Market report: Friday close

By Sarah Marks for MailOnline
Updated: 12:10 EDT, 20 October 2006

Rio Tinto injected fresh momentum into the mining-sector rally today with news that it plans a massive expansion in the fertiliser industry.

The shares added 23p to 2818p, leading the miners higher after revealing it is poised to ask the Argentinians for permission to develop a huge potash mine in the Argentinian Andes and transportation links to the sea.

Brazil, China and India are major potash importers, and the new mine would make Argentina the world's fifth-largest producer. Potash from the mine would not be on the market until 2009 and the project is expected to cost between $750m (£400m) and $800m.

Leading shares got off to a strong start with heavyweight petrol producers BP and Royal Dutch Shell cheered by higher oil prices.

However, after racing up to within a whisker of 6200 points following the expiry of futures contracts in the morning, the FTSE 100 steadily gave up all its gains to close 0.8 points lower at 6155.2. The negative sentiment was enforced by a poor opening on Wall Street, where disappointing figures from Caterpillar saw the Dow Jones tumble 39.70 points to 11,972.

In London, British Energy was 21½p lower at 448p on pessimistic comments from analysts at Cazenove while Corus slipped 5p to 473½p as hopes of a counterbid faded.

The lack of autumn shoppers saw clothing retailers struggling to make headway, with Next down 15p at 1842p and Marks & Spencer 1p higher at 646p.

Fears that Hanson would be rocked by last night's profit warning from US peer Martin Marietta Materials proved unfounded with the buildingmaterials conglomerate slipping just ½p to 752½p. Traders dismissed vague bid talk as stock-puffing from those anxious to see off any Marietta influence on the stock.

Hammerson led the Footsie climbers with a 34p gain to 1335p following a well-received investor presentation in Paris. Standard Chartered was 9p higher at 1425p on talk that Dubai government investment agency Istithmar is looking to top up its 2.7% stake.

Financial Times-to-Penguin publisher Pearson has suffered from market scepticism about its ability to cut costs and drive through efficiencies. But Goldman Sachs analysts say this means any good news on this could have a positive impact on the shares.

They were encouraging clients to buy ahead of Pearson's trading statement at the end of the month, and their bullish support saw it race up 7p to 784½p. Outside the blue-chips, Arla Foods UK was 7p stronger at 65p on the back of talks with its majority Danish shareholder, also called Arla Foods, which could see the Danish company buy out the remaining 49% of the Lurpak-to-Anchor business in the UK.

Investors alarmed by the storm in a cappuccino cup that is the leadership battle at Coffee Republic could consider moving their beans to Coffeeheaven, the eastern European chain.

The share price has fallen 15% in the past fortnight and remains at 28½p. Analysts at Numis reckon this has created an ideal buying opportunity.

It suspects a trading update, due on 14 November, will be 'very strong and could lead to forecast upgrades' while Coffeeheaven could be a takeover opportunity for the largest branded coffee bar chains wanting to break into new European markets.

Wolfson Microelectronics lost more than a third of its stock market value after a profit warning devastated investor confidence.

The shares plunged 166¾p to 279p as the chip designer warned fourth-quarter profits are likely to fall 'materially short of expectations'. Bridgewell downgraded Wolfson to neutral from overweight but saw 400p as a justifiable price.

Monterrico Metals soared 52½p to 313½p after the Peru-based miner said it had received a preliminary approach. The company, capitalised at just under £70m, reported losses of £2.2m in the half-year to September.