Market report: Monday close

By Mickey Clark for MailOnline
Updated: 12:16 EDT, 17 December 2007

Drugs giant GlaxoSmithKline fell 29p to 1294p today after a setback to the launch of its Cervarix cervical-cancer vaccine in the US.

America's Food and Drug Administration is demanding more information on Cervarix before allowing it to be marketed in the US. Deutsche Bank says the concerns are most likely to be related to the manufacturing process, or to its new modifying agent adjuvant, rather than to questions of efficacy or safety.

It is hoped the launch will only be delayed by between three and six months, as it seems unlikely that further trials will be required. Several clinical studies have already been undertaken. Deutsche expects sales of Cervarix to peak at £1.5bn worldwide and continues to rate Glaxo a hold with a 1345p target.

Shares generally were beating a retreat as investors took their lead from big losses on Wall Street on Friday, and in Asia this morning. Worries about the credit crunch continue to spook investors. The FTSE 100 index fell 119.16 to 6,277.8.

Retailers were having a bad time. Debenhams fell 5¾p to 75½p and Next Group lost 75p to 1602p. Seymour Pierce has cut Debenhams from outperform to hold and Next from buy to underperform. The broker warns of a difficult start to 2008 as the impact of dearer mortgages starts to feed through, while non-food spending continues to shift online and to the supermarkets. Kaupthing has downgraded Marks & Spencer, off 21p at 548½p, from buy to fair value.

Hammerson comes out top in UBS's latest review of the property sector. It has upgraded the commercial property developer from neutral to buy, reckoning it has an active development policy and significant French exposure.

The broker says Hammerson, down 34½p at 933½p, is in a strong position to progress future projects, but it has slashed its target from 1590p to 1250p. It cut its target for Segro, 16½p cheaper at 417¼p, from 700p to 600p, maintaining a buy, and for Derwent London, 21p down at 1370p, from 1800p to 1560p, keeping a neutral rating. It has repeated its buy call on Brixton, 5¾p lower at 269¾p, but reduced its target from 480p to 400p.

HSBC has begun coverage of Standard Life, 9p down at 249p, with a neutral rating and 300p target. It reckons the shares are inexpensive but unattractive, saying Standard Life's failed bid for Resolution, off 1p at 709p, has raised questions about its strategy.

It sees better value in Legal & General, 5.1p cheaper at 125.1p, which it rates at overweight with a 179p target, and Prudential, 32p lighter at 656p, put at overweight with a 959p target.

Credit Suisse has resumed coverage of Reed Elsevier, 7½p better at 648p, with an outperform rating and a 710p target, and is urging clients to switch out of Pearson, 8p down at 700½p.

Drax remained unchanged at 669p. Morgan Stanley has jacked up its target for the power generator from 530p to 640p on the back of rising electricity prices.

Aim-listed Novera Energy, also unchanged on 55½p, has applied for planning permission to build the Fleeter Wood windfarm in Cumbria. The application is for five turbines with combined capacity of 10 megawatts. The renewable energy provider expects to submit a further two applications soon.

Edmund Truell has been topping up his holding in cooker-maker Aga Foodservice Group. The man behind Pension Corporation has bought a further 1.2m shares, taking his holding to 21.9m, or 19% of the company. Aga fell 16½p to 352½p.

Bankruptcy specialist Accuma jumped 5¼p to 26¼p after saying it had received a bid approach.

TOMORROW'S AGENDA

• November's Consumer Price Index is released. The Bank of England opted for an interest-rate cut despite rising petrol prices pushing index up to 2.1% in October, above the bank's 2% inflation target. This month's figures may fuel fears the cut came too soon.

• Drax, owner of Europe's biggest coal-fired power station, issues a trading statement. Chief executive Dorothy Thompson should be upbeat as profits continue to be strong. Investors will be hoping for information on its biomass project from which it has pledged to produce 10% of its power by 2009.

• National Express updates the City on trading. The bus and train operator has just taken over the East Coast Main Line franchise from GNER, pledging to invest £44m in the service. However, many analysts believe the firm will struggle to meet the tough targets boss Richard Bowker has set for the franchise.