Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:16 EDT, 2 August 2007

Traders were braced for a further sell-off of shares on both sides of the Atlantic after it emerged that last night's big rally by the Dow Jones Average in New York was all a big mistake.

Today it emerged that an error by a fat-fingered trader in the futures market was behind the dramatic last-gasp rally which carried the Dow 150 points higher in just 25 minutes. It seems that a bozo at one of the big Wall Street houses sold 5400 contracts in the wider-based S&P Future, instead of 54.

He then had to race round and cover his short position, thereby driving prices sharply higher in the thin trading conditions.

But the result was that London opened on a positive note today as investors tried to claw back some of yesterday's hefty losses while bringing a bit of much-needed stability to the market in general.

The FTSE 100 index rose 49.73 points to 6300.30, but with Wall Street showing signs of volatility in early trading this afternoon, traders were decidedly nervous.

One market-maker commented: 'The problem is investors are reluctant to get deeply involved. If you are lucky enough to pick up stock, then it's unlikely you will be able to unwind your position later. Trading conditions really are that thin.'

The decision by the Bank of England's monetary policy committee not to raise interest rates for the second consecutive month came as no real surprise. But brokers say that despite five rises since August, a further quarter point has been written in before the year-end.

Dealers gave the thumbs-up to results from Unilever, 64p dearer at 1568p, but they were far from impressed with the delay in Mitchells & Butlers' joint property venture with financier Robert Tchenguiz. The shares responded with a fall of 35p to 713p.

British Airways bounced back with a rise of 17½p to 403¾p, despite being dubbed Europe's worst major airline in a report by the Association of European Airlines. The shares took a drubbing yesterday after the company was fined £270m by regulators after admitting to price-fixing over fuel surcharges.

Brokers say the company may now become the target of class actions by customers.

Servoca marked time at 37½p after buying Windsor Recruitment from Vantis Group for an initial £1.37m cash. It says the deal will increase the breadth of its recruitment business. The staffing and recruitment services specialist said a deferred payment of not more than £300,000 will be made and it expects the acquisition to be earnings enhancing. Servoca says its performance since inception on 7 June is in line with expectations.

Computer software services specialist Civica fell 41p to 214p after bid talks with Jon Moulton's privateequity outfit Alchemy Partners were abandoned. Civica blamed the breakdown on the uncertainty in debt markets, but assured shareholders current trading was in line with its expectations.

Anite Group rose ½p to 83½p after Bridgewell Securities raised its target price from 115p to 123p because it believes there is scope for a 50% improvement in the price. The broker has a strong buy recommendation on the shares and believes management and the board will focus on unlocking this value. Anite is currently its highest conviction idea in the sector.

TAKING STOCK: Market news in brief

Banking & finance
The outlook for mortgage lender HBOS worries Collins Stewart. Yesterday's full-year pre-tax profits lived up to expectations but the management is talking about a controlled slowdown in commercial property over the next year.

Building & construction
A survey by Fitch says the UK is the third most vulnerable economy to rises in interest rates after New Zealand and Denmark, due to high levels of consumer debt. Variable-rate mortgages, common in Britain, increase the risk says Fitch.

Citigroup has downgraded baker Greggs from buy to hold and cut its target from 5190p to 5100p, despite strong interim results this week. The second-half earnings outlook will suffer from tougher competition and rising costs.

Economy
More than eight million Britons are in serious debt and a quarter of them struggle to meet their monthly repayments, says a survey by debt consultancy Thomas Charles. Around 18% have amassed more than £10,000 in unsecured debt, such as credit cards.

Engineering
Car parts and building products maker Tomkins will report weaker second-quarter results tomorrow, hit by a weak dollar and depressed US housing market. Around threequarters of Tomkins' sales are generated in North America.

Health
Northwest Biotherapeutics has been accused of infringing patents involving gene expression technology. Rival Lonza Group has filed a complaint in a Delaware court. Northwest denies the claim relating to its DCVax-Brain product.

Industrials
Brokers appear divided over prospects for Morgan Crucible following yesterday's interim results. Bridgewell described it as a mixed bag and keeps the shares at neutral. Citigroup has repeated its buy rating and 320p target.

Leisure
Aim-listed independent music publisher Music Copyright Solutions has signed a long-term exclusive agreement to administer the music-publishing interests of film entertainment producer MarVista Entertainment Inc. Financial terms were not disclosed.

Media
Fitch Ratings has repeated WPP's long-term issuer default at BBB+ to reflect its position as the world's largest global advertising company, improving operations and conservative accounting. WPPs senior unsecured rating remains at BBB+.

Natural resources
Citigroup accuses Clipper Windpower of gaining a reputation for missing earnings guidance. It follows Tuesday's updatewhich saw it lower its manufacturing guidance from 250 units to 181. The broker has slashed its target from 1080p to 625p.

Retailers
UBS has cut its price target for B&Q DIY retailer Kingfisher from 280p to 235p to reflect stock market declines, a modest increase in its yield assumption on freehold property and downgraded forecasts. It is sticking with its neutral rating.

Support services
Recruitment specialist Lorienhas received an £18.62m offer (100p a share) from rival Contracting Solutions. Bob Morton was recently appointed non-executive chairman of Lorien after his company Southwind upped its stake to 40%, but a mandatory offer of 40p failed.

Technology
First-quarter trading is slightly ahead of operating budgets at CML Microsystems. The chip-maker is confident of improved full-year results. Chairman George Curry is to step down as managing director next month for health reasons.

Telecoms
AT&T is investing $250m (£125m) to upgrade fibre-optic networks, broadband services and internet technologies in South Carolina. It will also allow America's largest communications group to provide TV services to local residents.

Transport
UBS has taken the £350m fine levied on British Airways for price-fixing long-haul fuel surcharges in its stride. It says the fine is consistent with the provision already taken and has no plans to alter its buy rating and 650p target.

Utilities
Kelda's Yorkshire Water division performed in line with expectations during the second quarter despite exceptionally high levels of rainfall in June and July and flooding in many areas. The flooding affected operations, but notKelda's financial performance.