Market report: Wednesday close

By Mickey Clark for MailOnline
Updated: 12:06 EDT, 26 July 2006

THE SHARP rise in the price of copper is reaping rich dividends for the big mining companies.

That is the conclusion of broker Seymour Pierce, which expects copper to carry on climbing. It has raised its forecast on the metal to $2.80 a pound from $2.24.

In turn, it has upped its call on Antofagasta, ½p lower at 397½p, to buy and on Kazakhmys, ahead 14p at 1185p, to hold. Copper prices have also been buoyed by news that a landslide has hit output at a mine operated by Chile's Codelco, the world's largest producer.

Anglo-Swiss miner Xstrata jumped 11p to 2034p, having touched 2089p after Canadian regulators approved its £9.1bn offer for Falconbridge. But it still faces opposition from rival Inco, which has also tabled a bid.

The London market extended recent gains, underpinned by a strong finish on Wall Street over-night. Turnover remained at a low ebb but that allowed prices to be squeezed higher. The FTSE 100 index put on 25.9 points to 5877.1.

Reuters responded to betterthanexpected interim results with a rise of 19¼p to 396¾p. Pre-tax profits slumped from £142m to £123m as a result of continued heavy restructuring costs, but the payout to shareholders is still increased to 4.1p from 3.85p.

The news agency and financial information systems supplier is now forecasting revenue growth this year of 5%-6%. Broker Seymour Pierce has moved the shares from hold to outperform on the back of an encouraging performance by recent acquisition Core Plus.

Dealers also say Reuters should benefit from the squeeze on the sizeable bear position that has built up in the shares.

The prospect of improved margins has prompted French broker Société Générale to raise its rating on supermarkets group Wm Morrison, up 4p at 204p, from sell to buy with a 223p fair value. SocGen reckons the price war between the big four supermarkets has started to ease, which will allow them to start widening their margins.

Tesco gained 6p to 363½p on turnover of more than 40m shares after SocGen lifted its rating from sell to hold.

Colt Telecom was the biggest climber among second-liners, adding 6¾p at 127¾p after US broker Goldman Sachs raised the shares from sell to buy following a recent sharp fall in the price. The stock has dropped by 31.4% since 6 July, when Goldman added it to its list of sell recommendations.

Misys slipped 2p to 245½p after Deutsche Bank downgraded from buy to hold with a 235p target in the wake of yesterday's results. It has also downgraded Computacenter, 18¾p off at 230p, from hold to sell.

Goldplat recovers gold and platinum from mining waste products such as woodchip, fine carbon and grease. The company listed on Aim today following a placing of 20m shares at 7.5p. This has raised £1.5m and values the business at £7.8m.

The group benefits from laws in South Africa that force the mining operators to dispose of waste material in an environmentally friendly manner. Its customers include AngloGold Ashanti, Goldfields, Placer Dome, Harmony, Impala Platinum, Lonmin and Anglo Platinum. The shares settled at 8p.

Elsewhere on Aim, health and fitness group ADDleisure stood out with a rise of 0.5p to 2.38p after paying £562,500 to pick up 90% of Moments from founder Michael Warshaw. He receives 11.25m ADDleisure shares at 5p, and warrants equivalent to a further 3.5m shares at the same price.

Newmark Security firmed 0.13p to 1p after non-executive chairman Maurice Dwek bought a furtherm shares, lifting his holding to 39m, or 8.7% of the company.

Cluff Gold celebrated a positive drilling report with a gain of 7p to 77p. The report from its new satellite deposit at the Angovia gold project in the Côte d'Ivoire has 'surpassed' the company's expectations. Cluff added that the grades will enable it to 'significantly' add to the resource for Angovia.

Shares of Aspen Clean Energy were suspended on Aim at 7¾p pending an announcement.