News that British Airways had managed to avert this week's strike action at the last minute gave a lift to the airline's shares yesterday. They climbed 14.5p to 542p despite BA admitting there would still be some disruption to flights.
The shares were also helped by a positive note from UBS, which upped its price target from 600p to 650p. UBS said the share price weakness was an opportunity to buy, given that the recent fall in oil prices had not yet been factored in to profit forecasts for the airline.
With media stocks also in investors' sights, leading shares managed to end the day in positive territory. The FTSE 100 index added 11.9 points to 6239.9, aided by a positive start on Wall Street after another financial bid - Merrill Lynch's $1.8bn deal to buy First Republic Bank. But there was still some nervousness ahead of tomorrow's meeting of the US Federal Reserve, even though most economists expect the Americans to leave interest rates on hold.
UK retail sales grew more than expected in January, according to figures from the CBI, raising the spectre of yet higher interest rates on this side of the pond. However, many economists said the January spending spree simply showed that the effects of the recent rate rise had yet to filter through to consumers.
Among the media risers, Yellow Pages owner Yell Group climbed 9p to 608p after Merrill Lynch raised its recommendation from neutral to buy and set a 670p price target. Merrill said a recent regulatory review in the UK had been favourable for the company and the share price undervalued growth prospects in the US.
Merrill also boosted WPP, up 6p to 742.5p. It raised its price target from 690p to 810p and repeated its buy recommendation, saying the advertising company should be a core holding for investors in the media sector partly because it provided relatively safe earnings growth. Panmure Gordon also did its bit, issuing an upbeat note after reported comments from WPP's chief executive, Sir Martin Sorrell, at the Davos conference last week, when he was said to be talking optimistically about 2006/07 trading.
The positive mood among media stocks even extended as far as ITV, up 1p to 106.75p, and BSkyB, 5.5p better at 544p.
Prudential slipped 4.5p to 698p after an initial boost on the surprise news it is selling its loss-making internet bank Egg. Citigroup is paying £575m for the business, a lot less than has been suggested in the past. The move could leave Pru more vulnerable to a bid, although some traders believe the company could itself turn predator with Resolution, up 6.5p to 660.5p, one potential target.
Debt advice companies were under the cosh after Friday's profit warnings from Accuma and - after the market shut - Debt Free Direct. Investors sent the latter's shares tumbling 148p to 267p, Accuma was 20.5p weaker at 84.5p, Debtmatters lost 66p to 163p, and Debts.co.uk fell 12.5p to 118.5p even though it issued an upbeat trading statement yesterday.
J Sainsbury slipped 5p to 432.5p after Morgan Stanley placed 13m shares. Traders noted that Lord Sainsbury can soon sell his stake in the family business, should he so desire, which some investors are hoping will trigger a bid approach.
Alliance Boots fell 4.5p to 816.5p after unveiling a joint venture in China with Guangzhou Pharmaceutical. Analysts seemed unimpressed by the announcement, with Seymour Pierce, Evolution Securities and Panmure Gordon all advising clients to sell the shares.
SABMiller fell 13p to £11.70 after Goldman Sachs cut its rating from buy to neutral and reduced its price target from £12.40 to £12.20. There was also some talk that Altria may be considering a sale of its 28% stake in the brewer as part of a more general restructuring.
Bodycote International, up sharply on Friday on talk of a possible 300p-a-share offer from private equity group Apax, fell back 5.75p to 255.5p. But Evolution Securities said the bid speculation, whether accurate or not, highlighted the value of the engineering company's portfolio of businesses.
Up yesterday on vague bid speculation was Smiths Group, 28.5p better at 1079.5p. The company is selling its aerospace business, leaving its medical and engineering businesses attractive to predators, according to analysts.
Telecoms technology group Filtronic lost 13.25p to 177.75p on news it plans to return £10m cash to shareholders by the end of March and a further amount in October. This initial amount equates to 13p a share, when some in the City had been hoping for 100p. Panmure Gordon said it expected the October distribution would represent the bulk of the cash return. The broker added that Filtronic's remaining businesses had performed in line with expectations, apart from US defence, which may be sold before the year end. Panmure is sticking with its buy recommendation and 222p price target.
IPSA Group jumped 10.5p to 58.5p. The power company is in talks to try and cut a deal to sell electricity to South African customers to help ease the country's energy supply problems.
Bumpy ride
Investors in technology company Dicom have had a bumpy ride recently. The company, which helps businesses to catalogue and store their information by digitising printed documents, has seen its shares fall from around 270p in October to 216p, up 4p yesterday. But ahead of second quarter results due next Tuesday, house broker Bridgewell said it believed the recent share price weakness was "well overdone". It believed the figures to be in line with its expectations - revenues up 7% to £45.7m and earnings unchanged at £5.2m. "Dicom will have been in possession of the second quarter numbers for some time now," said the broker. "In the past when it has needed to provide an update it has done so within a week of the period close."