Market report: Monday close

By Mickey Clark for MailOnline
Updated:

 

The world's biggest mining company, BHP Billiton, is hoping to capitalise on the strong price of gold, which was trading today at close to its highest for almost 28 years.

The metal touched $739 an ounce on Friday as investors chose to use it as a hedge against shaky stock markets and an ailing dollar. Gold has been nudging better for much of the year and now stands 16% higher than it began 2007, with dealers forecasting the seventh consecutive year of price gains.

• How to invest in gold

So there would be no better time for the UK-based miner to announce it is sitting on the world's biggest gold resource at its Olympic Dam mine in South Australia. That was the word in Australia.

The mine already boasts the world's largest uranium reserve and an estimated 4430m tonnes of iron ore. The group has been operating up to 20 drilling rigs at a time to establish the true potential of the mine. BHP Billiton shares rose 98p to 1754p.

A strong show by other miners enabled the market to gain momentum. Xstrata jumped 145p to 3289p and Rio Tinto 155p to 4204p. The FTSE 100 index reversed an early fall to trade 9.2 higher at 6465.9.

Three companies making their debut as Footsie 100 constituents experienced differing fortunes. Tullow Oil fell 7p to 600p and Taylor Wimpey lost 16&frac75;p to 271p but Carphone Warehouse was down 3¼p at 368p.

Barclays dipped 17½p to 616p after Bear Stearns downgraded from peer perform to underperform as it fears a slowdown in growth at Barclays Capital following the subprime mortgage meltdown. The broker is not convinced Barclays' sector premium is justified, and rules out any bounce in the share price if its bid for ABN Amro fails.

Speculative buying drove Smiths Group 23p higher to 1050p. The aerospace-contractor is again seen as a potential break-up bid candidate after ending talks with GE about a joint venture. Credit Suisse has started the shares at outperform with a 1160p target, while Exane BNP Paribas has raised its rating from neutral to outperform and lifted its sights from 1070p to 1169p.

Morgan Stanley is cautious about the retail sector. It has repeated its underweight stance and 22p target on Woolworths, at its record low of 19¾p. It would also avoid retailers with a low profit margin. It retains its underweight rating on HMV, level today at 114¼p, and keeps its 100p target, WH Smith, 2p firmer at 380½p, with a 350p target, and Carphone Warehouse.

MS has overweight ratings on Burberry, 6½p better at 604p, with an 820p target, Marks & Spencer, up 25p at 592p (800p), and Next, 33p higher at 1969p (2450p).

City coverage and share tips

This is Money carries breaking City news throughout the day. Bookmark Companies & Markets and try these markets links...

Newspaper graphic and pen

Taking stock – Sectors at a glance

BANKING AND FINANCE
Brewin Dolphin chartist Richard Lake reckons after consulting his graphs that HSBC might be the first bank to turn bullish. His second-best pick is Barclays with Royal Bank of Scotland remaining the weakest of the top 10 biggest stocks.

BUILDING AND PROPERTY
Now could be a good time to sweep up at commercial floor-covering manufacturer James Halstead. It reports full-year profits a week today, and word is profits should be above market expectations on the back of strong second-half sales.

CONSUMER
Investors will expect Robert Wiseman to give a response on Thursday to the Office of Fair trading's finding that supermarkets and dairies have been fixing prices. The OFT will decide on punishment after it has heard companies' responses.

ENGINEERING
UBS predicts Electrocomponents will on Wednesday report strong second-half growth in the UK, where it is supported by robust manufacturing output trends. But investors should prepare for a slowdown in the US and Europe.

HEALTH
Look out for Synairgen on Wednesday. The asthma-treatment developer is expected to report an increased loss of £3m but there could be exciting developments on its treatments for chronic lung disease.

INDUSTRIALS
Next summer sees Manganese Bronze start production of vehicles in China for the Chinese market, and investors will want management to provide guidance about preparations alongside full-year figures on Wednesday. Broker Kaupthing is predicting a 29% rise in profits.

LEISURE
Investors will be anxious to hear if preliminary takeover talks for SCi Entertainment have come to anything when the computer games maker delivers full-year profits on Thursday. Backers are looking for at least 500p a share.

MEDIA
Emap may reveal new information about its strategic review when it updates the market on Thursday. Memorandums may already have been sent to interested parties, says UBS. It now thinks its 925p sum-oftheparts valuation may be conservative.

NATURAL RESOURCES
Nautical Petroleum should report a narrowing of losses a week tomorrow. Positive reports on its drilling programme could be the impetus the shares need. Analysts reckon a successful discovery could see the stock, languishing at 12p, rise to 30p.

RETAILING
A consumer downturn could be very uncomfortable for sofa maker SCS Upholstery, which reports full-year figures tomorrow. Panmure Gordon is warning that reports of recent sales improvements could prove a false dawn, and is repeating its sell call.

SUPPORT SERVICES
Tomorrow sees environmental consultancy White Young Green unveil full-year profits, with Brewin Dolphin pencilling in a healthy £15.8m compared with last year's £11.7m. Strong growth in the last few weeks of the year could see the figure exceed this.

TECHNOLOGY
A near-15% rise in worldwide demand for mobiles should benefit chipmaker ARM, says Credit Suisse. It adds that sales of midmarket and upmarket phones, which rely on ARM cores, are rising. It is repeating its overweight sector call.

TELECOMS
Netcall, the creator of call-centre software including Queuebuster, is expected to announce strong fullyear results on Wednesday, and may surprise with significant new contracts. It recently won a three-year deal with Cable & Wireless.

UTILITIES
Cathay Pacific is expected to make a $4bn (£2bn) bid for Shanghai-based China Eastern Airlines, opening a battle with Singapore Airlines and parent Temasek which have already offered HK$7.2bn (£458m) for a 15.7%.

TRANSPORT
Today is Drax's first outside the FTSE 100 and its new lower status is likely to be compounded by many investors switching to British Energy. Drax's production costs based on coal prices will be higher than its nuclear rival's.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most watched Money videos