Market report: Thursday close

 

THE popping of champagne corks could be heard at the offices of Slough Estates today as its shares nudged towards their record high with a rise of 12p to 655p.

The property developer and investment company will tomorrow join the elite club of bluechip companies that makes up the FTSE 100 index. Slough gains entry because of the vacancy left by the completion of a £7bn merger between chemists chain Boots and drugs distributor Alliance UniChem.

At last night's close, it was the biggest company in terms of market capitalisation on the reserve list created following last month's regular quarterly review of the Footsie's constituents. The shares have come up from a low of 559p since the start of the year, driven by soaring commercial property prices and rents.

As a result, Slough boasts a price tag of more than £3bn. Its entry into the top flight enables consultancy outfit RPS, ¾p lighter at 223¼p, to move from the FTSE Small Cap index to the FTSE 250 index. Promotion often brings a reward in that professional investors such as tracker funds have to increase their weightings, and that drives up the share price.

The FTSE 100 was enjoying another positive performance today, rising 52.4 points to 5929.5 after taking its lead from the Far East where shares were chased higher. Mike Lenhoff, chief strategist at broker Brewin Dolphin, is upbeat about prospects for the market. He says the charts indicate that the rebound from the June low is no dead cat bounce but the real McCoy.

The US economy may be slowing but the global economy is still charging at full tilt. That is good news for the top 100 companies, which between them derive about 70% of their sales overseas.

Sentiment was also bolstered by positive trading statements from leading companies such as Rolls-Royce, up 21¼p at 442¾p, Royal Dutch Shell, 41p higher at 1981p, and Kingfisher, 8¼p better at 244¾p. Even Smith & Nephew jumped 30¾p to 462¾p as better-than-expected second-quarter profit forced the bears to cover their positions.

Drugs giant AstraZeneca, down 111p at 3209p, came in for profit-taking after pleasing the City with interim numbers. Rival Glaxo-SmithKline continued to lose ground in the wake of yesterday's quarterly results, the shares dropping 22p to 1485p, even though Glaxo enjoyed a solid performance on the face of it, claiming it was close to perfecting a vaccine for the killer bird flu H5N1.

Seymour Pierce has kept its buy rating on the shares but says profits fell below forecast because of high research and development investment. Rival broker Morgan Stanley has repeated its overweight rating but describes the guidance on earnings as conservative.

Mortgage lender Northern Rock fell 21½p to 1106½p in the wake of yesterday's half-year results. Pre-tax profits rose 13% and the company was confident about the remainder of the year, even though mortgage arrears had started to rise.

Goldman Sachs has raised its target from 1108p to 1167p with a neutral rating while Merrill Lynch has a buy rating. WestLB remains a seller although it has grudgingly raised its target to 950p. UBS drops from neutral to reduce and has lowered its sights from 1110p to 1040p.

Troubled sportswear retailer JJB Sports, which has made a series of profit warnings in recent years, marked time at 180p. The group says underlying sales rose in the first half, but this was accompanied by a further decline in profit margins. The group also warned there was no sign competition in the UK sports retail market was easing.

Group revenue, including that from health clubs, increased 11.6% in the 25 weeks to 23 July from the same period last year.

News of a reduction in pre-tax losses to £2.6m from £2.9m losses lifted Aim-listed technology investor Angle by 8½p to 79½p. Chairman Hance Fullerton said: 'During the year to April next year, we expect strong progress in both our existing portfolio and our pipeline.'

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