Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:31 EDT, 7 September 2006

SHARE prices fell sharply around the world today, but City investors still pride themselves on their ability to spot a bargain when one comes along.

That appeared to be the case today when US broking house Goldman Sachs offered a parcel of 30m shares, worth almost £74m, in BT Group at 246p at a time when the bid price stood at 248p. The shares were soon placed with a number of institutions.

The telecoms giant was later down 4p on the day 245½p. But brokers were quick to point out just how ready professional investors are to part with cash when they feel there is value to be had - even in a falling market.

There was plenty for investors to feel worried about elsewhere. The Dow fell sharply overnight on Wall Street, rattled by a sharp rise of almost 5% in labour costs during the second quarter. The selling continued in New York this afternoon and those hoping that interest rates had peaked may now have to think again.

The selling spilled over into Tokyo and Hong Kong. So there was only one way for share prices to go when trading resumed in London - down. As a result, the FTSE 100 index fell 70 points to 5859.3. The decision of the Bank of England's monetary policy committee to peg interest rates at 4.75% came as small relief.

One of the biggest fallers among blue-chips was plumbing supplies group Wolseley, off 35p at 1115p. It has extensive interests in the US. Another company heavily dependent on the US is building products supplier Hanson, whose shares were down 14p at 658p.

Utility Scottish and Southern Energy added 15p at 1230p after Citigroup moved from hold to buy and jacked up its target from 980p to 1350p. It points out the company has taken the gamble of sacrificing an estimated £1.2bn of profit by choosing not to raise prices in order to attract new customers.

Tomkinswas given short shrift by the City after warning that profits for the third quarter would be below expectations. The automotive products group blamed the slowing US economy and offered little prospect of improvement. As a result, the shares slumped 41½p to 241¼p, the biggest casualties among second-liners.

The residential market in North America had slowed 'markedly' and automotive equipment had been weaker than expected, the company said. It also blamed the ill-effect of rising US interest rates, and says it must await the outcome of trading in September, which normally accounts for 50% of operating, before offering a clearer picture.

Music publisher EMI slipped 1¾p to 264¾p on positive comments about prospects from US broker Goldman Sachs.

On Aim, shares of Meriden were suspended at just 0.04p after the company asked to be placed in administration. It described the move as precautionary because it had not received a response from SeaFrance as to whether it will enter an informal compromise agreement that had been accepted by 90% of the residual creditors of the group's logistics division. Meriden placed its logistics division in administration in June.

It was the first day of trading on the junior market for Chromex Mining, a South African explorer of Chromite, which is used in chrome products. Broker Corporate Synergy has raised £870,000 through a placing of 4.35m shares at 20p. They opened at 21p before settling at 21½p.

Miner AIM Resources rose 1.25p to 6p after bringing forward the start of production at its flagship Perkoa zinc project in Africa by a full 12 months to the middle of next year. The company credited the move on new mining methods and said the project would produce 500,000 tonnes of zinc a year.