Market report: Friday close

By Mickey Clark for MailOnline
Updated: 12:09 EDT, 17 February 2006

MARKS & SPENCER slipped a further 6½p to 507½p from recent highs today amid fears its recovery may have stalled and it could be about to take a massive pension hit.

Investec has downgraded the retailer, saying it cannot be immune from the widely reported slump on the High Street in the first six weeks of 2006 and could be exposed to renewed price-cutting by its competitors.

The broker also warned about the state of the M&S retirement schemes. 'We believe the pension deficit has risen substantially and there is the possibility of putting up to £250m into the pension fund over the next 12 months,' said analyst Matthew McEachran.

Share prices generally recovered from a hesitant start that saw the expiry of the February series of futures and options pass without incident. At 5848.2, the FTSE 100 index held onto gains of 17.3, even though the Dow fell 28.8 points to 11091.9.

News of the bid approach for mining outfit Lonmin, up 531p at 2671p - where it is valued at almost £4bn - attracted support for other miners. Anglo American rose 123p to 2145p, Xstrata 56p to 1701p, Antofagasta 80p to 2115p and Kazakhmys 28p to 892p. In fact, mining shares accounted for six of the top 10 best movers.

There was further heavy turnover in mobile phones giant Vodafone today, with more than 350m shares - almost a quarter of total turnover - changing hands as the price held closed ¼p lower at 124¼p. Investors have been chasing the shares higher in the belief the company will soon announce a boardroom reshuffle that will see chief executive Arun Sarin step down.

He has come under increasing pressure from institutional shareholders, who have been expressing disappointment in the company's performance of late. Meanwhile, Vodafone has continued buying back its own shares. This time it has snapped up 28m at prices ranging from 120¼p to 123¾p.

Takeover target and British Gas owner Centrica rose 5p to 286p. Broker UBS repeated its buy rating and raised its target from 295p to 325p after the group announced a 22% increase in gas and electricity retail prices on 1 March.

It has been a disappointing few weeks for shareholders of Rexam, up 14½p at 499p ahead of next week's results. But broker Credit Suisse thinks the selling has been overdone and raised its rating from neutral to outperform while lifting its sights from 550p to 570p.

Broadcaster ITV retreated 1¾p to 113p as talk evaporated of a takeover by private-equity money. Broker Sanford Bernstein has repeated its underperform rating and 94p target.

It points out that the flagship channel ITV1 is losing more audience share than any other terrestrial channel, and suggests poor content is to blame. It reckons the recent bid rumours have given the shares artificial buoyancy, and that a suggested private equity deal is now unlikely.

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Precious metals specialist Johnson Matthey fell 8p to 1447p. US broker Morgan Stanley has downgraded its recommendation on the shares from overweight to equalweight and slashed its target from 1300p to 1120p. It says the stock is unlikely to continue outperforming the chemicals sector, or the equity market in general.

AIM-listed shell General Industries rose 5p to 52½p. The company's name has been changed to ImmuPharma following a reverse takeover at 42½p a share by the biotech specialist. ImmuPharma has three drug developments - treatments for lupus, MRSA and severe pain - on the go. It also has worldwide rights to exploit key discoveries by CNRS, the French equivalent of the Medical Research Council.

AIM-listed upmarket ice-cream maker Hill Station firmed 0.88p to 4.88p after announcing it would relaunch the Loseley brand and add a range of ice creams on sticks to its traditional range of tubs. Higher costs widened pre-tax losses to £792,000 despite a neartripling in turnover to £1.2m in the 15 months to 31 October.

Hill Station, set up by former JPMorgan bankers Charles and Tina Hall, scooped up larger rivals Loseley and Louis Granelli in November. The expanded group should finish its move into a single manufacturing site in South Wales over the next few months.

Also on AIM, Focus Solutions held steady at 19½p after chief executive John Streets bought 50,000 shares at 20p. It stretches his total holding to 29.22%.