What with the heatwave, Wall Street being closed for the July 4 Independence Day holiday and rather less fevered takeover speculation than usual, investors decided it was time to sit back and take stock yesterday.
The mood was fairly directionless, with the FTSE 100 index ending the day down just 0.9 points at 5883.5. Volumes were thin, with 1.88bn shares traded.
Property groups were among the main risers, wanted for their defensive qualities and on hopes they will benefit from turning themselves into tax efficient real estate investment trusts. Hammerson closed 38p higher at £12.41, British Land was 37p better at £13.33 and Land Securities climbed 51p to £18.79.
There was little major corporate news but Associated British Foods rose 20.5p to 789.5p after announcing it was cutting 200 jobs with the closure of two of its six British sugar beet plants, a move welcomed by the stock market in its usual heartless fashion.
Analysts' research was behind several share price movements. Marks & Spencer climbed 11p to 598p after Goldman Sachs advised clients to buy and put a 691p target on the shares. It said it expected a trading statement on July 11 to lead to profit upgrades and forecast the company would reveal increases in like-for-like sales of 10% in general merchandise and 10.5% in food.
Vodafone was 1.25p better at 119p after Deutsche Bank moved its rating on the shares from hold to buy and increased its price target from 128p to 130p. Deutsche analysts said: "At the current level, the price reflects the difficult fundamentals the group faces and therefore we upgrade to buy."
Supermarket group Wm Morrison edged up 0.25p to 202p, despite the lack of any takeover news. HSBC bank said it was starting coverage of the business with an overweight rating and a 240p target but broker Panmure Gordon reiterated its sell rating and said it did not believe a private equity bid would emerge. "The price is too high, the cash flow is too weak and there are no disposable assets," Panmure said.
AstraZeneca lost 45p to £32.19 after ING cut its recommendation on the drug firm from buy to hold, saying the outlook was uncertain for the six key treatments the company has in its pipeline. Rival GlaxoSmithKline was 15p lower at £15.06. The company has signed an agreement with Futura Medical to develop the latter's impotence gel. Futura slipped 3.25p to 82.25p as it announced it was raising £2.5m at 78p a share to help fund its part of the development costs.
Northern Rock, the mortgage bank boosted by bid speculation on Monday, slipped 0.5p to £10.40p. Credit Suisse issued a buy note with a £11.50 target. It said a bid was "unlikely" but added that Northern Rock was one of the primary victims of the recent indiscriminate sell-off. Smith & Nephew, the replacement joint maker, lost 10.5p to 412.5p on continued reaction to last week's news it had received a US subpoena relating to a possible anti-trust investigation.
Boots fell 14p to 766p as shareholders voted through its proposed merger with Alliance Unichem, down 13p to 1015p. The Boots meeting lasted around 20 minutes, with 12 or so shareholders there and no questions.
Jardine Lloyd Thompson, Britain's biggest listed insurance broker, added 6.5p to 407p as it confirmed it was in talks to buy its smaller rival, Heath Lambert, while the payment card group Retail Decisions climbed 25p to 176p as it said it had received a number of "unsolicited approaches". One existing bidder has also increased its indicative offer.
Hotel group De Vere slipped 3p to 862.5p as hopes of a bid battle were dashed. AHG, an investment group headed by property entrepreneur Richard Balfour-Lynn, raised its offer to 875p a share, prompting private equity business Permira to announce it was dropping plans to make a rival offer.
More speculative was a 6.75p rise to 112.75p in Photo-Me International on talk of an imminent 130p-a-share bid for the photo booths firm. Meanwhile Alliance & Leicester slipped 18p to £11.49 on talk Crédit Agricole was losing interest in making a bid for the British bank.
On the broking and investment banking beat it was a tale of two companies. Corporate Synergy added 1p to 22.75p after an upbeat trading statement. The company is forecasting first-half profits of £1m on turnover of £8.8m and has £18m of cash in the bank, compared with its market capitalisation of £30m.
Meanwhile rival Panmure Gordon lost 18.5p to 164p after its own trading update, which talked of "satisfactory progress" but also mentioned "recent challenging market conditions".
BBI Holdings was 4p better at 109.5p after the maker of diagnostic tests paid £200,000 for Audiometrics and CDx, which distribute blood glucose meter readers for the visually impaired.
Among new arrivals, Nationwide Accident Repair, whose customers include Royal & Sun Alliance and Norwich Union, rose from its 111p placing price to 116.5p. Eros, the media group which distributes Bollywood films, climbed from 176p to 192.5p, while Tasty ended at 81.5p after seeing its shares placed at 52p. The group is the latest venture from the founders of the Ask restaurant chain and comprises three dim sum outlets.
In the post
DX Services, the postal group spun off from Hays in 2004, climbed 79.5p to 410p yesterday after it said it had received a takeover approach that could lead to a cash offer worth 415p a share. This would value the company at around £350m, although DX cautioned there was no certainty a bid would be made. Traders said DX would be very attractive to a private equity group. "It is a very stable business model in terms of revenues, it generates a lot of cash and there are opportunities to significantly increase the margins," said one. Deutsche Post and TNT were two other names in the frame. DX has reported a 19% fall in first-half operating profits and dropped any plans to become a universal postal operator in favour of focusing on key customers, including banks and law firms.