Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:00 EDT, 1 February 2007

Good shares cost less at J Sainsbury. Just ask the investors who snapped up a large slug of the Sainsbury family holding on Friday, worth £176m.

They are reckoned to have paid about 430p for the 40m shares, but saw the price rise a further 11½p to 445¼p today - just off its all-time high.

The sale, by the blind trust of former science minister Lord Sainsbury of Turville to settle contracts entered into with a leading investment bank, reduces the family's holding by 238.3m shares, or 13.89%.

Whispers that a large share sale by the Sainsbury family was planned had been doing the rounds for some days. Even last year, there had been talk that the whole Sainsbury family stake would eventually be sold to a potential bidder.

In recent weeks, bid speculation has resurfaced at the UK's third largest supermarket retailer, which carries a price tag of more than £8bn. But City speculators point out that any bidder would need to get the family on its side before making a move.

Meanwhile, stock market bears were feeling the squeeze as prices in London raced sharply higher in thin trading. It followed a near 100-point overnight rise on Wall Street, where the Federal Reserve chose to peg interest rates at 5.25%, and strong demand for shares in Asian markets this morning.

At one point, all the companies that make up the FTSE 100 index were showing gains on the day, powering it to a rise of 79.1 points to 6282.2. Wall Street extended its gains this afternoon with the Dow rising 14.60 to 12,636.30.

Sentiment in London was bolstered by strong profit numbers from Royal Dutch Shell, which responded by rising 33p to 1739p.

Building supplies group Wolseley perked up with a rise of 34p to 1352p following positive comments on the US economy by the Fed. A big slug of Wolseley's profits are generated in the depressed US housing market.

Satellite broadcaster BSkyB gained 21p to 567p after Lehman Brothers raised its rating from equal weight to overweight on valuation grounds. Rival broker UBS says BSkyB deserves a re-rating while Merrill Lynch has also set a target of 650p on the back of the latest trading update.

Note the heavy turnover in Rentokil Initial, which saw almost 20m shares change hands as the price shaded ½p to 160¾p. This included a line of 5.1m at 160¼p and a further 1.7m at the same price.

Debt management consultant Accuma rallied 4p to 86½p after giving further details of current trading in the wake of Friday's profits warning that left its shares sharply lower.

The group confessed the number of individual voluntary arrangements it arranges had fallen sharply. It blames this on an unsuccessful marketing campaign and growing resistance from banks.

It remains confident business will pick up this year. The average number of IVAs it arranged during the past three months dropped from 271 a month to 221.

Broker Numis Securities has slashed its target for Accuma from 450p to 150p and reduced its pre-tax profit forecast for the year from £10m to £8.5m.

TAKING STOCK: Sectors at a glance

BANKING AND FINANCE
Dresdner Kleinwort has raised Amvescap from hold to buy and its target from 535p to 675p. The fund manager posts full-year numbers in a couple of weeks with a further £25.6m of cost cuts earmarked for 2007.

BUILDING AND PROPERTY
As residential mortgage competition grows, Kensington has moved into related areas such as second mortgages, self-certified prime mortgages and buy-to-let. Altium says this should ease margin erosion, and rates the share a hold.

CONSUMER
Sony Ericsson is to make mobile phones in India with manufacturers Flextronics and Foxconn. It will produce basic colour and midlevel music-enabled phones for local distribution in one of the fastest growing mobile markets.

ECONOMICS
The Federal Reserve opted to freeze US interest rates last night and markets today seized on its view that inflation was easing, suggesting rates will be cut later in the year. There was little concern over Fed comments about 'somewhat firmer' economic growth.

ENGINEERING
Smiths Group's trading update failed to match expectations. The detection and special engineering units were stronger, but themedical arm was weaker. Panmure Gordon has repeated its buy rating, citing currency factors.

HEALTH
Oxford BioMedica attracted support on talk it may be getting together with GlaxoSmithKline or Pfizer on a project. The biotech recently said it was in talks with four potential partners about developing its Trovax cancer vaccine.

INDUSTRIALS
ITM Power was chased higher despite first-half losses widening from £910,000 to £1.42m. Broker Ambrian continues to rate the alternative energy innovator a buy with a short-term target of 320p and two-year view of 1000p.

LEISURE
Luminar is fast turning into a leisure-industry powerhouse, says Panmure Gordon. The nightclubs operator has 125 of the best sites around the country. The broker has a target of 850p, up 16% on current levels, but says the stock could go as high as 1100p.

MEDIA
JPMorgan has downgraded Pearson from overweight to underweight in its publishing review. It reckons Pearson's sale of the Financial Times, high peer-group margins and sustained leverage seem already discounted in the shares.

NATURAL RESOURCES
Serica Energy has been awarded two offshore licences in Norway. One includes the Bream oil discovery in the north. The other includes blocks 18/10-1 in the south. Oriel Securities has repeated its buy on Serica.

RETAILING
Carpetright was looking threadbare yesterday as the shares struggled to hold above 1200p. After a strong performance in November, the retailer has admitted slower sales growth. UBS has cut from buy to neutral with a 1350p target.

SUPPORT SERVICES
Fallout continues from the boardroom bust-up at Mears Group. Chairman Bob Holt is taking over as chief executive following the departure of Stuart Black and pledges to grow the social housing services group. He has resigned as a non-executive director of Sportingbet.

TECHNOLOGY
Deutsche Bank has raised banking and healthcare software specialist Misys from hold to buy. The shares have risen sharply from a low of 185p after September's profit warning. Deutsche has jacked up its target from 190p to 300p.

TELECOMS
Goldman Sachs has repeated its buy rating on Vodafone after betterthan-expected third-quarter subscriber numbers. The mobile phones giant has picked up nine million new customers, taking the total to 200m.

TRANSPORT
Lehman Brothers has cut cruise operators Carnival and Royal Caribbean from overweight to equal weight blaming a full valulation and weakness in the Cariibean market. Packages there bring agents less than higher-end cruises.

UTILITIES
Talk of a takeover or management buyout powered Kelda and the rest of the water sector. The Yorkshire Water group is seen as vulnerable following the £8bn sale of Thames Water to Australia'sMacquarie. Dealers say there is always cash for infrastructure investment.