Market report: Thursday close

By Mickey Clark for MailOnline
Updated:

 

The City's big income funds have started queuing to buy shares in a company called Eurasian Natural Resources (ENRC), which is due to make its debut among the UK's top 100 listed companies.

Mickey Clark

The Evening Standard's Mickey Clark

Never heard of it? Not many people have. It joined the London stock market towards the tail-end of last year, and now weighs in at a healthy £12.2bn.

The shares started life at around the 600p level and have almost doubled since then, briefly touching a peak of 1123p. Today they dipped 59p to 890p. The mining company is based in Kazakhstan and is almost 60% controlled by four of its founders.

Dealers say ENRC is not an investment that has been tailor made for widows and orphans. Curiously enough, rival Kazakhmys, down 35p at 1745p, has been forced to deny having received a 'formal' proposal from ENRC about a merger of the two companies.

Yesterday's Budget overshadowed the latest regular quarterly review which also saw Tate & Lyle, up 3½p at 509p, regain promotion to the top-flight along with defence contractor Cobham, 7¼p off at 204¼p. They will replace housebuilder Taylor Wimpey, 6.6p cheaper at 163.4p, telephone directories operator Yell Group, 3.6p lower at 171.9p, and the hapless Rentokil Initial, 0.6p off at 77p.

Elsewhere, a sense of reality returned to the Square Mile with share prices taking a tumble on growing fears for the global economy. The FTSE 100 index responded with a fall of 84.01 points to 5692.4, while the FTSE 250 index slumped 187.94 points to 9801.5.

Now that this week's diversions, which included the central banks pumping money into creaking money markets and yesterday's Budget, are over investors must focus back on fundamentals.

Chancellor Alistair Darling has instructed the Bank of England's monetary policy committee to keep inflation on target. That has strengthened the pound against the dollar, making life difficult for exporters and overseas earners. Meanwhile, oil and gold continue to trade at record levels as investors move out of equities.

British Airways fell 12p to a threeyear low of 230½p, worried by the escalating cost of fuel. It has warned that rising fuel costs will reduce profits during the next year by 25%.

Plumbing supplies specialist Wolseley was the biggest faller among bluechips, losing 37p at 550p, after Goldman Sachs downgraded from neutral to sell and slashed its target from 775p to 565p. ABN Amro has also moved from hold to sell while cutting its target from 630p to 530p.

BUDGET 2008

What it means for you:

Alistair Darling with the Budget box

Wolseley makes most of its profits in the United States, where Goldman expects housing starts to drop below am, resulting in growing losses for the group.

UBS has downgraded Close Brothers, down 10½p at 587p, from buy to neutral and cut its target from 1000p to 630p. It has also adjusted its earnings forecasts to reflect increasingly difficult market conditions affecting Close, which owns market-maker Winterflood.

Back in January, Cenkos Securities withdrew its offer £1.5bn offer for Close. Then last month, Close shares fell sharply after it broke off takeover talks with other suitors.

Valiant Petroleum began trading on AIM at 817p following a placing of 6.6m shares at 750p, valuing the upstream oil and gas explorer at almost £200m.

TOMORROW'S AGENDA

• Aga Foodservice, which appointed former House of Fraser chief executive John Coleman as its chairman last week, is forecast to report pre-tax profits of around £26m at its annual results. The posh cooker maker is also expected to unveil a return of cash to shareholders following the sale of its foodservice division. However, total sales fell last year and chief executive William McGrath warned of a difficult 2008. Aga launched a marketing drive earlier this month in a bid to convince consumers its cookers are household necessities rather than indulgent purchases.

• Insurer Prudential unveils full-year results with the figures likely to show it is reaping the rewards of its foray into Asia. Vietnam, Taiwan and China now contribute around 40% of profits. Total earnings are estimated to be up 25% to £2.47bn despite flat UK sales and a small subprime hit from the Pru's US firm Jackson National Life.

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