Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:00 EDT, 26 April 2007

An attempt by the London stock market to make the most of Wall Street's record-breaking overnight performance, which saw the Dow breach 13,000 for the first time, appeared to be ending in failure today.

Share prices in the City initially climbed back above 6500, buoyed by the continuing takeover activity and talk of more to come. Strong gains in Asian markets added to the mix.

The FTSE 100 index touched 6511.1 at one stage but was unable to maintain the early pace, and profit-taking on Wall Street eventually left it nursing a fall of 0.5 at 6461.1. The Dow was down 2.90 to 13,087 this afternoon.

Earlier in the day, Marks & Spencer was carried to record highs, touching 750p as more than 18m shares changed hands. Dealers say stock shortages may be fuelling the gains.

But the price compares favourably with the 400p billionaire retailer Sir Philip Green was prepared to offer a few years back. Its lead was later pared back to 12½p at 741p.

Trading updates lifted Amvescap 23p to 600½p and Reckitt Benckiser 147p to 2775p. Slough Estates boiled over with the price shading 14p to 757p.

This was despite talk that it could become a bid target for the likes of rival British Land, which is selling off part of its holding in the Meadowhall shopping centre in Sheffield. Word is the proceeds could be used to snap up Slough, which is currently valued at £3.63bn.

Caterer Compass lost an early lead to trade 1¾p down at 358½p despite a 24% jump in profits at its biggest rival, Sodexho Alliance in France. Sodexho is bullish about the outcome for the year with the help of strong performances in the UK and Ireland.

Microchip developer ARM Holdings rose 8¼p to 139¾p despite a drop in first-quarter profits from £24.7m to £21.6m. The group is upbeat about prospects for the remainder of the year and intends to step up its share buyback programme.

Morgan Stanley has repeated its equalweight rating on Rolls-Royce, down 2p at 484½p. It has also jacked up its target price from 450p to 550p although it warns the next move may be down, because of its exposure to the weaker dollar.

The broker reckons that, with a payout to shareholders likely early next year, it would be a buyer at 450p and below. It sees 40% upside to 685p in a bull scenario, with global air traffic, aided by Open Skies, potentially lifting civil after-market revenues.

But the shares could fall 20% to 390p if there is a sustained two dollars to the pound, global economic slowdown, market share weakness and higher material costs causing growth to stagnate.

Wellstream Holdings made a successful debut after a placing of 67m shares at 320p, which valued it at £214.5m. The group, which designs and makes flexible pipeline for the offshore oil and gas industry, started life at 350p before settling at 358p.

Candover Partners sold 43.6m shares leaving it with 13.8% of the shares, while HBOS has sold a further 1.5m.

TAKING STOCK: Market news in brief

BANKING & FINANCE
Deutsche Bank has downgraded Northern Rock from hold to sell, complaining that mortgage spreads remain under pressure in the UK. This will lead to a decline in return on tangible equity. Deutsche has also slashed its 12-month target from 1250p to 980p.

CONSUMER
UBS has raised its target for Britvic from 330p to 360p after the soft drinks supplier chose to outsource its secondary retail distribution and vendor and chilling re-manufacturing. The broker reckons such a move will lead to an 8% upgrade of 2009 earnings estimates to £53.4m.

HEALTH
Chief executive Stephen Jones has bought an extra 5500 shares in Aimlisted drugmaker Syntopix at an average price of 177p each. Jones still holds less than 1% of the company, which makes medicines for the treatment of dermatological diseases.

LEISURE
Ladbrokes stood out amid talk that an offer worth 550p a share may be on the cards. Word is the bookie may soon find itself the target of yet another privateequity outfit. Previous approaches in 2005 and last year ended in failure. This time it is linked with Apax Partners.

NATURAL RESOURCES
Platinum is expected to reach $1450 an ounce this year on positive investor sentiment and strong fundamentals, according to precious metal consultancy GFMS. The outlook for palladium is also bright, even though Russian stock sales are expected to tip the metal into a surplus.

RETAILING
Panmure Gordon says the stock market entry of Sports Direct has been a disaster. Value remains well hidden, so the broker has cut its pre-tax profit forecasts for the next three years by between 10% and 20%. It rates the shares a buy but warns that they lack a short-term catalyst.

SUPPORT SERVICES
Hays traded at a high for the year after Goldman Sachs raised it rating from neutral to buy, saying the City underestimates the recruitment group's growth potential. The broker says Hays' rating is currently pricing in only 1% growth in its UK business from 2009 onward.

TELECOMS
Filtronic has sold its remaining 2.6% stake in Powerwave for £10.2m. raising proceeds from the sale of 17.7m Powerwave shares to £53.4m. Filtroni receivedthe shares and $185m (£92.5m) cash in exchange for its wireless infrastructure last year.