Retailers were in the spotlight yesterday as leading shares looked for - but failed to find - a convincing direction after another turbulent week.
Marks & Spencer added 18.5p to 573p as analysts at Deutsche Bank said the 13% fall in the retailer's share price was a buying opportunity. M&S is the broker's top pick in the European general retail sector, with a buy recommendation and a 655p target.
The bank was putting its money where its mouth was, as its investment arm separately told the company it had edged its stake up from 3.35% to 3.37%.
The Deutsche analysts also upgraded their stance on J Sainsbury from sell to hold, but their target of 300p is still below the current market price of 323p, up 2p. And broker Panmure Gordon was more negative, telling clients it was not optimistic about the supermarket's prospects for growing margins, and advising them to sell the shares.
Meanwhile Wm Morrison climbed 4.75p to 199.25p as takeover talk refused to die down. Nearly 50m shares were traded - slightly more than on Thursday, which in turn was higher than for the past three weeks - as dealers speculated on a bid at 240p a share. Attention has turned, almost inevitably, to Baugur, the Icelandic firm which seems to be buying up most of the British high street. Analysts said it would be a good time to pounce on Morrisons, before new chief executive Marc Bolland, from Heineken, starts work.
MFI rose 1.5p to 107.75p amid continuing speculation over the future of its loss-making retail operation. Several private equity groups are now understood to have expressed an interest in the business, including Apax Partners, Argyll and John Moulton's Alchemy, but MFI will have to pay them, possibly up to £200m, to take it away. What form any takeover might take is unclear as a result of the group's £150m pension deficit. The fund's trustees would need to approve any deal.
Richard Ratner, analyst at Seymour Pierce, yesterday upgraded the shares from a sell to hold on the basis that a deal is imminent, but provided four different valuations ranging from 70p to 130p depending on what sort of deal, if any, is eventually done.
There were reports yesterday that Gary Favell, the chief executive of Wyevale Garden Centres and former boss at Magnet was being courted by the private equity groups to run MFI Retail on their behalf.
Overall the market reversed its earlier gains after some key US figures came in worse than expected and miners fell back after an upbeat start.
The FTSE 100 index initially rose around 80 points, following the lead of Wall Street on Thursday night and Asian markets yesterday morning. The US market had been buoyed by upbeat comments from US Federal Reserve chairman Ben Bernanke on Thursday night.
But the Bernanke effect soon wore off after a stronger than expected University of Michigan consumer confidence indicator yesterday afternoon. Wall Street went into decline and dragged London down with it. By the close the FTSE 100 index had lost 21.9 points to 5,597.4. Volume was heavy with 3.4bn shares traded. The index has fallen around 58 points over what has proved to be a volatile week, but this has encompassed a 100 point fall on Tuesday, and a 112 point rise on Thursday.
Mining stocks fell back after China said it was taking measures to try and cap its booming economy, with BHP Billiton closing 22p lower at 960p.
Vodafone slipped 1.5p to 114.5p as Credit Suisse drew investors' attention to increased competition in Spain, one of the most profitable European markets for mobile phone companies. The broker estimates that the emergence of rival Xfera and mobile virtual network operators, plus planned cuts in international roaming charges after regulatory intervention, could slow Vodafone's growth in the country from 20% to 2%.
Industrial group Brambles lost 8.5p to 415.25p awaiting news of the disposal of its Cleanaway and industrial services division.
Scottish Power was the leading riser in the top 100 index, up 21.5p to 577.5p after Morgan Stanley issued an upbeat note following a presentation from the power company.
SThree, a staffing company specialising in the communication and technology industries, led the FTSE 250 higher, up 15.75p to 300p after Bridgewell repeated its buy recommendation on the business and set a 350p target.
Lower down the market, overseas property specialist Medsea Estates rose 1p to 19.25p after it issued an upbeat annual meeting statement.
But jewellery manufacturing and distribution group Abbeycrest fell 4.25p to 15p as it returned from a five-week share suspension. The company has sold its Leeds headquarters and UK distribution centre for £3.3m, using the proceeds to repay its debts to HSBC.
The company admitted it would soon have run out of working capital, and without raising money through the disposals would have gone into administration. It now has new bankers in the form of Burdale Financial and said it had sufficient working capital to last it the next 12 months.
Out of the dark
There was some action yesterday at MicroEmissive Displays, whose light emitting displays are used in cameras and mobile phones. Its shares slumped 33.5p to 40.5p as word went round that a seller had got rid of around 300,000 shares - 1% of the company - to a marketmaker at 34p a share, less than half the prevailing price. Traders tried to identify the mystery seller, with Axa Investment Management mentioned. This was soon dismissed so attention turned to Cambridge Display Technology, although this was later said to be unlikely. Whoever has baled out has pushed the price below the 47p level which equates to the amount of cash per share the company has in the bank. Company followers were perplexed and maintained there was no particular bad news on the cards.