Market report: Friday close

By Sarah Marks for MailOnline
Updated:

 

France's EDF could raise its offer for British Energy by £500m, according to sources close to the deal.

London Stock exchange

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The word in the City today is that EDF might go as high as 735p a share in exchange for board support for its offer. This could push the final price beyond £11bn.

Speculation on an improved French offer went some way to softening the sell-off triggered by the withdrawal by Spain's Iberdrola from the auction for the nuclear power firm. British Energy was down 10½p at 726½p.

Fears of further oil-price rises kept the lid on London shares for most of the day, but a strong opening on Wall Street kicked it into positive territory. The FTSE 100 index of leading shares closed up 12.3 points at 5802.8.

Miners, led by Eurasian Natural Resources, off 39p at 1321p, suffered from weaker commodity prices.

The FSA position on short-selling provided a much-needed fillip to financial companies, while housebuilders also showed strong rises. Alliance & Leicester topped the banking sector, rising 33¼p to 338¾p.

Persimmon was 38¾p higher at 411½p, Taylor Wimpey led the FTSE 250 risers with a gain of 9½p to 70½p, while Barratt Developments was 10¼p higher at 86½p. Redrow was up 22¾p at 163¾p, followed by Bellway, 33¾p ahead at 512p.

In the US, the Dow Jones opened 149.4 points up at 12,291 as the latest economic data persuaded some commentators that inflation may have peaked.

AstraZeneca could be about to declare victory in the fight to protects its blockbuster drug Seroquel. With a summary judgment hearing scheduled to go ahead in 10 days' time, there is an outside chance the judge will rule in favour of the drugs company, say analysts at Panmure Gordon.

They reckon the generic drug firms cannot win at this stage, and a possible positive verdict for Astra is reason enough to start buying. However, an 10p drop to 2106p suggests the market is still counting on a full trial to start on 11 August, and Astra was down 9p at 2107p. Panmure's target of 3075p is clearly rooting for victory.

A glimmer of sunshine hit the gloom-laden High Street today, as John Lewis revealed sales in its department stores had risen for the first time in five weeks.

Four consecutive weeks of falls reported by the retailer had led to speculation that the credit crunch had driven shoppers to ground, but a 2.1% rise in sales last week should provide some evidence of their survival.

The impact on the High Street, initially muted, strengthened throughout the day, with department stores chain Debenhams up 2¾p at 54p, Next up 14p at 1069p and Marks & Spencer 4¾p higher at 358¾p.

Moss Bros, ½p lower at 40½p, countered a 1.5% drop in sales over the past five months with news that old stock levels across its 150 stores are down, but what held back sellers was further evidence of stakebuilding by Laura Ashley. It emerged today that the floral furnishings and fashion group has upped its holding to just over 10% of the company, making it the largest single shareholder.

Motoring accessories and bicycles group Halfords was 1½p higher at 270½p, overcoming a downgrade from overweight to neutral by HSBC analysts, who also slashed 95p from their target, suggesting 285p is a more realistic price. They warned that next month's trading update might be disappointing, and the downgrade reflected increased market focus on short-term sector earnings.

Carphone Warehouse, 12¼p better at 214¾p, remained in focus following yesterday's results. Citigroup upgraded the mobiles retailer from sell to hold, but cut its target to 235p from 290p.

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MONDAY'S AGENDA

• Despite the misery on the High Street, the British Retail Consortium this week said sales across the country rose 1.9% in May as consumers went on a sunshine-inspired spree. Whether London shoppers were as keen to part with their cash will be revealed on Monday in the BRC's survey of the capital's stores.

• Drinks warehouses chain Majestic Wine publishes full-year results. In its most recent trading update, Majestic warned sales growth had slipped because of the consumer slowdown, and said 2008 could prove challenging. Chief operating officer Steve Lewis will replace Tim How as chief executive when he retires in August after 19 years in charges.

• With inflation soaring and growth grinding to a halt, the Bank of England's quarterly bulletin is expected to add to the economic gloom. It will be closely watched by the City for any hints on future interest rate decisions.

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