Market report: Friday close

By This Is Money
Updated: 12:00 EDT, 30 March 2007

Share prices traded within a narrow range today as the first quarter drew to a close and the big City institutions took a look back at what has been a volatile few weeks on the stock market.

Turnover slowed to a trickle as investors began to balance their books and allowed themselves time to take a look at future strategy. As a result, the FTSE 100 index was left nursing a loss of 17.9 at 6306.3 although dealers reported little in the way of selling pressure.

Shares of steelmaker Corus were suspended at 607p now the takeover by Indian rival Tata Steel has been completed. Corus drops out of the Footsie 100 today, to be replaced by fund manager Schroders, down 12p at 1268p.

Stock market bears have caught a cold in Resolution following the breakdown in bid talks. The shares slumped 27p to 620½p on the news. The life assurer conceded in November it was looking for a buyer. It is reckoned to have had talks with rival Prudential, 3p better at 717½p, and Standard Life, up ¾p at 327p, but failed to agree a price.

Broker Collins Stewart has repeated its buy rating on Resolution and says the breakdown in talks will free the company to communicate its strategy to the market more clearly.

Vodafone was another big faller, losing 6.1p to 135.5p as boss Arun Sarin warned of a slump in margins at its UK mobile phone business. Talking to brokers in the City and Frankfurt today, Sarin warned of increased competition.

British Airways fell 12p to 486p as private-equity outfit Texas Pacific Group swooped on Spanish carrier Iberia. BA owns a stake in Iberia, and has first refusal on the sale of another sizeable minority stake. But BA must now rethink any plans it had for a tieup with Iberia.

Alliance Boots was ½p lower at 1026½p on news of the improved terms from Kohlberg Kravis Roberts and its own deputy chairman Stefano Pessina, who owns 15% of the shares.

Dresdner Kleinwort has downgraded BSS, 5¼p adrift at 483¼p, from buy to add on valuation grounds in the wake of yesterday's strong trading update. But the target price has been raised from 500p to 524p.

The broker says BSS performed well last year in terms of organic growth and with the benefit of recent acquisitions and this trend looks set to continue. It has raised its pre-tax profit forecasts by £1m, with a £600,000 increase for the following year.

Venture capitalist and investment manager Braveheart Investment Group was among more than half a dozen companies to make their public debut on Aim today following a placing of 3.99m shares by Panmure Gordon at 160p, valuing the company at £21.45m. The shares started trading at 162½p and touched 174p.

Also making its debut was Equable Propertiesthe commercial property investor and latest vehicle of Desmond Bloom. A total of 111m shares were placed at 1.4p and the price more than doubled to 2¾p. The group has also made its first acquisition with the purchase of 10 pubs for £4.5m.

Aim-listed Dominion Petroleum, up 4p at 28p, has signed the production sharing agreement for the development of the offshore Block 7 oil prospect in Tanzania. It forged the deal with the government of Tanzania and state-run Tanzanian Petroleum Development. Block 7 covers 8500 sq km. Dominion will spend at least $8.75m (£4.5m) to hunt for oil on the site over a four-year period. In clinching the deal, Dominion fought off some fierce competition from the likes of oil giant Chevron and Brazil's state-owned Petrobras.

Clapham House advanced 9½p to 319½p on the back of a bullish trading update. Altium Securities says trading was in line with expectations, but emphasised that the pipeline for new restaurant sites remained strong. The company is raising £4.3m by way of a placing at 300p. Altium has repeated its buy rating.

TAKING STOCK

BANKING AND FINANCE
Amvescap is locked in a legal battle with Deutsche Bank, alleging it poached 16 employees from its fixedincome team. Evolution says the defections are serious for the fund manager. Fixed-income handles about $100bn (£51bn) of the $500bn under management. Amvescap has been winning new money in this area.

BUILDING AND PROPERTY
Land Securities is to move into the housebuilding sector. The office developer's huge departure will see it build the housing element of the Ebbsfleet regeneration in north Kent. The company has opted to go it alone on the contract rather than tie up in a joint venture with a housebuilder, Building magazine reports today.

