Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:07 EDT, 10 January 2008

Shares of BP were in retreat again today, losing a further 5½p to 605p as more brokers piled in to give the oil giant a kicking ahead of fourth-quarter results due to be published early next month.

Merrill Lynch yesterday slashed its profit forecast by a massive 25% to $4.4bn (£2.3bn) even though the price of a barrel of oil is currently hovering at just below $100.

Today, other brokers fell into line. ABN Amro has cut its forecast by 21% to $4.7bn after a cosy chat with the company. It now takes the view that quarter-on-quarter improvement in US refineries will be less than assumed, while upstream costs will be higher than previously thought. It continues to rate the shares a hold with a 635p target.

Citigroup has cut its fourth-quarter estimate from $5.96bn to $4.77bn, once again blaming the move on lower US marketing and refining expectations. BP's chief executive Tony Hayward tipped off the City last autumn by warning that the group's third-quarter performance had been 'dreadful'.

Elsewhere, investors liked the trading update from Sainsbury's, 23p ahead at 388p, but were less impressed with the decision of the Bank of England monetary policy committee to peg interest rates at 5.5%. There had calls for a cut following a slump in consumer spending during the run-up to Christmas and evidence of an economic slowdown.

The FTSE 100 index reversed a 25-points lead to trade 50 points down at 6222.7 within minutes of the midday announcement.

British Energy rose 3½p to 582p following the Government's decision to commission more nuclear power stations, but coal-fired power generator Drax fell 11p to 616p after Deutsche Bank cut its target from 950p to 780p because of higher costs.

TUI Travel's promotion to the Footsie 100 index has been marked by a serious decline in the tour operator's share price. The shares today fell a further 3¾p to 222½p as talk of an imminent profits warning subsided for the time being. The price has now fallen from a peak of 293.75p since the start of the new year.

Lloyd's List publisher Informa fell 25½p to 394½p after one seller off loaded eight shares at a steep discount to the ruling market price. Citigroup placed them with various institutions at 392p.

There was also a big seller of Premier Foods, down 24¾p at 163½p, following a disappointing trading update. Citigroup placed 16m shares at 167p. Panmure Gordon has repeated its buy recommendation on the shares but will reduce its profits forecast for 2007 by 7% and for this year by 9%. JM Finn Capital Markets says Premier's management failed to achieve the top-line goal range outlined at the interim stage, but still rates the shares a buy.

Indian oilfield-services companies Adani and Welspun are preparing a counterbid for Burren Energy, down 1p at 1222p, which has already agreed a £1.73bn takeover from its 25% shareholder Eni of Italy. City speculators say the Indian offer could be worth £1.86bn, or 1320p a share.

JPMorgan has upgraded Burberry, 17½p ahead at 485p, from neutral to overweight but cut its target from 680p to 620p. The investment bank says the luxury goods retailer now trades at a 17% discount to its peers despite being the only company benefiting from positive currencies, or a weakening sterling.

Cairn Energy, down 54p at 2751p, has bought interests in six hydrocarbon licences off west Greenland through its exploration-focused unit Capricorn.

TOMORROW'S AGENDA

• Builder Bovis issues a trading update. With the rest of the industry, the FTSE 250-listed company endured a dreadful 2007, which saw its share price halve. This year is expected to be little better. Citigroup predicts a drop in demand will cut house prices by about 3%. Analysts believe chief executive Malcolm Harris will report a decline in completions. Meanwhile, weak volume growth and its problems in keeping pace with bigger competitors remain major concerns. Rival Bellway, which is also issuing a statement, says reservations fell 7% at the end of last year.

• Figures from the Office for National Statistics are forecast to show that growth in manufacturing output slowed slightly in November. Economists believe output was up by 0.2%, while the wider measure of industrial production is expected to have grown only 0.1%. Recent data from the sector hint at a further cooling in 2008.