One to take to the checkout

By Geoff Foster for MailOnline
Updated: 02:46 EDT, 17 October 2006

Considered a basket case when reporting a disastrous £312.9m loss last year, Wm Morrison is now a share that every fund manager wants to put in his or her trolley.

The UK's fourth-largest supermarket jumped 7½p to a year's peak of 258½p amid vague rumours of a hungry private equity player launching an opportunistic bid.

However, dealers said the rise was much more likely to be a rosy reflection of the group's growing recovery prospects as it is expected to bounce back this year with profits in the region of £250m.

UBS stirred up interest by increasing its target price to 285p from 255p in the wake of last month's impressive interim results. The broker believes its recovery is ahead of expectations.

The trial of the profitable small stores format should drive higher sales densities and profit. It says the industry has returned to grocery price inflation and all food retailers should enjoy stronger underlying growth.

New chief executive Marc Bolland has only just got his feet under the table and will need time to conjure up higher sales and lower costs. As for a bid, Sir Ken Morrison and family own 20% of the equity and will definitely never sell on the cheap.

There was a stampede of investors departing British Energy (133½p down at 427p) after the nuclear power generator said it was shutting down two nuclear reactors after finding cracks in boiler tubes.

Many switched funds into Drax which closed 35½p higher at 813½p. International Power added 5¾p to 338 ½p and Scottish Power 10½p to 685p.

The Footsie advanced 15.1 points to a five and a half year high of 6,172.4, while a recordbreaking Wall Street moved relentlessly towards the magic 12,000 level with an early gain of 13.7 points to 11,974.

Morgan Stanley remains bullish. It is not tempted to take profits and says because of falling inflation and rates, the valuation case for European equities is still good.

A firmer platinum price and vague takeover talk lifted Lonmin 110p to 2813p.

Lloyds TSB retreated from 595½p on profittaking to finish 2p easier at 579p after the UK's fifth biggest bank said it has no intention of selling its Scottish Widows insurance and fund management arm.

Other banks closed mixed. HBOS added 6p at 1104p but Barclays lost 1p at 722½p. Dealers looked on in envy as Banca Popolare Italiana said it was climbing into bed with Banca Popolare di Verona to create Italy's third largest retail bank in terms of the number of branches.

They still await a UK banking marriage which would surely set the heavyweight sector alight.

Top FTSE 250 performer was Wolfson Microelectronics, 22½p better at 466½p. The group, whose chips go into iPods, reports third-quarter figures next Tuesday. They should please and analysts will probably have to upgrade full-year forecasts.

Keith Birch's business software solutions provider Touchstone jumped 13p to 183p after saying interim results on November 15 will show continued good growth with turnover up by more than 35% on last year and trading profits over 25%.

Buying on consideration of the profits potential of its file sharing software, OnShare, helped Z Group rise 3p to 108p.

Despite positive studies showing that its revolutionary disinfectant does kill the deadly MRSA superbug in hospital wards, Byotrol eased ½p to 71p. Charles Stanley says buy and raised its target price by 20% to 120p.

After finding zinc at its Lessard property in East Canada, Landore Resources firmed 5/8p

Rumours that Jim Mellon was topping up his holding in the company accompanied a rise of 1½p to 23¼p in Billing Services on hefty turnover of 18.1m.

Shipwreck explorer Subsea Resources sank 8p to 25½p after warning that revenue from its Celia project will be delayed. It blamed problems with the ROVs - remotely operated vehicles - used to work its recovery system.

OMG (Oxford Metrics Group), producer of image understanding technology, gained 4p to 36p following an upbeat trading statement. The company has had a strong second half, with revenues ahead of expectations.

Broker Evolution upgraded its 2006 revenues forecast to £16.2m from £15m and its profit before tax estimate to £1.8m from £1.6m.

Support services company Carter & Carter rose 8p to 733p following record annual results. to 9⅝p.

• Early stage biotech company Immupharma added 1p to 57½p amid whispers that phase II trials of its IPP-201101 treatment for Lupus, the chronic rheumatic disease which affects joints, muscles and other parts of the body, have been successful.

If true, the FDA is expected to fast-track it through final trials. Analysts believe the potential market value could be between £2bn-£3bn.