Market report: Wednesday close
US value investor Brandes Investment has taken a profit on its 15% stake in Marks & Spencer, Britain's biggest clothing retailer, ahead of next Tuesday's trading update.
It has sold 32m, or 2%, of its 252m shares at 500p, to raise £160m. Deutsche Bank bought the shares and plans to sell them on a first-come, first-served basis. M&S recovered an earlier fall to trade 2½p better at 499½p.
Brandes-backed billionaire Philip Green's aborted 400-p-ashare offer for M&S in July 2004. Ironically, the share price has climbed from 320½p since May last year, really taking off during the fourth quarter, adding £264m to the value of Brandes' original investment.
Growing hopes that US interest rates may have peaked cheered City investors, who chased share prices to a four-and-a-half-year high in London today.
The overnight publication of the Federal Reserve's Open Market Committee meeting minutes showed most members believed scope for further rate rises this year was limited. That enabled Wall Street to finish on a high note and extend those gains in early trade this afternoon. Tokyo stocks hit a five-year high and Hong Kong shares rose sharply.
In London, the FTSE 100 index extended its strong start to 2006, closing 33.1 up at 5714.6. The FTSE 250 index climbed 64.4 to close at a record 8957.7.
Clothing retailer Next topped the blue-chips with a leap of 157p to 1680p on the back of its latest trading update. Bridgewell Securities has moved from overweight to buy and is forecasting pre-tax profits for the year of between £435m and £450m. Fellow broker UBS is sticking with its buy rating, as is Merrill Lynch. Credit Suisse First Boston repeated its outperform stance.
UBS has repeated its buy ratings on Barclays, up 9½p at 627p, and Royal Bank of Scotland, 17p firmer at 1819p, ahead of the banks' dividend reporting season. It has raised its target price for Barclays from 685p to 705p and for RBS from 1950p to 2030p.
Tobacco producer Gallaher fell 12½p to 871½p after broker ABN Amro placed a line of 6.7m shares at 871p. A line of 8.5m in Scottish Power, worth £46m, went through on the ticker, leaving it 6p lower at 536p.
This week's surge in the price of Aim newcomer China Real Estate appears to have caught the company, as well as the City, on the hop. The price more than doubled to 470½p yesterday, prompting the property developer to declare it was not aware of any information that would be likely to have an impact on the shares. The price then fell today 115½p to 355p. China Real Estate began trading just a few days before Christmas.
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More disastrous news for Bow-Leven, the explorer looking for oil off Cameroon. The shares collapsed 133p, or 46%, to a record low of 165p after it announced the suspension of its Baucho-1 exploration well.
Mark Parfitt of broker Hardman takes the charitable view that, while the news is disappointing, it does not impinge on the company's book reserve or prospects for drilling and appraisal, which are fully funded with £48m. Broker Panmure has downgraded from buy to sell but retained its 200p target.
Appian Technology, whose Talon number-plate identification system forms part of the City's ring-of-steel cordon and of congestion-charge monitoring in the capital, has listed on Aim following a placing of shares by broker JM Finn at 5p which raised £2.08m and values the company at £5.6m. The shares opened at 7p and peaked at 7.25p.
Appian says it will use the funds to support a sales push in the UK and abroad 'in markets that are expanding in response to rising security and traffic congestion issues'. Its systems are also used in car park management and the surveillance, counter-terrorism and access-control markets.
It was also the first day on Aim for Dermasalve Sciences, a maker and distributor of skincare products, which has just completed a reverse takeover of Meon Capital. Corporate Synergy has placed 6.2m shares at 11p, valuing the company at £6.57m. The shares opened at 11½p.
Taking advantage of the current demand for raw materials, gold and copper explorer Stratex International has joined Aim after a placing of 37.4m shares at 5p, valuing the company at £6.87m.
Stratex's operations are focused mostly in Turkey but it also has a strategic alliance with Canadian miner Teck Cominco. The shares opened at 6.75p.
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