Market report: Thursday close

By Tom Nicholls
Updated: 12:16 EDT, 21 September 2006

Could Compass, the world's biggest caterer, be set for a break-up? Traders were giving the theory some credence today, sending shares up 7¾p to 272¼p.

What with UN procurement scandals, sales shortfalls in Iraq and a long-winded boardroom succession saga, Compass has had a shocking 18 months. Some analysts think the business has got too big to manage and could be better value if sold off into its constituent parts.

Newly appointed chief executive Richard Cousins has a lot to do to win hearts and minds, but most considered a break-up unlikely so soon into his new regime. The company has denied it is on the agenda, but that did not stop the share-trading action.

The FTSE 100 index climbed 9.5 points to 5875.7, encouraged by a 72.28-point surge by the Dow yesterday to 11,613.19, after the US Federal Reserve kept short-term interest rates on hold as expected.

Wm Morrison led the charge with a 18p rise to 251½p after topping earnings forecasts.

Miner Anglo American was among the Footsie leaders, adding 55p to 2195p amid talk of a stakebuilding operation by a Chinese mining firm. Rio Tinto was 41p better at 2468p and Antofagasta climbed 8p to 443¼p.

Toward the other end of the scale British Energy was 5½p weaker at 568½p. But Collins Stewart analyst Lakis Athanasiou, who a fortnight ago predicted the recent dive in the stock, says the sell-off is overdone.

He reckons the bad news of falling output, because of unplanned power-station outages, and volatile electricity prices this winter are factored into the price. He is revising his price target down to 630p from 670p but rates the stock a buy, not least because of the chances of a 57p dividend for this year, the first payout since near-bankruptcy four years ago.

Cable & Wireless was bid up 1¾p to 131½p after the telecoms group raised performance targets for its international unit. Briefing analysts and investors today on its overseas outlook, it said it was 'well-placed not just to meet the competition in our markets, but to beat it'.

Kelda, which owns Yorkshire Water, was 4½p better at 854p on rumours an infrastructure fund may be targeting the utility. Anglian Water owner AWG, up 16p to 1535p, said a week ago that it had been approached by an unnamed party.

Investors were having a punt on Sportingbet, up 5&12;p at 187p, on the back of a report that new chief executive Andrew McIver will not be deterred from taking on the US market despite the arrest in New York two weeks ago of chairman Peter Dicks on a charge of gambling by computer.

He has since resigned. PartyGaming was 2½p firmer at 103&frac50;p despite a UBS downgrade. Cutting its target price to 75p from 135p, the broker forecast a decline in new-customer growth and a fall in revenues and profits.

Peter Hambro Mining added 6p to 1049p after reporting a 6% rise in gold production in the first six months of the year. Operating profits soared 148% to $20m (£10.6m), and chairman Peter Hambro was upbeat about the trading outlook, with production ahead of group forecasts and the gold price still propped up by fears of stagflation and geopolitical instability.