409.94.
Nervousness about the Federal Reserve decision on interest rates, due after the close tomorrow, was countered by relief that US housing construction bounced back in February.
The latest Commerce Department report found construction of new homes and apartments rose by 9% last month to a seasonally adjusted annual rate of 1.525 mln units. Wall Street had expected housing starts to total 1.450 mln.
In London, the UK annual CPI inflation rate rose to 2.8% from 2.7% January, an unexpected increase as analysts had forecast a drop to 2.6%.
The surprise rise raised fears of a possible further Bank of England interest rate hike as early as next month.
On the corporate front in London, Friends Provident was a big blue chip casualty today, losing 12p at 190p, after the life insurer's full-year pretax profit came in shy of expectations.
The group reported underlying pretax profit for the year of £509m on a European Embedded Value Basis, down from £524m the previous year and marginally lower than analysts' expectations of £513m.
Elsewhere on the downside, William Morrison shares fell 6.75p to 308p after being downgraded to 'hold' from 'buy' by Deutsche Bank with the price target cut to 335p from 345p on the back of reduced earnings estimates following recent results and the new CEO's business review.
The broker said there is very little in chief executive Marc Bolland's review of the business that it would argue with, but said it involves spending more than Deutsche Bank had anticipated, and will deliver less recovery benefit.
Wolseley was also weaker on profit-taking after the building materials giant's forecast-busting interim results, losing 22p at 1,221p.
Imperial Tobacco shares lost 35p at 2,250p ahead of a trading update tomorrow, and amid reports that private equity firm KKR could be set to launch a counter-bid for Spain's Altadis, which rejected Imperial's bid approach last week.
Tate & Lyle shares lost 3p at 541p after German peer Suedzucker warned on profits due to EU reforms in the sugar industry.
Shares in BSkyB dropped 5.5p at 554p amid increased regulatory fears, after media watchdog Ofcom launched an investigation into the UK pay-TV market.
Ofcom said the probe follows a complaint from BT Group, Virgin Media and Setanta over the satellite broadcaster's recent withdrawal of basic channels from the cable platform.
Weakness in oil & gas issues also weighed as crude oil prices remained below the $57 a barrel mark ahead of tomorrow's inventories.
Shell shares lost 9p at 1,617p, BP dropped 4p at 511.5p and BG Group was down 4p at 693p.
On the upside with blue chips, Whitbread was a top performer, leaping 193p to 1,934p on rumours of a private equity bid at 2,300p per share.
Traders, however, poured cold water on the talk, pointing out the recent wave of M&A and break-up news means dealers are putting together and contemplating all possible scenarios.
In a research note published yesterday, Citigroup initiated coverage of Whitbread with a 'buy' recommendation, saying it believes a break-up of the leisure group by a third party could unlock property value.
ICAP was also higher on bid talk, taking on 29.5p at 522.5p, with rumours the inter-dealer broker could be subject to a 700p per share bid.
A London-based sales trader said bid rumours have surfaced over talk that chief executive Michael Spencer, who owns 21.7% of the group, is looking to spend more time with the Conservative Party and is keen to offload the stake.
Elsewhere, banking issues featured heavily on the upside again amid ongoing sector consolidation hopes.
Barclays jumped 25p to 702p after issuing a statement last night confirming it is in 'preliminary talks' with ABN Amro concerning a potential combination of the two banks.
Goldman Sachs said it thinks the deal would be a strong strategic fit, while in other comment JP Morgan estimated Barclays could bid up to ¬33.50 per share for ABN Amro.
In sympathy, peers Lloyds TSB added 5.5p at 553.5p, while HBOS was up 7p at 1,042p.
Bid excitement also surrounded insurer Prudential again, up 23.5p at 731.5p amid rumours AIG of the US could offer 850p a share for the firm.
The stock was also buoyed by Citigroup lifting its price target to 875p from 800p and reiterating its 'buy' advice following recent results.
Among broker changes, bullish comment sent ICI shares 7.25p higher at 490p after Citigroup upgraded the group to 'buy' from 'hold' as part of a review of the Global Paints & Coatings sector, which the broker believes is now 'ripe for consolidation'.
On the second line, pubs operators Punch Taverns, Mitchells & Butlers and JD Wetherspoon all rose sharply on the back of the Whitbread takeover rumour.
Punch was a major FTSE250 leader, up 52p at 1,193p, while M&B took on 28p at 787p and Wetherspoon was 26p better at 736p.
On the results front, shares in Bluebay Asset Management gained 3p at 398.5p after the group nearly doubled profit in the first half, prompting Citigroup to repeat its 'buy' stance.
BlueBay reported a 91% rise in pretax profit for the first half and said its assets under management more than doubled, due to a strong investment performance and growing demand from institutional investors.
Headlam Group shares took on 10p at 587p after the floor coverings group posted full-year results that beat market expectations and prompted KBC Peel Hunt to upgrade its recommendation to 'buy' from 'hold'.
The broker said Headlam's trading pretax profit of £44.2m was ahead of its top-end expectation, and as such it has increased its forecasts for the group and now expects pretax profit of £47m, with EPS of 38p and dividend of 22.6p.
Among the midcap casualties, JKX Oil & Gas shares reversed early gains, losing 9p at 298p, in line with a weak sector having earlier been buoyed by a 'strong' set of full year figures.
JKX saw its full year pretax profit jump 113% to $109.2m, while turnover grew 59% to $131.7m.
First Choice Holidays was also a big faller, down 8.5p at 299.5p on profit-taking after the group spiked following the confirmation it would merge with TUI, and with SG Securities cutting its stance to 'hold' from 'buy'.
Amongst smallcaps, Osmetech slipped 1p to 23.25p after the company revealed widening full-year losses. These reflected the cost of investment and the first full year of results from Clinical Micro Sensors, which was purchased in July 2005.
Good progress was made by Cello Group, 10p better at 148.5p, after the market research and consulting group turned in full headline pretax profits some 40% higher at £5.9m.
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