Market report: Tuesday close

By Mickey Clark for MailOnline
Updated: 12:03 EDT, 10 July 2007

The value of little Northwest Biotherapeutics has more than doubled over the past two days as investors pin their hopes on the group's new vaccine DCVax to combat brain cancer.

Northwest shares topped $7 (£3.50) in New York overnight, having started the day in London at 102½p. Today, they closed up 74½p at 212½ in the Square Mile, a rise of 90p, having briefly touched 295p.

It follows news that DCVax had been cleared by the Swiss authorities for commercial use, and will be made available to patients later this year. DCVax is described as a major breakthrough in the fight against cancer because it uses the body's immune system.

Broker Collins Stewart has tipped the shares as a strong buy and jacked up its shortterm price target from 200p to 300p.

Shares generally were initially marked higher as they took their lead from a solid performance on Wall Street last night. But they never looked like maintaining the early momentum, and an absence of fresh takeover news soon saw prices come rattling back to leave the FTSE 100 index down 81.8 at 6630.9 in thin trading.

Early sentiment was bolstered by Marks & Spencer, which developed a bear squeeze as the price climbed 9p to 641½p following a better-than-expected trading statement. Numis Securities says trading has slowed during the first quarter but remains healthy.

Citigroup has repeated its buy rating and 780p target, saying the group has posted a resilient first-quarter performance in poor markets, which highlights another sharp gain in like-for-like sales of clothing. Charles Stanley has upgraded from reduce to hold but warns clients the outlook remains uncertain.

Unilever stood out with a jump of 31p to 1647p, while Cadbury Schweppes closed down 1p at 672p. Brokers are claiming that both companies may be due a re-rating on the back of French food group Danone's £8.4bn bid for Dutch rival Royal Numico.

Drax, Europe's biggest coal-fired powered generator, put on 3½p at 740½p. Goldman Sachs has raised the shares from neutral to buy because its says they look cheap compared with the price of oil, with which it is historically linked. The broker says this is explained by the oil price driving the gas price, which is the marginal fuel cost for power generation throughout the UK.

A broker's upgrade was good news for SABMiller, the world's second-biggest brewer. It rose 5p to 1278p after Lehman Brothers repeated its overweightrating and hoisted its target from 1230p to 1500p.

BHP Billiton fell 60p to 1483p amid mounting speculation that the world's biggest miner has started talks with private-equity firms looking for financial backing to make a £20bn takeover bid for Alcoa. BHP's favoured partner is reported to be Blackstone, which bought Hilton Hotels for $26bn (£13bn) last week. BHP has appointed Merrill Lynch to investigate bids for aluminium producers Alcoa and Alcan.

Shares in former England cricketer Phil Edmonds' White Nile continued to reel from last week's reports that it had been excluded from a consortium seeking oil in the Sudan, with the shares on the slide for the third day in a row. This time they dropped 4p to 81p in a tight market. The company is still seeking clarification from the South Sudanese Government, but the setback will be bad news for investors who recently subscribed for new shares at 100p.

HSBC has begun coverage of shares in international automotive retailer Inchcape, down 10½p at 485p, with an overweight rating and 615p.

The broker has based its recommendation on the fact that Inchcape is pushing into emerging markets at modest valuation and has developed a strong relationship with key manufacturers Audi, BMW, Honda, Mazda, Mercedes-Benz, PAG, Subaru, Toyota/Lexus and Volkswagen.

TAKING STOCK: market news at a glance

BANKING & FINANCE
Shareholders of Man Group have approved the disposal of its broking arm, MF Global Ltd, via an initial public offering to maximise future returns and growth opportunities. The UK's largest hedge fund operator said in March, that it planned to demerge its brokerage arm and list it on the New York Stock Exchange.

BUILDING & PROPERTY
Merrill Lynch was impressed with first-half results from St Modwen Properties but does not expect a repeat performance in the second half. The property developer brought forward a number of projects, and pre-tax profits of £17.3m included a £6.7m contribution from the sale of Northern Racing. The shares are held at neutral.

