Cash flood lifts buying

By Geoff Foster for MailOnline
Updated: 05:25 EDT, 8 February 2006

PROVIDING further evidence of the underlying strength of the market, cash-rich institutions happily swallowed several large lines of stock offered to them yesterday.

Travel company First Choice Holidays fell 10p to 237p after almost 51m shares, or 8%, was sold to various fund managers at an average price of 241½p. Barcelo, one of the world's largest hospitality companies based in Mallorca in Spain, is said to have reduced its stake to around 12%.

Cheap and cheerful clothing group Matalan gained 7½p 180½p after 7m shares were placed at 174p. Rumours abound that a Wal-Mart cash offer or management buy-out at 250p a share could be on the cards.

John Hargreaves and family interests own 53% of the company which continues to struggle against competition from super-markets and value chains such as Primark.

Speculation has intensified since it was announced that chief executive John King is to leave at the end of the year. He will be the fourth chief executive to walk the plank in five years.

Broker Merrill Lynch placed 9.5m Sportingbet at 375p and the close was 14p lower at that price. Interim results are due on February 22 and should please. First-quarter profits jumped to £14.3m, from £2.6m, thanks to the rising number of US customers betting on sports events and playing poker. Sportingbet is believed to have attracted a big turnover on the back of last weekend's Super Bowl final in the US.

Elsewhere, an 18p fall to 647½p in oil giant BP following disappointing fourth-quarter profits and a 26p decline to 1913p in rival heavyweight Royal Dutch Shell dragged the Footsie 25.6 points lower at 5,746.8. Wall Street was erratic in the early stages, replacing a 24 point gain with a 31 point loss.

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The major talking point was General Motors bowing to pressure from shareholders, led by billionaire Kirk Kerkorian, and deciding to halve its dividend and slash chief executive Rick Wagoner's pay by half. It has teetered on the brink of bankruptcy for months.

Retailers were under the weather following the worst British Retail Consortium sales figures for more than a decade.

Next lost 18p to 1690p, DSG International 3½p to 172¼p and Marks & Spencer 6¼p to 495¼p. French Connection touched 252p and closed a ragged 7¾p down at 260¼p after broker Evolution said the stock is overvalued. Its target price is 235p.

Perennial bid favourite Woolworths jumped 2p to 34½p on a hefty turnover of 119m. An off-the-wall rumour of a possible merger with newsagent WHSmith, 10¾p better at 408¾p, had punters scrambling for stock.

'Rubbish. It would be like two drunks holding each other up,' said a fund manager. Woolies has been a sitting duck since Apax Partners left it at the altar last year after tabling a 51p a share offer.

Still reeling from a Merrill Lynch downgrade, Cairn Energy slipped 72p more to 1832p, for a two-day fall of 133p.

Gloria Gaynor's smash hit 'I will survive' should now be Sanctuary Group's theme tune. Following last week's rescue £110m fundraising, the shares rallied 1.23p to 1.90p.

Oil Quest Resources jumped 6¾p to 22½p following confirmation of the reverse takeover of EnCore Exploration and Encore Petroleum and the signing of a conditional agreement to acquire EnCore Natural Resources and EnCore Oil and Gas.

Aurum Mining sparkled at 39½p, up 5½p, after the Kyrgyz authorities granted an extension until the end of 2010 to its exploration licence over the Andash gold and copper project in the Kyrgyz Republic.

Broker Numis sees significant upside at Quantica (1¾p dearer at 62½p) after the recruitment company reported betterthanexpected annual profits of £3.6m, up from £2.4m last time.

Aim-listed environmental solutions business Virotec International edged up ½p to 20¾p following an upbeat report on ViroSweage, one of its product lines, by the Water Research Council.

Corpora, the software group, shed 1¾p to 10¼p after raising £2.25m via a placing of 28.1m shares at 8p per share. Funds raised will pay down debt and service continuing expansion.