CONSUMER
Panmure Gordon has raised Tate & Lyle from sell to hold on the back of yesterday's trading update. The sugar giant said trading had been in line with market expectations and had continued to comfortably exceed the same period last year. This follows January's profits warning, which was blamed on slower growth of Sucralose sales.

ENGINEERING
Panmure Gordon has repeated its buy rating and 535p target on VT after the shipbuilder and support services group said trading for the year to 31 March had been 'in line with board expectations'. It has seen continued growth throughout its support services businesses. The broker says there is 13% upside to its 535p target.

HEALTH
Drugs discovery firm VASTox says its chief executive Steven Lee has paid £12,900 for 10,000 extra shares at 129p each. That lifts his total holding to 158,148 shares, or less than 1% of the company. VASTox revealed this week that Roche, Bayer and Merz will present scientific data gathered using its Zebrafish technology platform.

INDUSTRIALS
A bidding war may be about to break out over Spanish fag maker Altadis, which is the target of a £7bn offer from Imperial. Altadis shares were marked higher on the Spanish bourse yesterday amid claims rival British American Tobaccomay team up with venture capitalists CVC Capital, Cinven and PAI over a possible bid for Altadis.

LEISURE
The House of Lords decision to block 17 new casinos under the Gambling Act could be good news for Rank Group. Investec says the Government may now separate the 16 small and large casinos from the supercasino, which will reduce the competitive impact on Rank and restrict supply into the market. The broker has repeated its buy rating.

MEDIA
Californiabnaires Ron Burkle and Eli Broad today increased to $8.2bn (£4.2bn) their takeover offer for US newspapers and television giant Tribune, owner of the Los Angeles Times, Chicago Tribune and a host of TV companies. The deal tops a rival bid from Chicago property titan Sam Zell.

NATURAL RESOURCES
First Calgary Petroleums is raising C$152.4m (£55.2m) through the issue of 30m shares at C$5.08 each. The AIM-listed oil and gas company said the net proceeds will be used to fund its 2007 capital budget and as working capital. It needs to raise more than £500m to extract gas reserves from its venture in the Algerian desert.

RETAIL
WestLB has repeated its reduce holding on Kingfisher following news of last year's drop in profits. The broker says the current premium rating for the shares, and the uncertainties in France - where fourth-quarter margins were down 200 basis points - prevent it from taking a positive view of the stock at this stage.

SUPPORT SERVICES
A better-than-expected trading update from Compass received well-rounded praise from the City and indicated the independent caterer may have turned the corner. Credit Suisse has upgraded from neutral to outperform and raised its target from 285p to 370p. Merrill Lynch is pleased that so much progress has been made on margins.

TECHNOLOGY
Citigroup has begun coverage of Sandvine with a buy rating and 190p target. It says growth in the broadband and internet protocol in cable and telecom networks should drive growth in demand for the group's Deep Packet Inspection-based solutions. Sandvine helps residential broadband providers manage network security.

TELECOMS
Vodafone boss Arun Sarin has begun a series of broker presentations at which he will make known the impact on profits of growing competition on the UK and German arms and the need to reduce costs. He must convince that Vodafone is not neglecting two of its biggest markets following the purchase of India's Hutchison Essar.

TRANSPORT
The rail regulator's quarterly report shows all the UK rail sectors achieved growth in passenger kilometres, total passenger journeys and revenue in the third quarter of 2006 compared with the year before. Long-distance passenger kilometres and journeys increased by 7% and 7.2% respectively, between the third quarters of 2005-6 and 2006-7.

UTILITIES
National Grid's latest trading update has revealed rising costs and debts now totalling £11.8bn. It overshadowed reassurances that operating profits will be up when the group unveils full-year figures in May. UBS appears unimpressed and has repeated its neutral rating, warning the higher costs and debts will hurt the shares.