Yesterday's trading: FTSE catches Wall St cold

By Geoff Foster for MailOnline
Updated:

 

Would you credit it? Early gains on the back of skyscraper-high hopes that interest rates will soon be on the way down were wiped out as revived concern about the health of the world's biggest economy prompted late selling both sides of the Pond.

Geoff Foster, Daily Mail City

Geoff Foster: Daily Mail

Wall Street plummeted more than 300 points on hearing that US jobless claims had climbed to a seven-year high in September, while factory orders showed a steeper-than-expected drop in August.

Already in the Last Chance Saloon ahead of the crucial House of Representatives vote on the Treasury's $700bn bailout plan, the market remains scared of its own shadow. Bears are in control and roared that nothing can stop the US economy tipping into a deep recession and corporate profits will suffer.

Wall Street sneezed and London yet again caught a cold. The Footsie lost a 92-point gain to close 89.26 points down at 4,870.34. Any further disappointment with today's US non-farm payroll (employment) figures and we could really be in trouble.

HBOS was chased up to 178½p at one stage after shareholder M&G followed Standard Life and put its considerable weight behind Lloyds TSB's (12p better at 262p) original merger terms. The close was 22p higher at 170.1p and still well below the offer. Lloyds is offering 83 of its shares for every 100 HBOS share. This now implies a value for HBOS of 217½p or £11.4bn.

Reflecting widespread relief the dividend was not cut and that second-quarter sales figures were no worse than recent pessimistic forecasts, Marks & Spencer touched 238p and ended 17p dearer at 227¼p.

Growing speculation that UK interest rates will be shaved by ¼% to 4¾% next Thursday kept sellers away. The High Street needs as much help as it can get as it faces the worst Christmas trading period for more than 30 years.

Simon Wolfson's Next jumped 40p to 1099p after buying fashion label Lipsy for £17.4m. Jeremy and Marcelle Stakol, who owned 25% of the business, walk away with a cool £3.5m. Lipsy is due to open its first store at Brent Cross shopping centre in North London in November.

Satellite TV giant BSkyB gained 13¼p to 429½p following positive comments from ABN Amro, which has a target price of 604p. The broker believes Ofcom's review of the pay-TV industry is becoming clearer and that removes one of the clouds over the shares. It is likely to consist of a 'wholesale must offer' obligation on premium sport and film channels, together with a 'retail minus' regulated pricing structure. A healthy wholesale offering at this stage in Sky's growth cycle could prove an attractive way to drive profitability.

Another 3% fall in the copper price to $5,900 per tonne, the lowest for more than 2½p years, dragged miners lower.

Vedanta Resources slumped 123p more to 912p. Lonmin lost 132p further to 1681p for a two-day fall of 593p after Mick Davis's Xstrata (66p off at 1617p) decided not to proceed with a £33-a-share cash offer, but instead splashed out £440m on doubling its stake in the company to 24.9%.

Directories group Yell screamed 9½p higher to 90p on talk it will soon re-finance its heavyweight £3.68bn debt. Vague takeover gossip lifted British Insurance 14¾p to 195¾p.

Upmarket wallpaper and fabric-maker Walker Greenbank firmed 1p to 23½p after it defied the sceptics with a 23% leap in first half profits to £1.72m.

Brokerage Killik says buy. Electronic tracking device firm Dmatek rose 6p to 122½p after strengthening its presence in the US with two state-level contracts worth around £12m.

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Chromex Mining sparkled at 39p, up 4½p, after concluding the first sale of 8,500 tonnes of chrome, achieving an operating profit in the first month of production. May Gurney, the support and construction services company, added 10p at 205p after reporting inline trading for the first six months of the year. Its forward order book is £1.25bn.

Software designer for the gaming industry Playtech jumped 25p to 417p after extending its licence agreement with leading game operator Mansion, Tottenham Hotspur's sponsor, to cover poker.

Almost 4m shares in Nighthawk Energy changed hands and the close was 4¾p higher at 46p. Buyers responded to news that five wells have been drilled at its Jolly Ranch project in Colorado, and are producing at a range of 25-80 barrels of oil per day under test conditions.

Synchronica, the mobile email specialist, edged up 0.3p to 3¼p after announcing its first licensing deal in India, the second largest mobile market in the world.

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