Stock market report: Wednesday close
There are signs the property sector may be enjoying a spot of massage by fund managers as the month draws to a close.
Better day?: Traders will hope the FTSE can follow US stocks higher.
JP Morgan has moved to overweight in Hammerson, which was among the top-performing blue-chips with a rise of 23¼p to 334p ahead of the start of trading in the nil-paid shares tomorrow. This follows the company's deeply discounted seven-for-five rights issue at 150p to raise almost £600m, announced earlier this month.
Citigroup and UBS are taking a more bullish approach to British Land, up 20¼p at 422¼p, and Land Securities, 27½p ahead at 527½p, after fundraisings. British Land is seeking £740m and LandSecs £756m.
The sector has also benefited from a move by hedge-fund operator Crispin Odey to cut his short position in British Land. His Odey Asset Management previously had a short position of 0.27%, worth almost £6m. That has now been cut to below 0.25%.
Segro, formerly Slough estates, rose 10¾p to 97¾p. It has been in talks with the banks, and has thrashed out a deal on covenants covering loans worth £1.7bn.
The property developers have been staggering under a big surge in debt following the collapse in commercial property values. A number have been forced to go cap in hand to shareholders to raise funds and strengthen their balance sheets, rather than breach their banking covenants. This has led to talk of a share placing at Liberty International, up 12p at 338½p.
On the other side of the Pond, property was even more in focus as a survey showed an unexpected fall in house sales. Yet again, that spurred worries about the credit crisis, leading Wall Street to open lower for the seventh time in eight days.
That gave little cause for optimism in the FTSE 100 index, which yo-yoed in and out of positive territory and by mid-afternoon was up 32.5 points at 3848.98 after touching 3884.06 this morning. In New York, the Dow this afternoon dived 134.85 points to 7216.09.
In London, financials made gains amid signs some punters had chosen to close their short positions. Royal Bank of Scotland put on 1p to 23.1p while Lloyds Banking Group added 3.5p to 57.4p ahead of results on Friday. HSBC was up 20½p at 492½p ahead of next week's full-year results.
Deutsche Bank has cut its target from 532p to 510p, warning the outlook for the bank remains challenging. It says action may be needed to bolster HSBC's capital ratios, but a large-scale rights issue will not be easy to get away in the current environment. Elsewhere, Prudential's rollercoaster ride continued with the shares eventually settling at 267¾p, off 1p, having spent most of the day up 10p. Keefe, Bruyette & Woods says the Pru appears to have moved into pole position in the bidding for American Insurance Group's Asian arm. It has repeated its outperform rating on the Pru and 797p target. Revived bid talk lifted Old Mutual 0.3p to 40.6p ahead of next week's results.
Talk of stakebuilding was behind a rise of 13¾p to 226½p in pubs chain operator Mitchells & Butlers as more than 1.2m shares changed hands. At the last count, billionaire financier Joe Lewis held 88.3 million shares, or 21.7%. The price has dropped from a peak of 892p since the summer of 2007.
Aero-engines maker Rolls-Royce jumped 9½p to 289p after UBS raised its rating from sell to neutral and repeated its 280p target.
White van man's favourite Northgate slammed into reverse with a loss of 30p to 39p after yet another profits warning. The van-rental group is regarded as a barometer of the economy. The company says trading conditions have deteriorated further, and it is looking to renegotiate its banking covenants.
Investors drew some crumbs of comfort from Barratt Developments' trading update. Barratt rose 9¾p to 81½p, Berkeley Group, 39p better at 856½p, Bovis Homes, 16p ahead at 365p, and Persimmon, 22¾p up at 317p.
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Tomorrow's agenda
Royal Bank of Scotland will dominate the headlines when the part-nationalised bank delivers full-year results. But it won't just be its mega losses - the worst in British corporate history at around £28bn - attracting attention: the restructuring under new chief executive Stephen Hester will also be in the spotlight. Leaked details of the plan indicate that RBS's balance sheet will be split in two. Its core UK and US retail operations will remain, other parts of the business will be sold off and about £200bn in toxic assets will be placed in the Government's 'bad bank', where they will be underwritten by the Treasury. Major job cuts are also expected.
Transport group national express and British Gas owner Centrica are among other companies reporting. National Express is tipped to slash its payout to shareholders as train companies begin to struggle. Meanwhile, Centrica is likely to spark a new row over energy prices when it posts profits of just under £2bn for the year, despite a sharp drop in profits at its British Gas residential arm.
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