Market report: Tuesday close

By Mickey Clark for MailOnline
Updated: 12:10 EDT, 23 May 2006

CITY investors had their prayers answered today with share prices enjoying a better time after almost two weeks of losses, led higher by battered mining companies.

The appearance of a few hardy bargain-hunters was the cue market-makers had been waiting for and they responded with enthusiasm, marking prices higher. Despite fresh losses on Wall Street overnight and in Tokyo today, London was able to claw back some of its recent eye-popping losses.

The FTSE 100 index closed a whopping 146 to 5678.8 but remained well below this year's peak of 6137.1, reached on 21 April. The FTSE 250 index, made up of secondline companies, also enjoyed a respite, bouncing up 405.70 to 9234.3. Just a few weeks ago, it topped the 10,000 level for the first time.

The Dow future was indicating an opening rally when trading resumes in New York this afternoon, but the spectre of growing inflation and the prospect of further rises in US interest rates continue to weigh heavily on sentiment. It looks as if the American economy is slowing, and that will hit all of us.

Mining companies have borne the brunt of the recent sell-off. Some have lost almost a quarter of their value in the past 10 trading days, and there are fears they have further to fall.

Followers of the sector, which has boomed on the back of record prices for copper, gold and zinc, were making the most of it today. Copper miner Antofagasta rallied 183p to 2072p and there were also gains for BHP Billiton, 78½p to 1042p, and Kazakhmys, 124p to 1082½p.

Oil shares posted useful gains, having been in retreat for the past week on the back of falling crude prices. BP rose 25½p to 635p, Royal Dutch Shell 68p to 1837p and Cairn Energy 204p to 2187p.

Full-year pre-tax profits from Marks & Spencer were in line with expectations but the shares retreated 18p to 549p - making them the worst blue-chip performers, and well off their recent peak of 632p. Broker Seymour Pierce was cheered by the payout to shareholders and has lifted its full-year dividend forecast from 14.4p to 16.2p.

US broker Citigroup has repeated its buy rating and 635p target. M&S chairman Paul Myners has topped up his holding with 50,000 shares at 551½p, stretching his holding to 228,741, or less than 1%.

Plans for a £750m shareholder sweetener as BAA attempts to rebuff Spanish raider Ferrovial have been smoked out by the Takeover Panel. BAA, up 7p at 830p, was due to publish its detailed defence against a hostile bid led by Ferrovial to get its hands on Heathrow, Gatwick and Stansted airports at the end of this week.

But, following previous heavy hints by BAA's management, the City watchdog ordered the company to confirm speculation that it plans to hand back £750m in cash to shareholders.

The BAA plan comes just days after the Civil Aviation Authority warned it or any future owner of its airports not to load the business with unnecessary debt ahead of an expected £10bn, 10-year investment programme.

Oil explorer Soco International stood out with a jump of 175p to 1290p as investors were excited by prospects for the Golden Tuna oilfield off Vietnam, in which it has a 25% stake. The field, jointly operated with Petrovietnam and PTTEP of Thailand, is expected to come into production next year with an initial output of about 70,000 barrels a day.

The management shake-up at troubled parcels group Business Post continued today with finance director Peter Fitzwilliam out of the door and replaced by Steven Glew, latterly finance director at Mothercare but previously with 15 years' experience at Tesco.

That plus hopes Business Post's worst problems are behind it sent the shares up 31¾p to 379p. The company reported a 75% collapse in pre-tax profits to just £5m after almost £7m of restructuring costs.

The good news, however, is that subsidiary UK Mail, the fledgling rival to the Royal Mail which sends out bills and flyers for the likes of Royal Bank of Scotland and O2, delivered profits of £3.2m, up from breakeven in its start-up year. Broker Altium raised its rating on Business Post from sell to reduce.

Jubilee Platinum managed to apply the brakes, rallying 8½p to 68½p. The shares had struck a record 98¼p last month. Tests at its borehole DT6 in the Bushveld complex in South Africa are described as 'excellent'.

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