Market report: Monday close

By Mickey Clark for MailOnline
Updated:

 

The London stock market hauled itself back above the 6000 level for the first time in more than a month, with share prices extending last week's rally.

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Morgan Stanley says this is a rally in a bear market, but cheered hard-pressed City investors by saying it still has some way to run.

Leading shares have now risen 8% from their 17 March low, and the broker insists the FTSE 100 can move higher over the coming weeks. Morgan Stanley is highlighting 6200 to 6300 as the likely top end of this rally, maintaining that equity valuations are attractive and remain within 'buy' territory.

Overall sentiment remains cautious. The FTSE 100 index closed up 67.7 pointsat 6014.8 after touching 6100 at one stage. Investors are pinning their hopes on a further quarter-point cut in interest rates by the Bank of England's monetary policy committee later this week.

Miners led the way with the help of an upgrading of the sector by Goldman Sachs. It has moved from neutral to attractive to reflect stronger activity next year from tight metals markets and rising base metal and iron ore prices.

Goldman has re-started coverage of Anglo American, up 125p at 3287p, with a buy and placed the shares on its Conviction Buy list with a 3945p target. It has also raised Vedanta Resources, up 106p at 2287p, from neutral to buy and jacked up its target from 2172p to 2630p.

Xstrata, 160p dearer at 3867p, is kept at neutral but its target has been lifted from 3580p to 3905p. In addition, Lonmin, 114p higher at 3302p, is still seen as a buy, with its target raised from 3121p to 4350p.

Hopes of a higher offer from private equity outfit JC Flowers lifted Friends Provident 3.1p to 137p. Only last week Flowers saw its latest offer of 150p a share rejected by the life assurer's board. It is now thought to be working on an offer of between 155p and 160p a share, which would value Friends at £3.5bn. Flowers has until the end of the month to make a formal offer.

A fresh burst of speculative buying lifted British Energy 2½p to 713½p, making it one of the best-performing bluechips, as talk of an imminent offer for the nuclear power generator gathered pace. Weekend reports claim a string of potential suitors have begun to line up, including Germany's RWE, EDF of France and Britain's Centrica.

Citigroup has cut chemicals specialist Victrex, up 2p at 702p, from buy to hold, claiming the shares are trading in line with its price target of 750p. Victrex's prospects for earnings per share and strong cashflow and balance sheet are attractive in current markets, the broker reckons. But given the shares have already performed strongly in the year to date, it is lowering its rating.

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Intellectual property and technology commercialisation company Angle, up 15¼p at 41¾p, has received an approach which may lead to an offer being made worth an indicative 60p for each Angle share.

That amount would be satisfied in full by the issue of new shares in the acquiring company. Angle is evaluating the approach and said it remains optimistic about its future prospects.

JKX Oil & Gas, up 9¾ at 476&frac34p, has bought a 25% interest in three exploration licences in the Carpathian Fold Belt in Slovakia from Aurelian Oil & Gas. JKX will fund the first €1.6m (£1.2m) of a 238km 2D seismic programme to be shot in 2008, with Aurelian responsible for the balance up to £3.2m, after which the costs will be split on a 25%-75%basis.

Oil and gas facilities service provider Petrofac, 6p dearer at 580p, has won a two-year extension of its existing dutyholder contract with Venture Production for about £20m a year, to start in November.

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TOMORROW'S AGENDA

• Internet poker and casinos company 888.com delivers preliminary results. The figures are forecast to show the Gibraltar-based group is recovering after it was forced to shut down its US operations in 2006 following Congress's ban on internet betting. Investors will also be hoping for news on how its sports betting arm, which launched last month, is faring and plans for expanding it further.

• More grim news on the housing market is anticipated with the Council of Mortgage Lenders' mortgage survey for February. The study will highlight the impact the financial turmoil is having, with the percentage of a property's value borrowed by those moving homes expected to drop substantially.

• Upmarket bakery and ingredients manufacturer the Real Good Food Company unveils full-year figures. Rising food costs are likely to hit the AIM-listed business's profits.

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