Market report: Monday close

By Mickey Clark for MailOnline
Updated: 12:15 EDT, 28 January 2008

Shire was one of the biggest bluechip casualties of today's sell-off, with the shares dropping 43½p to 946½p.

Mickey Clark, stock market correspondent

Sanford Bernstein did the damage by downgrading the pharmaceuticals group from market perform to underperform and reducing its target from 1210p to 910p after the slow performance of recent drug launches.

The broker reckons the attention deficit hyperactivity disorder treatment Vyvanse is a critical drug for Shire, since it accounts for 34% of its 2011 consensus revenues. These are only achievable if the Vyvanse launch accelerates substantially after a relatively slow first seven months.

Despite a weak stock performance since October, the broker thinks Shire is unattractive until consensus numbers fall. It has cut its earnings numbers by 20%, to about 40% below consensus.

Shares generally made a drab start to the week as they followed the world's other main players lower. A late sell-off In New York on Friday paved the way for hefty falls in Asia this morning, and London's FTSE 100 index followed by dropping almost 150 points, before regaining ground to close down 80.6 points at 5788.9. On Wall Street this afternoon, the Dow extended Friday's losses, before making a turnaround and rising 61.7 points to 12,268.9 by 5pm British time.

In London, an expected strong showing by the miners failed to materialise. Anglo American dropped 125p to 2465p and Antofagasta 22½p to 629½p. Lonmin shed 30p to 2870p after Investec slashed its price target from 3850p to 3500p on concerns the company will not meet its full-year platinum sales target.

Rio Tinto retreated 147p to 4549p, with still no sign of an increased offer from BHP Billiton, down 23p at 1394p. Anglo-Swiss miner Xstrata fell 5p at 3495p amid reports that Brazilian smelter Companhia Vale do Rio Doce is lining up the finance for a bid.

The big supermarket chains are often seen as a defensive play in bear markets, but even they are finding the going difficult as consumers tighten their belts.

The phenomenal growth they have enjoyed in recent years may be slowing, and that may be the reason Sanford Bernstein is taking a more downbeat view. It has cut its price target for Tesco, down 5&frac;34;p at 415p, from 550p to 500p, J Sainsbury, 9½p cheaper at 375p, from 500p to 460p and Wm Morrison, 2½p lower at 294¼p, from 290p to 280p.

The supermarkets are being forced to look abroad for ways of boosting profits. Tesco plans to open its first Tesco Express in China next month as it looks to take advantage of the world's fastest-growing economy. The chain, which formed a joint venture in China three years ago, already has more than 50 hypermarkets in eastern China, from Beijing to Shenzhen.

Housebuilder Persimmon ran into a spot of profit-taking, the shares drifting 35½p to 790½p.

They have dropped from a peak of 1526p in December 2006, reflecting the slump in the housing market, but have rallied sharply in recent weeks after striking a low of 695p on 9 January.

ITV slipped 0.9p to 72p. A decision is expected tomorrow on whether BSkyB will be forced to sell some or all of its 17.9% stake. UBS says a full sale is likely to result in a stock overhang on the market, further depressing the price.

Severfield-Rowen rallied 8p to 258p in the wake of last week's trading update. Chairman Peter Levine has spent about £1m buying 400,000 shares at 248p. That increases his stake to 465,480 shares, or less than 1% of the company.

Goldman Sachs has increased its rating on Northern Foods, up 4p at 96½p, from neutral to buy with an unchanged share-price target of 109p on valuation grounds.

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TOMORROW'S AGENDA

• UK insurer Prudential reports new business figures for 2007. Despite talk of an imminent profit warning, chief executive Mark Tucker should cheer investors by announcing strong growth in the US. The Pru is shifting the focus of its business into lucrative annuities and away from individual pensions. Its shares jumped last week amid rumours of bid interest from China's Ping An.

• The CBI releases its barometer of High Street trade. January's distributive trades survey is expected to show conditions deteriorating for UK stores as consumers, hit by rising utility prices and the impact of high interest rates, curb spending.

• A trading statement from Imperial Tobacco should be upbeat, although analysts will be looking to see whether the smoking ban is hitting UK sales. The West, Davidoff and JPS brand owner is bidding for Spain's biggest cigarette distributor, Logista, following its takeover of Gauloises maker Altadis.