Market report: Friday close

By Mickey Clark for MailOnline
Updated: 12:07 EDT, 26 October 2007

British Energy's run of bad luck continues. It was among the biggest blue-chip casualties today, touching 525½p before reducing the deficit to 10p at 538p after finding more cracks in the boiler tubes at its ageing Hinkley Point nuclear reactor in Somerset.

The company said the latest cracks were discovered during a routine quarterly report for the local community at Hinkley by Britain's Nuclear Installations Inspectorate.

The company insists this is not an issue that undermines the safe operation of the station. But this week its share price fell 11% after it was forced to concede it would keep four reactors off-line for the foreseeable future.

The move was made to enable it to assess an issue related to the boiler closure units. These included Hartlepool and Heysham 1. British Energy, which accounts for almost 20% of our total electricity output in the UK, has been dogged by nuclear power plant outages over the past year.

Investors generally continued to press home the advantage, driving shares back above 6600, which is bad news for market-makers. The lack of turnover and marked price movements suggest there is little stock around and that is pushing prices higher. The FTSE 100 rose 84.99 to 6661.3. Wall Street opened higher this afternoon with the Dow rising 78.90 to 13,750.80.

Mining shares made much of the early running despite suggestions they may be starting to look overvalued. Rio Tinto, tipped this week as a bid target for BHP Billiton, put on 182p to 4417p, while Xstrata added 187p at 3528p, and Antofagasta rose 31½p to 849½p.

Lonmin rose 12p to 3350p after Lehman Brothers cut its price target by 200p to 3400p on the back of yesterday's production update from the platinum producer.

The US broker continues to rate the shares equalweight and complains that the mining outfit has again given disappointing production guidance. It sees limited short-term scope for improvement to the share price, as investors realise there will not be an early solution to operating problems.

The broker says there is significant scope to downgrade earnings estimates for Lonmin, and with these headwinds, the share price is unlikely to outperform the sector over the next year.

Vodafone started the week at 175p and was trading 3.9p up at 193.6p following brokers' upgrades this week. ABN Amro hasmoved from hold to buy.

Capita fell sharply yesterday after learning it had lost the London congestion charge contract, up for renewal in 2009, to a consortium led by IBM. The price rallied 19p to 719p, with Panmure Gordon repeating its buy rating. The broker says the contract accounts for only 3% of Capita's revenues and profits and could affect 2010 earnings by a similar amount.

But analyst Mike Murphy at Panmure warns: 'The impact on sentiment is likely to have a greater effect on the share price in the short term. The perception will be that the market is becoming more competitive and margins will be driven down.'

British Airways added 10p to 443½p after completing a $1.7bn debtfinancing programme. The money will be used to buy 24 twin-engined Boeing 787s and 12 double-decker Airbus A380s.

Car parts retailer Halfords fell 8¾p to 344¾p after UBS cut its price target from 430p to 390p on valuation grounds. It is sticking with its neutral rating.

Oxford BioMedica, up ½p at 33¾p, says it has won a key battle in its patent infringement case against US-based Open Biosystems Inc. The legal order concerns a patent for Lentiviral LTR Deleted Vector, used against Parkinson's disease and Alzheimer's, which Oxford Biomedica says it owns.

MONDAY'S AGENDA

• Amid mounting evidence that the residential market is cooling, Hometrack releases its house prices survey for October. City forecasters will be looking closely to see the extent of the slowdown after prices have been almost static for the past two months. According to the British Bankers' Association, the number of mortgage approvals, an early gauge of demand, has fallen sharply. But while many have lost their appetite for property, analysts believe the shortage of saleable residences should prop up prices.

• The Bank of England announces September's net lending to individuals, which includes loans secured on dwellings and consumer credit. Credit card lending was up by only £0.1bn in August, interpreted as a sign of faltering consumer confidence. Experts believe individuals will be borrowing less as a growing number of credit applications are rejected and as high interest rates hit hard.