Market report: Tuesday close

By Mickey Clark for MailOnline
Updated: 13:24 EDT, 11 March 2008

News that five of the world's leading central banks had pumped an extra £125bn of cash into frail money markets today was just the tonic stock market investors needed, having been battered in recent days days by heavy losses relating to fears about a US recession, the credit crisis and a slowdown in the global economy.

Market report: The Evening Standard's Mickey Clark

The FTSE 100 index was already 40 points higher when the concerted move by the central banks was announced.

Within minutes it had extended its lead to 154 points before settling down and closing down 61.3 higher at 5690.4. This afternoon on Wall Street, investors were quick out of the traps with share prices reversing yesterday's losses. The Dow rose 185.4 to 11,925.4.

The banks responded quickly to news of fresh funding. Barclays put on 21¼p to 437p, Royal Bank of Scotland 14¾p to 349¼p and HBOS 27½p to 589½p.

Meanwhile, Vodafone is back on brokers' shopping lists, and that helped give the rest of the stock market a much-needed kick-start following several days of heavy losses.

Shares in the mobile phone giant rose 2.9p to 154.3p as more than 170m changed hands. Dealers said the rise in the heavyweight stock was the equivalent of an eight-point rise in the Footsie-100. Goldman Sachs has added Vodafone to its conviction buy list following the recent decline in the price from its high of 191.6p at the start of the year.

Citigroup says the shares should be valued 45% higher than current prices. It says Vodafone has fallen along with the index this year, but should benefit from upgrades from cost savings, foreign exchange and India.

JPMorgan also reckons Vodafone offers better value than other European telecom companies, such as Swisscom.

Xstrata fell 92p to 3742p as speculation grew that Brazil's Vale may pull the plug on its proposed £43bn allshare offer. The Vale share price has fallen sharply in recent days, wipingbns off the value of the company and making the Xstrata deal almost impossible to finance. Antofagasta fell 4p to 724p following impressive profit numbers, but dealers say it has warned of rising costs.

Cairn Energy led blue-chips higher with a leap of 223p to 2989p amid vague talk of a bid from Italy's ENI.

ENI last year paid £1.76bn for Burren Energy. Both companies had big interests in the Congo, but Burren was also high profile in Turkmenistan, a country regarded as rich in potential. A Cairn bid would cost ENI around £4bn.

The prospect of sharply higher costs to land its aircraft at Heathrow and Gatwick left British Airways 3¾p lower at 238p. Only last week, BA warned that profits would probably drop by around 25% during the next 12 months as the group struggled to cope with soaring fuel costs. EasyJet lost 13½p at 397½p and Ryanair 11 cents at €3.07.

Citigroup has raised Brit Insurance Holdings, up 10½p at 226½p, from hold to buy and repeated its 285p price target because it reckons the shares look dirt cheap. Citigroup says the shares stand on too penal a rating, despite a 13% discount to net tangible assets, a single-digit price-earnings ratio and a double-digit dividend yield.

Mears Group posted a £3.2m rise in pre-tax profits last year to £15.4m, on revenues up from £241.4m to £304.6m. The shares responded with a rise of 4p to 284p. The social housing and outsourcing services group lifted the final dividend 21.2% to 2.9p, for a 4p total.

UBS has upgraded software specialist Misys, up 3p at 140½p, from neutral to buy, while lowering its target from 170p to 160p ahead of the company's trading update on 9 April.

TOMORROW'S AGENDA

• Budget Day sees a host of companies reporting, including struggling fashion chain French Connection. The group, which issued the latest in a string of profit warnings in November, is expected to deliver pre-tax profits of £3.1m - 22% lower than the previous year. Analysts fear its longer than usual winter sale shows its plight is worsening.

• Irish airline Aer Lingus is forecast to unveil a 20% jump in annual pre-tax profits to about e110 million (£84m) but its 2008 outlook is likely to make grim reading. Although passenger numbers rose strongly in the first two months of the year, its load factor - the percentage of seats filled - fell sharply.

• Analysts predict up-market estate agent Savills will unveil record results despite a drop-off in transactions in the last three months of 2007. Pre-tax profits are expected to rise from £75m to around £85m.