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Pause in dollar's freefall gives Icap a lift

This article is more than 17 years old

A pause in the dollar's freefall gave a lift to Icap, the interdealer broker.

Its shares have been under pressure recently as investors fretted about the effect of a weak US currency on its transatlantic operations.

But traders pointed out the company hedges its dollar exposure, and today the shares recovered 16.75p to 462p. Sentiment was also helped by news the company had bought back 2m of its own shares yesterday at 444.86p each. Icap said it would buy back more shares "in the near term ... in recognition of the recent weakness in [the] share price".

Elsewhere retailers were in the spotlight. Woolworth investors - including Icelandic raider Baugur - might have wished otherwise. Shares in the high street retailer slumped 2.75p to 34p - a 7.5% drop - after it warned full-year profits would be at the lower end of analysts' expectations after like-for-like sales in the last 18 weeks fell 6.5%. This is not good news in the run up to Christmas, a crucial trading period.

Even the mighty Tesco disappointed. Its shares lost 4p to 393.5p despite third-quarter sales meeting expectations. Analysts said the market usually expected Tesco to beat forecasts, and took offence when this did not happen.

Morrisons Supermarkets, down 4.25p to 257.5p, and Sainsbury, 3.5p lower at 400p, were caught in the fallout.

Debenhams was also under pressure. It lost 0.5p to 184.5p - well below the 195p flotation price earlier this year. Anecdotal evidence suggested its sales in recent weeks were down some 17%.

Despite the retail rollercoaster, the overall market managed to move higher. The FTSE 100 index closed 36 points higher at 6086.4, while the 250 climbed 82.2 points to 10834.1.

Among the risers was copper miner Antofagasta, up 23.25p to 530p on vague bid talk.

Mobile phone retailer Carphone Warehouse rose 20.75p to 291.75p after the company met Merrill Lynch analysts on Monday, who were said to have come away impressed.

Whitbread was 13p higher at £15.81, as it just managed to achieve promotion to the FTSE 100 index. It came in at position 91, making it just eligible at the expense of British Energy.

Whitbread's shares have been lifted in recent weeks by takeover talk. There have been suggestions that US group Starwood had taken a 3% stake but so far no official announcement has come to confirm that. Credit Agricole has built up a 4.35% shareholding, and some traders believe that some of this is in the form of contracts for difference and may conceal a potential predator. Others say Credit Agricole maintains the shares are held for its own benefit, to gain tax benefits from Whitbread's proposed £350m return to shareholders.

Whitbread itself has been reshaped into four divisions - Premier Travel Inns, pub restaurants, David Lloyd Leisure centres and Costa Coffee - by chief executive Alan Parker and finance director Chris Rogers.

Other FTSE changes include the promotion to the FTSE 250 of Ashmore, Hochschild Mining, UK Coal and UK Commmercial Property Trust. Those demoted are Wolfson Microelectronics, Whatman, Photo-Me International, and Computacenter.

All the changes need to be ratified by FTSE tomorrow.

Oil giant Royal Dutch Shell added 28p to £18.04. A hefty note from ABN Amro suggests the company should merge, either with BP or Total. "In our opinion, the creation of an oil mega-major would generate important strategic and financial benefits for the companies and significant value for shareholders," wrote ABN.

"BP-Royal Dutch Shell and Royal Dutch Shell-Total are feasible combinations. The regulatory responses to both would be manageable.

"Despite the need to divest some downstream activities, we believe the synergy potential of both combinations would be material, with pre-tax cost savings and revenue enhancements of up to $10.3bn per annum."

The bottom line is ABN is recommending a buy with a £21.50 target price. It says this could rise to £30 in the event of a merger.

Still with broker notes, Vodafone jumped 3.25p to 138.25p as Goldman Sachs added the mobile phone operator to its buy list. The company holds an investor day tomorrow on its emerging markets businesses.

Advertising giant WPP rose 21p to 688p after Panmure and UBS made positive noises.

But HSBC was in the doldrums. The banks shares fell 14p to 923p after it said profits for the third quarter were up on a year ago but underlying revenue growth had slowed from the first half.

Drinks group Britvic added 3.5p to 248.5p despite seven directors and managers immediately cashing in some of the performance related shares they were awarded on Friday.

Meanwhile speciality plastics group Victrex was in demand, up 55.5p to 757.5p after a 31% rise in full-year profits, while Phil Edmonds' Central African Mining and Exploration Company moved from a half-year loss of £573,000 into a £10.4m profit and saw its shares climb 2.5p to 67.25p.

But Enodis, which makes ovens for MacDonalds, fell 5.5p to 196.5p after Aga Foodservice said it had decided not to make an offer for the company after all.

Lower down the market, nurseries and overseas schools group Nord Anglia jumped 22p to 260p. The company, which recently saw off predatory interest from investor Bryan Myerson, is set to join the Small Cap index when the changes are announced tomorrow, prompting tracker funds to top up their holdings. There was also a bullish note from Investec, which suggested a sum-of-the-parts valuation of 300p a share.

Car retailer European Motor Holdings accelerated 73.25p to 478p after confirming reports it was in takeover talks, with Robert Tchenguiz, Inchcape and Lookers all mentioned as possible predators.

Accuma, the financial group which specialises in individual voluntary arrangements, added 12.5p to 238.5p. Traders said it had recently made an upbeat presentation to Teather & Greenwood.

Finally, not only did the Aussies win the test match, their investors also got first dibs on an upbeat trading statement from investment group Henderson. The company said it had been asked by the Australian Stock Exchange if it was aware of any reasons why its shares - which are also listed there - had moved higher recently. It said not, but after further queries, issued an update saying it had made good progress in the 2006, and expected profits to be between £78m and £82m, compared to £63.4m last year.

The shares climbed 6.75p to 127.75p, but analysts at Altium repeated their sell recommendation and 100p target, saying they could see no more than modest top line growth from the company.

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