Market report: Tuesday close

By Mickey Clark for MailOnline
Updated: 12:06 EDT, 11 December 2007

Some of those companies threatened with the chop from the FTSE 100 index were pulling out the stops today in an attempt to retain their places ahead of tonight's deadline for the quarterly reshuffle. Six companies face the drop.

Pubs chain Mitchells & Butlers put on 7¾p at 507p, having more than halved this year, weighed down by tough trading conditions, the smoking ban and several profit warnings.

Rival Punch Taverns rose 11p to 838p. It has been another poor performer, not helped by the decision to postpone converting its portfolio of pubs into a real estate investment trust. The price has slumped from a peak of 1401p.

Another company fearing the chop is housebuilder Barratt, up 8¼p at 485¾p. Credit Suisse has raised it from neutral to outperform while lowering its target from 780p to 530p. Talk of a takeover also helped fuel the stock.

Credit Suisse has dropped its rating on rival Persimmon, down 10p on 820½p, from outperform to underperform and halved its target to 630p. The broker does not believe the market has factored in a worst-case scenario for builders.

Credit Suisse has Barratt as its top pick, with Persimmon leastpreferred. It has maintained a neutral rating on Taylor Wimpey, down ½p at 223p, while cutting its target from 300p to 220p. Taylor Wimpey is also struggling to keep its place in the Footsie.

Sugar giant Tate & Lyle, currently in 118th position, dipped a further 8¾p to 435½p. It shares have slumped from 768p this year after a series of profit warnings. Some analysts believe T&L's Splenda wonder-sweetener could come under serious competition from Reb-A, a sugar-free extract of the stevia plant.

Reb-A, though banned in the UK and US, is produced by Malaysian manufacturer PureCircle, whose shares made their debut on AIM today, and raced to an 11% premium at 187p.

Blue-chips generally fell, although there was support for second-liners. The FTSE 100 fell 18.04 to 6536.9 while the FTSE 250 rose 14.97 to 10647.9.

Property shares lost ground despite one broking house last week claiming the sector had been oversold. The market has been unnerved by news from New Star Asset Management that the value of its commercial property portfolio had fallen by 17.8% since the end of July. Hammerson dropped 22p to 1074p, British Land 39½p to 933½p and Liberty International 12p to 1147p.

Van rental firm Northgate has had a horrible time of late as punters reckon it is exposed to a downturn in the UK economy and to a fall-off in the Spanish construction industry, where it is a large player. Unveiling half-year profits up 16% to £44m, chief executive Steve Smith said: 'There is a lot of talk of a downturn but we are simply not seeing any evidence.&39; The stock, down 40% over the past year, rose 20p to 740p.

Ashtead, the company bestknown for providing traffic cones and roadworks signs, has more than halved over 12 months. And today the shares fell by 3p to 80p after the firm lifted the divi by 50% and brought in Rothschild to conduct a strategic review of its Ashtead Technology arm.

That business supplies gear to the booming oil and gas sector. If sold off, it could go for a disproportionately large figure compared with the group's bombed-out £470m market capitalisation.

Armour Group rose 2½p to 39p. Chairman Bob Morton says the in-car entertainment company had its best-ever month's trading in November.

It was the first day of dealings on AIM for Zimbabwean investment company LonZim. The shares were placed at 100p and settled at 105p. The Lonrho trading company has a 20% stake.

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TOMORROW'S AGENDA

• Investors will be hoping for news of a positive reception for HMV's revamped stores as the struggling music and entertainment chain delivers first-half results. The retailer is hoping that the overhaul of its store format will return its 'top dog' status although experts have been sceptical that the plans, which include refreshment hubs in shops, will aid its recovery. Citigroup is expecting losses to remain fairly steady at £28m, but other analysts are more optimistic, believing losses should fall to £14m. Trading was up over the summer with sales of DVDs soaring as consumers opted to stay at home during the wet weather.

In September, the Waterstone's bookstores owner said it was entering the Christmas period in 'good operational shape' despite tough competition from supermarkets and online rivals. Christmas is crucial for HMV, which usually makes 80% of its profits in the last quarter of the year. As fears grow that the festive season will be grim for the High Street, the store will also be in the spotlight as a gauge of current trading.

• Beleaguered gambling firm Rank updates the City on trading. Its stock has fallen 57% in the last year as the smoking ban and tighter regulation of fruit-machines hit trading hard. West Midlands property developer Richardsons Capital has recently bought a 9% stake in the Mecca bingo and Grosvenor Casinos operator, however, giving a much-needed vote of confidence to the group. Rank has been the centre of bid speculation after news spread that Harrah's Entertainment had sought a 28% share in the company.

• Newspaper group Johnston Press issues a full-year trading statement. The City will be interested in any hints about the outlook for the advertising market amid concerns that marketing budgets are being cut. In the first half of the year, the owner of regional titles including the Lancashire Evening Post reported a 3% drop in print-based advertising and the future is looking fairly bleak as Johnston Press is particularly reliant for revenue on the ailing property sector.