Market report: Monday close

 

There was some good news for frazzled stock-market investors as the final quarter got under way today.

Goldman Sachs has repeated its year-end target of 6833 for the FTSE 100 index, an improvement of almost 6% on current levels and somewhat better than the bears had predicted in the wake of the credit crunch.

The US broking house is telling clients to buy large-capitalised stocks, taking advantage of low valuation dispersion and avoiding consumer exposure.

'We are overweight in mining, telecoms and drugs; underweight in consumer industries,' it says. Goldman also forecasts 4.2% profits growth next year. 'Our model suggests the market looks fair value at current levels and therefore we expect price returns to reflect profits growth,' it adds.

Even so, early sentiment suffered from news of big subprime mortgage write-offs at Citigroup and UBS. As a result, investors experienced another helter-skelter performance. Shares opened lower, but quickly rallied, only to come off again later in the day.

It took a strong start to trading on Wall Street this afternoon to steady the nerves and drag prices back into positive territory. The FTSE 100 index rose 39.4 to 6466.8 - its highest since 24 July. In New York, the Dow surged 101.60 to 13,997.20 on the back of better-than-expected US manufacturing numbers.

The market also had to contend with a number of downgradesby brokers. JPMorgan has cut its target for WPP, down 2p at 660p, from 894p to 807p after taking an increasingly cautious stance for the US next year, and beyond. But it continues to repeat an overweight rating.

Northern Rock tumbled 47.1p to a new low of 132.1p as a takeover at a higher price now seems unlikely.

Waste disposal group Biffa rose 19p to 240½p despite warning that it expects the performance of its waste-collection division to fall short of the same period last year. It emphasised the division's overall performance for the year was likely to be in line. Seymour Pierce says the results are in line and has maintained its outperform rating and 280p.

Shares of Aim-listed Ubet2Win were suspended at 0.2p. The racecourse operator and online bookmaker says its first-half results have not been completed, so trading in its shares have been suspended pending publication of the results.

Chief executive Francis French said there had been big losses in the six months to end-June, with the company 'unable to develop as planned'. It has had to close a number of operations, reflecting the reduced level of turnover.

French said the board had decided it should no longer lay bets through its internet website as the online software system is faulty. 'A claim has been made to the online system provider for the return of all funds paid for the system and the servicing of it, but to date the system provider has not acknowledged this,' he said.

European Goldfields, down 2p to 288½p, has sold 71,000 wet metric-tonnes of gold concentrates from its Olympias mine in Greece. About 50,000 tonnes are being sold to a unit of Celtic Resources and 21,000 to Trafigura Beheer.

Markets in China and Hong Kong were closed for a public holiday today, but they were trading in Tokyo.

Sentiment there was buoyed by a better-than-expected central bank survey of business confidence, although the gains were capped by worries about the impact of a stronger yen on exporters' earnings and by falls on Wall Street on Friday.

The Tankan survey showed sentiment among Japan's large manufacturers was steady for a second quarter running in the three months to September, defying market forecasts for a deterioration.

Despite the upbeat reading, investors refrained from buying actively, maintaining some caution about the outlook for the corporate sector. The Nikkei 225 Average closed up 60.27 points at 16,845.96.