CONSUMER
Merrill Lynch remains a buyer of Aga Foodservices and has raised its target from 455p to 495p to update the value of a planned break-up of the group. Aga plans to split its foodservice operations from the consumer side of the business. Citigroup has also moved from hold to buy, saying international expansion should drive growth.

ENGINEERING
Hargreave Hale has bought 785,714 shares, or 4.40%, in Mount Engineering at 70p apiece - just days after the civil and environmental consultant floated on Aim. Mount Engineering was formed in April for the purpose of acquiring Mount (York) and its three subsidiaries Redapt Engineering, Hi-Flow Valves and Raxton.

HEALTH
JPMorgan has cut Shire from overweight to neutral because it thinks the shares are fully valued. It is also worried that the number of patients switching from Adderall XR to Vyvanse, the company's new treatment for attention deficit disorder, may disappoint. Brokers are forecasting sales of Vyvanse will reach $960m in 2009.

INDUSTRIALS
Tate & Lylewas far and away the best performer among blue-chips after Credit Suisse upgraded the shares from neutral to outperform and tweaked its target 10p higher to 640p. The broker points out the sugar group looks to have a better-quality earnings stream, but on under 12 times the group rating fails to reflect this.

LESIURE
Goldman Sachs has lifted its target for Game Group from 202p to 230p following last week's AGM. It says the hardware line-up from the computer games retailer will be even more impressive this year with items like Sony's Play Station 3 in free supply. The broker has repeated its buy rating and keeps the shares on its 'conviction buy' list.

MEDIA
ABN Amro describes the recent sell-off in Aegis as unwarranted, and has raised shares in the media group from neutral to buy while trimming its target from 155p to 150p. Aegis has dropped 10% since the start of the summer, but the broker says the concerns are overdone with the company's combination of business's strategically well-placed. KBC Peel Hunt remains a bull of Premier Oil after the company said it had found traces of oil at its Masimpur-3 well in Assam. Premier encountered problems drilling the well, and the broker says the shares are overpriced. But speculation about a discovery is wellfounded, and the short-term direction of the shares is likely to be positive.

RETAILING
Poor weather conditions have prompted HSBC to downgrade menswear retailer Next from neutral to underweight and to slash its target of 2300p to 2050p. The broker warns that even if the weather begins to behave the summer season is already a washout, and that the rains have obscured the fact consumer spending in on the wane.

SUPPORT SERVICES
Taylor Nelson Sofres received the thumbs-up for a bullish trading update. The market research specialist has pointed to a recovery in its weaker US business and strong growth in the UK and Asia Pacific, Latin America and the Middle East. But Bridgewell has been cautious since March and repeats its neutral rating.

TECHNOLOGY
Tulip Holdings has received irrevocable undertakings in respect of its revised cash offer of 156p a share for Trace Group amounting to 7.14m shares, or 50.08% of the company. Last month Microgen agreed an increased recommended cash offer of 180per share for Trace. But Tulip has no intention of lapsing or withdrawing its bid.

TELECOMS
The buzz in the City yesterday claimed Vodafone was looking to take advantage of Vietnam's plans to privatise its telecoms industry by making an acquisition. Seymour Pierce says mobile revenues will rise quickly given Vietnam's rapid economic growth. Vodafone remains the top pick in the sector for Morgan Stanley.

TRANSPORT
Panmure Gordon has upgraded British Airways from hold to buy with a 540p target and insists the airline should be able to defend its leading position in the premium market. Slot shortages at Heathrow, even after Terminal 5 comes into operation, mean it will be difficult and expensive for competitors to launch new services.

UTILITIES
Electricity suppliers will increasingly be buying their power on a 'just in time' basis, making prices volatile and vulnerable to spikes. That is good news for British Energy, says broker ABN Amro, which has a target of 792p on the stock offering from the low-cost nuclear generator - nearly 50% upside of the current price.