Market report: Wednesday close

By Mickey Clark for MailOnline
Updated:

 

The Sunny weather has brought with it rising pollen levels, but before investors reach for the tissues to quell their sneezing and runny noses, help may be at hand.

London Stock exchange

Updates from the stock exchange.

Little Aim-listed Allergy Therapeutics claims to have found a cure for the dreaded hay fever, which often blights summer for millions of Brits. The shares rose 6p to 34¾p, still well below their record of 132½p struck in February last year.

The company says results from phase three tests of its allergy vaccine Pollinex Quattro Grass have been positive, paving the way for it to apply for European Union marketing approval. The submission to the EU is planned for the first quarter of next year.

Allergy Therapeutics estimates the worldwide market for allergy treatment to be more than $10bn (£5.1bn). Its development of the treatment in the US is on hold until the Food and Drug Administration completes its own clinical study.

Chief executive Keith Carter said: 'This is a landmark study, and the most important news in the 70-year history of the company.' Nomura Code describes the success of the phase three trials as 'highly encouraging' and should help Allergy Therapeutics get a sales partner and EU approval.

The rest of the drugs sector benefited from bullish comments by Dresdner Kleinwort. AstraZeneca rose 39p to 2130p after winning FDA approval for the use of schizophrenia drug Seroquel for the treatment of bipolar 1 disorder.

Shares generally lost an early lead in another day of thin trading. But FTSE 100 eventually pulled back closing 4.15 points up at 6216, with the FTSE 250 down 96.76 at 10,275.3.

Investors had to digest two more emergency rights issues among second-liners. Bradford & Bingley, down 14¾p at 144p is raising £300m while Johnston Press, off 20½p at 115¼p, is tapping shareholders for £212m.

The Bank of England's latest Inflation Report offered little cheer to investors, indicating that the cost of living will remain well above the Government's target for sometime to come.

Adding to the bearish tone was the UK's best-known investor Anthony Bolton, a former fund manager with Fidelity Investments. The recent share price rally from their March low point, when Bear Stearns was rescued, could be a dead-cat bounce, he warns. Boulton reckons the sell-off that began in August may have been the start of a long bear market running into next year.

The miners again made the early running. Eurasian Natural Resources led the way with a rise of 99p to 1476p. Deutsche Bank says the shares are its top pick in the mining sector following ENRC's decision not to bid for Kazakhmys, up 74p at 1809p, and has jacked up its target from 1060p to 1550p. Anglo American climbed 34p to 3389p, Vedanta Resources 109p to 2532p and bid target Rio Tinto 236p to 6881p.

But there were few takers for the banks following the B&B rights issue. Alliance & Leicester shed a further 13p to 445¾p in the wake of yesterday's trading update. Deutsche Bank has repeated its sell rating on the shares and slashed its target from 410p to 335p, while Lehman Brothers has repeated its underweight rating.

Citgroup claims further write-downs are possible on top of the £333m made yesterday, so it has repeated its sell rating and lowered its sight on the price from 400p to 350p. Elsewhere in the sector, HBOS lost 14¾p to 470¼p, Lloyds TSB 7½p to 410½p and Barclays 10½p to 427¼p.

It was the first day of dealings on Aim for Yangtze China Investments, a provider of expansion capital to Chinese enterprises. Collins Stewart has placed 25.83m shares at one dollar apiece. The price opened at $1.02.

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TOMORROW'S AGENDA

• Barclays will reveal whether it is to become the third British bank in a month to tap shareholders for cash when it issues a first-quarter trading update. Citigroup analysts say the lender could seek to raise between £6bn and £12bn but there is talk that, rather than turning to a rights issue, chief executive John Varley could look to an outside investor to put up the money.

China Development Bank and Singapore's Temasek, both stakeholders in the bank, have been mooted as candidates. The urgency of the fundraising will become clear from the size of its writedowns for the three months. Citi predicts the statement will spark earnings downgrades.

• After issuing a profit warning in January, Currys and PC World owner DSGi publishes a full-year trading statement. Chief executive John Browett is set to unveil a new strategy for the struggling retailer, tipped to include a massive cull of staff at head office.

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