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Market report: Wednesday close

By Mickey Clark for MailOnline
Updated: 12:43 EDT, 7 May 2008

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Rugby-playing baked-beans king Tony O'Reilly has spent another €1.25m (£813,500) topping up his holding in Irish publisher Independent News & Media, leading to speculation it may be a defensive move.

Mickey Clark, Evening Standard

The man who used to run HJ Heinz has bought 500,000 shares at €2.05 each, stretching his total holding to 231.69m, or 27.88% of the company.

Another Irish businessman, Denis O'Brien, has also been stakebuilding in the shares, fuelling talk he may be pondering a bid. At the last count, he owned 175m shares (21%).

It also emerged at the weekend that Carlos Slim, the world's second-richest man, has been pocketing shares in IN&M, a tad lighter at €1.99. The Mexican billionaire made his money introducing the mobile phone to South America, and is reckoned to have snapped up a 1% stake - adding to the rumours about a takeover. Slim and O'Brien have crossed swords before, and are said to be competing for lucrative contracts to supply mobile phones to other parts of South America.

Shares generally were on a positive track. In another day of thin trading, the FTSE 100 index rose 45.8 to 6261. On Wall Street this afternoon share prices opened a touch softer for choice. The Dow fell 19 points to 13,001.9.

More than 17m shares changed hands in Mitchells & Butlers, lifting the pubs chain 15¼p to 340¾p. Word is property developer Robert Tchenguiz, who is thought to hold a 23% stake, has been adding to his holding. He wants to block the proposed takeover of Punch Taverns' managed pubs chain by M&B. Such a move could end up with Punch, up 60½p at 600p, owning 25% of M&B.

Enterprise Inns jumped 115¼p to 510p on talk it will get real estate investment trust status. The sunny weather also lifted Marston's 34½p to 234p, and Greene King 55½p to 590½p.

When other banks were diving into the debt market to trade in those ill-fated toxic loan parcels, Lloyds TSB, up 10½p at 499½p, played a straight bat. But some brokers are now complaining its conservative approach has not served it well and that the shares will suffer in the long run.

Some brokers take a cautious view in the wake of yesterday's bullish trader. Credit Suisse repeated its neutral rating and trimmed its target by 20p to 460p. It says the Bank of England pumping billions into the banking system, and successful rights issues from Royal Bank of Scotland, 1p cheaper at 364p, and HBOS, 19½p better at 519½p, have 'significantly reduced' Lloyds' advantage over other domestic players.

US broker Morgan Stanley remains underweight in Lloyds, with a rockbottom target of just 300p, despite double-digit first-quarter profit growth.

Citigroup reckons only time will tell. It is still a Lloyds buyer with a 500p target, reduced from 550p, saying the bank is unlikely to need a rights issue.

The appearance of a few bargain-hunters enabled the builders to stage something of a rally. Persimmon led blue-chips higher with a rise of 32p to 620½p, pursued by Barratt Developments, 15p up at 282½p, Taylor Wimpey, 5¼p ahead to 131¼p and Redrow, gaining 18p to 289¾p.

Goldman Sachs has downgraded Smith & Nephew, 6½p cheaper at 550p, from neutral to sell in the wake of last week's profits warning. It slashed its target from 710p to 530p.

Keep an eye on AIM-listed Coal of Africa, which jumped 9¾p to a record 176¼p. The coal development company has sold the Holfontein project in South Africa to Australia's Lachlan Star for A$25m (£12m). Medusa Mining rose 4p to 67½p after finding a rich vein of gold in the Philippines.

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TOMORROW'S AGENDA

• The Bank of England announces its interest rates decision at noon. Yesterday's dire figures on the service sector, which showed that growth almost stagnated in April, fuelled speculation that the Bank will opt for a further rate reduction.

• Fashion chain Next is tipped to reveal dismal figures when it updates the market on trading. Analysts at Dresdner Kleinwort anticipate a 9% drop in like-for-like sales in its stores and a 3% decline in sales from its Next Directory catalogue.

• Smirnoff and Guinness owner Diageo publishes a trading statement covering the first three months of the year. Despite consumers curbing spending in many of its key markets, the drinks giant is predicted to report sales growth of about 6%. Demand in the US remains strong while its brands are proving increasingly popular in emerging markets.

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