Market report: Wednesday close

By Mickey Clark for MailOnline
Updated:

 

Cairn Energy's brief reign as a blue-chip company will come to an abrupt halt today with the oil explorer's poor share-price performance resulting in it being dropped as a constituent of the FTSE's top 100 companies.

The FTSE steering committee, meeting tonight, is expected to rubber-stamp the regular quarterly reshuffle, which will see Cairn's place taken by fund manager Schroders.

Putting it bluntly, Cairn, with proven reserves of more than threebn barrels of oil in Rajasthan, has failed to live up to expectations since its entry to the Footsie in September 2004. Despite the recent demerger of its Indian interests, the shares have slumped from 2433p last year. Today, they were 23p dearer at 1599p.

Schroders, up 26½p at 1132p, has enjoyed renewed support after a strong showing by the stock market in the year to date, and is currently valued at £3.15bn.

Richard Lake, a chartist with broker Brewin Dolphin, has his money riding on Schroders or Punch Taverns to replace Cairn. Punch, up 12p at 1130p, is valued at £2.96bn. Aberdeen Asset Managers, on the other hand, picks Daily Mail and General Trust, owner of the Evening Standard, to replace Cairn. DMGT rose 14p to 808½p.

PayPoint, 12p up at 580p, is expected to lose its place in the FTSE 250 index, and is likely to be replaced by BlueBay Asset Management, up 7p at 361p.

The rest of the market clawed its way back, having been on the slide again for much of the day. Modest gains on Wall Street this afternoon assisted with the turnaround and lifted the FTSE 100 index 18 points to close at 6156.5, while the Dow rose 11.20 to 21,218.80.

In fairness to London, it was weighed down by a long list of companies going ex-dividend - the equivalent of a 32-point fall.

They included Aviva, down 8½p at 760½p after coughing up a 19p dividend, Barclays, off 12½p at 718p (20.5p), Persimmon, 6p better at 1379p (32p), Lloyds TSB, 24½p cheaper at 539p (23½p), Rio Tinto, 22p higher at 2713p (32.6p), Royal Bank of Scotland, 60p down at 2099p (66.4p), and Standard Chartered, 5p easier at 1399p (50.21p).

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Power generator Drax firmed 14p to 728½p despite Goldman Sachs removing it from its must-buy list ahead of results.

Some large parcels of stock were on offer. Citigroup placed a line of six million WH Smith at 380p as the retailer retreated 5p to 380¼p. Citigroup was also behind a placing of 6.5m shares in bookie William Hill, 1p down at 618p, and five million in Yell, no change at 585½p.

The property sector received a boost from US investment bank JPMorgan. It has included Great Portland, 32p dearer at 755½p, and British Land, 48p higher at 1518p, as its top plays in the European market. It also singled out Liberty International, 25p better at 1225p, and Land Securities, up 56p at 2067p, as looking cheap.

Acambis has ousted chief executive Gordon Cameron after a decade with the vaccines specialist, and announced moves to cut costs by a fifth. Cameron will be replaced by Ian Garland, who joins from Arrow Therapeutics, bought last year by AstraZeneca for £78m. The Acambis share price responded with a rise of 7½p to 127p.

TAKING STOCK: Sectors at a glance

Finance & banking
Collins Stewart starts coverage of Allied Irish Banks with a trading sell despite its 25% growth, reported yesterday. The broker says AIB shares sell at a premium to those of RBS and Barclays yet yield 1% less on the dividend.

Housing & builders
Redrow's half-year results yesterday were in line with expectations. Dresdner Kleinwort continues to sell the shares but has conceded a price target rise from 419p to 436p. Cazenove has repeated its in-line rating.

Consumer
First Choice Holidays says this summer is looking brighter than it did in December. But today's AGM heard that summer revenues are flat against last year, with bookings down 5%. The firm is to buy four more planes.

Economics
The unwinding of yen carry trades - blamed for much of last week's global stock market volatility - are 'technical position adjustments' by investors who have been too complacent about risk-taking, Bank of Japan Deputy Governor Kazumasa Iwata said.

Stock market information

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Financial data - newspaper and pen

Engineering
Black cab maker Manganese Bronze is on track to meet its profit forecast, supported by progress at its Chinese joint venture and the debut of its TX4 cab. MB says it was astonished by the 40% leap in TX4 sales in its second quarter.

Health
Japan is spending £30.4m increasing its stockpile of Tamiflu to protect against bird flu. It has already bought enough of the drug from Swiss drugmaker Roche to treat 25m patients for five days.

Industrials
Imperial Tobacco gave up ground as takeover talk fizzled out. BAT chief executive Paul Adams has reportedly ruled out an offer because he reckons Imps and Spanish cigarette producer Altadis are both too expensive to buy.

Leisure
Whispers claim US private-equity company Fortress Investments is poised to offer 275p a share for struggling music publisher EMI, which has issued two profit warnings this year, and last week rejected an indicative 260p cash offer from arch-rival Warner.

Media
Medal Entertainment & Media has warned of pre-tax losses of £1m for the year to 31 March 2007. The TV production company blames lower-than-forecast sales at its UGD/Britannia Music and DD Home Entertainment businesses.

Natural resources
Another £190m has been added to Imperial Energy's value of £447m after proven oil reserves at Tomsk, western Siberia, were jacked up by 150% to 803m barrels. Total reserves are forecast at 3.37bn.

Retailing
Galiformwas lifted by betterthanexpected full-year profits yesterday. Just as well seeing Travis Perkins has ruled out a bid for the Howdens joinery business which used to be part of MFI. Dresdner Kleinwort remains a buyer.

Support services
Charles Stanley has begun coverage of specialist datacentre services provider IX Europe with a buy rating and a 105p target. The shares have performed strongly since floating last April. Despite that the City has failed to grasp the extent of its operational gearing.

Technology
Panmure Gordon has raised Psion from hold to buy despite yesterday's dip in profits from £10.5m to £7.6m. ABN Amro also has a buy rating and says firm action by the mobile computer specialist's management is paying off.

Telecoms
Spirent Communications cancelled 20.2m shares yesterday to shrink the total number in issue. Dealers say the telecoms equipment supplier has been a weak market of late The shares are now starting to look oversold.

Transport
Bmi, part-owned by Lufthansa and Sweden's SAS, is cutting jobs at regional airline BMED, which it recently bought for £30m and which runs Middle East and Africa services for British Airways. Staff at the Derbyshire HQ face the axe.

Utilities
Strong profits at International Power have prompted Dresdner Kleinwort to raise its rating from reduce to hold. It says IP has extracted more value from its UK portfolio, but the boost to domestic and US earnings from lower commodity prices may be temporary.

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