Market report: Wednesday close

By Mickey Clark for MailOnline
Updated:

 

Shares of High Street bookies took a bashing after the Government threatened to curb the use of fixed-odds betting machines, which account for about a third of their profits.

Mickey Clark

The Evening Standard's Mickey Clark

Sports Minister Gerry Sutcliffe is worried that high-stake gaming machines are in danger of triggering a gambling problem in the UK. He has asked the Gambling Commission to give priority to work on the risks associated with such machines.

He says he is concerned about the 'longer-term impact of the growing popularity of fixed-odds betting machines and high-stake gambling machines'.

'We have always said that if any evidence emerges that they are causing harm then we are prepared to take action, and we have the power to take action&39;, the Minister insisted. His comments left William Hill nursing a loss of 22p at 403p and Ladbrokes down 8¼p at 317¾p.

Meanwhile, stock-market bears regained the upper hand today, driving share prices lower and wiping out much of the gains achieved during the past few days. But, as with the recent rise in shares, turnover levels left much to be desired. Even so, the FTSE 100 index was left with a loss of 73.3 at 5893.6, reflecting the setback on Wall Street overnight.

A reversal in fortunes for the banks did the damage. A slump in profits at Alliance & Leicester, down 36p at 492p, pulled the rug on sentiment, leaving HBOS 12&frac12p lower at 646½p and Royal Bank of Scotland off 3½p at 363¼p. Barclays extended yesterday's lead with a rise of 13p at 490p. Lehman Brothers has lowered its target from 554p to 534p but has repeated its buy rating. It regards Barclays as the best risk/reward investment among the major UK banks.

Building shares were spooked by reports that the days of the 100% mortgage are over, leading to fears of further weakness in new- house prices. Taylor Wimpey dropped 13.9p to 166.2p, Persimmon 34½p to 705½p and Barratt Developments 17¾p to 393¾p. Builders' merchant Wolseley fell 25p to 653½p.

Vodafone was a dull market, losing 7.9p to 162p. It earns a lot of its profits in the US, where mobile phone companies are coming under pressure to reduce the cost of calls.

Bid target Xstrata was squeezed 57p higher to 3947p amid speculation it is close to agreeing terms with Brazil's Vale of 4700p a share. Neither side would comment. Vale is believed to have held talks with the miner's biggest shareholder Glencore, which owns 35% of the company.

UK Coal stood out with a rise of 26p to 445¼p after Numis began coverage of the shares with a buy rating and 661p target. It says the mining operations are becoming increasingly more important in terms of valuation as macro-economic conditions and management actions take effect. Current valuations are conservative.

Johnson Matthey slumped 54p to 1947p after Bear Stearns cut its rating from outperform to peer perform because it reckons the shares look fully valued, having struck its own target of 2000p. It warns the market is currently overestimating JM's leverage to the record highs in platinum and other precious metals.

Citigroup has raised chemicals group Croda International, up 28½p at 604p, from buy to hold, but has kept its 700p target unchanged. Citigroup reckons yesterday's full-year numbers restored confidence in Croda after last year, when the shares fell and raw-material costs soared. That combined to undermine efforts to improve margins at its Uniqema subsidiary.

Stock market information

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Financial data - newspaper and pen

TOMORROW'S AGENDA

• All eyes will be on Centrica as the energy supplier unveils full-year figures. Analysts predict a 40% jump in profits to about £2bn, just weeks after British Gas raised gas and electricity prices. While investors will doubtless be pleased with the strong performance, its record earnings will add to criticisms that energy companies are ripping off customers. Chief executive Sam Laidlaw is likely to defend the price rises by pointing out the profitability of the British Gas Residential division fell sharply in the second half of last year as oil prices soared.

• Despite the gloom engulfing the retail sector, figures from the Office for National Statistics are expected to show sales picking up in January after a miserable December. Analysts forecast a 0.2% rise in sales but margins are believed to have taken a hit from heavy discounting as stores tried to draw in bargain-hungry consumers.

• Defence and aerospace giant BAE Systems delivers annual results. Analysts forecast that 2007 pre-tax profits will rise to £1.2bn from £894m the year before. While its UK programmes have been hit by cost over-runs, the group should report strong growth in its land and armaments divisions. Investors will also be hoping for news on who will replace Mike Turner as chief executive when he steps down in August.

• Struggling DIY retailer Kingfisher issues a trading statement. Investors hoping B&Q's store refurbishment programme has paid off are likely to be disappointed, with analysts forecasting a 3% fall in like-for-like sales and flat full-year profits. Ian Cheshire, who replaced Gerry Murphy as chief executive last month and is tasked with turning around the business, is expected to slash the dividend next month.

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