Market report: Monday close
SUGAR giant Tate & Lyle stood out in a falling stock market on the prospect of a big newmarket being opened up for its artificial sweetener Sucralose.
Its shares led blue-chips higher with a jump of 18p to a new record of 685p after it emerged that Mexico and the US have settled a long-running trade dispute over the import of high fructose corn syrup.
This would result in the elimination of a 20% tax on all soft drinks made with sweeteners other than sugar cane. Mexico would, in turn, raise import quotas until December 2007 from 250,000 tons to 425,000 tons, a move brokers say would open up a huge new market to Sucralose that had been stifled by the 20% tax.
Several brokers were quick off the mark, raising their earnings forecasts for Tate. Goldman Sachs has lifted its six-month target price by 40p to 700p after raising next year's earnings estimate by 2% and that for 2008 by 6%. The broker said the move reflects the prospect of higher margins for the base business and Sucralose.
Goldman also expects further clarity on new initiatives accompanying the 'value added' seminar hosted by the group on 7 September. It says that although news of commercial Sucralose competition may hurt the share price, it reckons this is unlikely in the short-term.
Rival broker Evolution Securities has repeated its buy rating on Tate and set a two-year price target of 900p. ABN Amro, is also bullish about the outlook for the company.
Share prices generally chose to give back some of the big gains achieved last week, with Wall Street opening lower this afternoon.
Stronger-than-expected consumer credit and mortgage approvals have revived talk in the Square Mile that a quarter-point rise in interest rates will be delivered by the Bank of England's monetary policy committee later this week. The FTSE 100 index fell 46.6 to 5928.3 in another day of thin trading, while in New York the Dow was down 26.90 at 11,192.80.
Anglo-Swiss mining outfit Xstrata see-sawed through the session before trading 4p lower at 2297p amid mounting speculation that it may turn to shareholders to fund the contested acquisition of Canadian copper miner Falconbridge, where it has raised its stake to 24.5%.
Inco has chosen not to extend its offer for Falconbridge, which dealers say raises the odds on Xstrata's bid succeeding.
Goldman Sachs has raised its rating on Xtrata from neutral to buy while rival Merrill Lynch has added the shares to its prestigious 'Europe 1' list.
Severn Trent advanced 25p to 1298p following weekend reports it might become the target of a £5bn bid by private-equity outfits KKR and Apollo Management. Broker UBS has cut Seven Trent from buy to neutral following a strong performance by the shares.
It has also cut rival Kelda, 4p lighter at 832p, from neutral to reduce.
Drug supplier Shire rose 23½p to 863½p on further reflection on last week's interim numbers. UBS still rates Shire a buy but has slashed its target from from 1100p to 1010p.
Shares in Napo Pharma began trading on the big board at 8512p following a placing of shares at 83p which raised almost £12m. The company, which specialises in the development and sale of proprietary drugs in collaboration with local partners, is valued at £36m.
It is developing treatments to combat Aids diarrhoea, irritable bowel syndrome, cholera and paediatric diarrhoea. The price later settled at 90½p.
On Aim, shares of West 175 were suspended at 1.35p while the group negotiates a potential merger with a subsidiary of Hightex Group, a newly incorporated company which intends to apply to list its shares to Aim. Shareholders of West 175 would be offered shares in Hightex.
Also on Aim, shareholders of AdVal Group saw the value of their company sink as the price plunged 0.25p to 0.45p after the group again warned on difficult trading conditions.
It has reached agreements to sell off most of its businesses piecemeal. AdVal could no longer sustain the cost of trading its shares on Aim, although the individual trading subsidiaries were capable of trading profitably.
Games Workshop rose 6½p to 353p on learning that directors had been adding to their holdings. Chairman and chief executive Tom Kirby picked up a further 63,000 shares at 344.1p each, taking his total holding to 1.9m shares, or 6.1%.
Finance director Michael Sherwin has also bought 11,500 at the same price and he now owns 77,168, or less than 1% of the company.
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