Market report: Thursday close

 

The odds on Dulux paint maker ICI remaining independent by the end of this year lengthened considerably today as speculative buying pushed the price up 6¼p to a record 461p.

Holland's Akzo Nobel, which heads the list of likely bidders, today said it was in talks to sell its Organon BioSciences division for about £6bn instead of pushing ahead with plans to float it separately. Preliminary bids for Organon are expected to be in by the middle of the month.

City speculators say Akzo will use the money raised to turn its fire on ICI, regarded as vulnerable to takeover following the disposal of Quest for £1.2bn last year.

The proceeds from that sale were used to reduce debt and tackle the group's pension deficit, and dealers say the move has made ICI attractive to bidders.

Shares generally gave back some of their recent gains after an unconvincing performance on Wall Street overnight. The FTSE 100 index fell 32 to 6287, undermined by another sell-off of the miners on the back of softer copper prices.

Xstrata slumped 97p to 2320p, Kazakhmys 47p to 1040p and Vedanta Resources 40p to 1118p. BHP Billiton shed 33p to 900p after it had to close parts of its nickel mines in western Australia because of heavy rains brought about by tropical storm Isobel.

Clothing retailer Next responded to a Christmas trading update that was better than the City had expected with a rise of 9p to 1856p. The sentiment spilled over into Marks & Spencer, up ½p at 736p.

Private-equity group Blackstone scooped a £127.5m jackpot today after flogging off part of its holding in healthcare group Southern Cross, which responded with a jump of 26¼p to a record 345p on turnover of 46m shares, making it the best performer among second-liners.

Blackstone and funds it advises have begun placing 40m shares, or 21.3% of the company, via an accelerated bookbuilding exercise through US broker Morgan Stanley at 318¾p.

Blackstone and the funds continue to hold about 46m shares. The UK's largest provider of nursing care was floated last July, and recently reported a maiden loss of £17.4m.

It was full steam ahead for shares in luxury cruise line operator Carnival, which helped lead blue-chips higher with a rise of 32p to a record 2713p.

Morgan Stanley of the US has joined other brokers in singing the group's praises, repeating its overweight rating for the shares while jacking up its price target from 2750p to 3150p.

Morgan says the target reflects Carnival's recent better-than-expected fourth-quarter results and outlook. It pointed out the company is now among the cheapest stocks in the sector following a material de-rating of cruise operators.

An overnight fall in the oil price to a six-week lows-ignalled a sell-off among second-line oil companies. Venture Production fell 47p to 827½p, Burren Energy 44½p to 844½p and Petrofac 14¾p to 381½p.

Building products distributor Heywood Williams, was down 3½p at 108p after warning that its North American business faced 'difficult' conditions in the second half.

Mickey Clark's markets at a glance...

BANKING AND FINANCE

UBS says Barclays outperformed by 12% in 2006 and it expects a similar showing in 2007. Bradford & Bingley should continue to grow, Royal Bank of Scotland remains cheapest and HSBC is a mix of defence and value.

BUILDING AND PROPERTY

Goldman Sachs expects bid talk to underpin builder Berkeley. But it has repeated its neutral rating and cut its target from 1700p to 1500p to reflect the group's planned B share repurchase. Further buybacks are scheduled for next year and 2010.

CONSUMER

Storms in the US have resulted in 10ft snowdrifts, leaving thousands of cattle trapped without food or water, whichmay drive beef prices higher. The National Guard in Colorado has been throwing cattle bundles of hay out of helicopters.

ECONOMICS

Consumer confidence fell in December, but so did people's willingness to save as pessimism over the economy and reluctance to make purchases grew. The GfK NOP Consumer Confidence index slipped a point to eight in December, one higher than a year ago.

ENGINEERING

Bank of America downgraded General Motors to sell because redesigned cars are the only thing holding up prices. It said GM charges too much for cars and trucks, with stocks growing and fewer redesigns expected 2008-10.


BLOG: Time for another share crash


HEALTH

Nomura Code says the outlook for Evolutec is unclear after disappointing trials for its rEV131 inflammation treatment for use after cataract surgery. The broker warns the trial leaves little value in the company.

INDUSTRIALS

Sony has settled its legal dispute with Eastman Kodak. The photographic supplier had accused Sony of 10 patent infringements relating to digital photo technology. The companies have now entered a cross-licence agreement.

MEDIA

Panmure Gordon can find little to cheer about the performance of Trinity Mirror short-term and has downgraded to sell, cutting its target from 500p to 430p. The Mirror group newspapers publisher's recent trading update offered little inspiration.

NATURAL RESOURCES

Dragon Oil's Cheleken Contract Area off Turkmenistan has a production level of 28,025 barrels of oil a day. The oil and gas producer has commissioned its first
wellhead and production platform in Cheleken's LAM field.

RETAILING

ABN Amro has begun coverage of furniture retailer Land of Leather with a buy rating and 380p target. It says there is scope for improvement in the shares as the group delivers on its potential to build scale through new stores.

SUPPORT SERVICES

Dresdner Kleinwort says problems at WS Atkins' Metronet underground maintenance subsidiary have overshadowed an encouraging overall performance. The broker has moved from add to buy and raised its sights from 915p to 938p.

TECHNOLOGY In-car entertainment group Armour hit a 10-month high after reaching agreement with Lenbrook of Canada to distribute its NAD electronics and PSB speakers. PSB is best-known for its music and home cinema speakers.

TELECOMS

Dresdner Kleinwort fears CSR could lose Bluetooth market share if it is snared in a Washington Research Foundation lawsuit against Matsushita, Samsung and Nokia accusing them of infringing patents by using CSR chips. It rates CSR a sell.

TRANSPORT

Former National Express rail chief Nick Brown is to run the Docklands Light Railway. Brown, who last year quit as the director of strategy at National Express, has been appointed chief executive of DLR owner Serco's rail businesses.

UTILITIES

India's own Oil and Natural Gas Corporation had admitted that it is talking to a number of multinational exploration companies, including the UK's BG Group, about their taking stakes in its deepwater exploration blocks off the Indian coast.

LEISURE

No-frills airline easyJet is launching weekly flights to Ibiza from Glasgow, Belfast and Bristol this summer. The services will operate throughout the peak summer months. Flights from Glasgow take off on 16 June, and fromBelfast and Bristol in July.

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