Stock market report: Monday close

By Mickey Clark for MailOnline
Updated:

 

Unilever today stood out with a rise of 30p to 1322p.

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Friday's issue of a £350m corporate bond at par and yielding 3.9%, redeemable in 2014, by the Knorr soup and Lipton tea group was quickly gobbled up.

In fact, it was heavily oversubscribed, and the stock was today trading at £100.30.

Some applicants say they got about 7% of the stock they applied for while others received nothing. It is claimed some of the City's biggest institutional investors had been allocated the stock ahead of issue.

This would indicate that demand for bonds remains high, making last week's rally by share prices all the more puzzling.

Stock-market bears were continuing to feel the squeeze in London today as shares climbed back above 3800.

The FTSE 100 index close 110.3 points up at 3863.9, stretching its gain to 318 points or 9% in a week. Wall Street also extended its gains this afternoon.

The Dow rose 100.27 to 7324.25 despite a bigger-than-expected drop in industrial production last month.

Increased optimism about the banking sector has improved London sentiment, although most traders agree this is likely to turn out to be a dead-cat bounce.

Barclays rose 16.8p to 90.9p after confirming plans to sell part of its fund management business. The deal is expected to fetch the lender £4bn, which will be used to strengthen its balance sheet.

The insurers were also chased higher, Prudential putting on 18¾p at 279½p. Hedge fund operator Man Group firmed 2p to 195p but UBS dropped its target from 186p to 165p to reflect lower assets under management.

The shorts continue to cover their positions in Land Securities in the wake of the property developer's £755m rights issue, with the shares climbing a further 29¼p to 399¾p. That, in turn, drove up the nil-paid 17½p at 103p.

The bargain-hunters came in for Marks & Spencer, 13¼p better at 259½p. JPMorgan has tweaked its target 10p higher to 310p after seeing an improvement in the retailer's food business.

National Grid advanced 27½p to 581½p. Morgan Stanley has scuppered suggestions the group needs a rights issue and reckons the shares have been oversold.

Anglo American put on 38p at 1153p despite Goldman Sachs dropping its rating on the shares from buy to neutral and slashing its target from 1196p to 1143p.

The broker reckons metal prices may fall further. Evolution Securities continues to rate Rio Tinto, up 24p at 2101p, a sell, and cannot see any benefit to shareholders from the Chinalco fundraising. It has raised its target from 1180p to 1640p.

Cazenove has lifted its rating for Arm Holdings, 1p better at 104½p, from inline to outperform, and says it has confidence the group can cut costs.

On AIM, Victoria Oil & Gas jumped 1.86p to 4.5p. The Kazakh general prosecutor has supported it in a dispute over its ownership of the Kemerkol oil field.

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Tomorrow's agenda

Debenhams may reveal it has gained market share across the menswear, childrenswear and womenswear categories. The department stores group, which has been showing signs of a turnaround after a tough couple of years, is expected to prompt broker upgrades at its first-half pre-close trading statement. It last week acquired assets from Principles after owner Mosaic went into administration.

Analysts believe the deal cost the retailer between £5m and £10m. It is understood the brand itself has been sold to a separate legal entity, and could be resurrected. However, it seems unlikely as 66 stores have closed and 110 head-office staff have been laid off.

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