Wolseley sags on cash call fears

Building materials group Wolseley has seen a mini-revival in its battered share price since July, but that has now ground to a halt.

Analysts are once again expressing concerns about the company's exposure to the struggling US market, and suggestions it might need a hefty rights issue have returned to the fore. Citigroup, in a note cutting its recommendation from hold to sell, forecast the group had borrowings of around £2.6bn at the end of July.

"While the group is currently fairly determined not to have a rights issue, the risk that it resorts to one at some stage in the next 12 months remains high," said the bank. "While dilutive (around 105-15% for £600m-£800m), it would put the group in a much improved position to take out some of its struggling competitors on the way back out of the housing induced slump."

Collins Stewart started coverage of the company with a sell note, suggesting a £1bn cash call at 300p a share could be needed if the company looked in danger of breaching its banking covenants.

Wolseley closed 20.75p lower at 445.25p.

Overall, leading shares ended the week on a positive note, albeit after a jittery performance during the day. Poor US retail sales and worries about the health of Lehman Brothers - not to mention other financial institutions such as AIG, Merrill Lynch and Washington Mutual - sent Wall Street sharply lower initially, and undermined the London market. But growing hopes that Bank of America would rescue Lehman revived the Dow Jones Industrial Average by the time London closed, and helped push the FTSE 100 up 98.3 points to 5416.7.

Miners were among the leading risers after a rebound in metal prices. Eurasian Natural Resources Corporation climbed 60p to 722p, while Anglo American added 194p to £25.02. Lonmin recovered 111p to £30.40 despite doubts a proposed takeover would succeed. Lehman Brothers analyst Christopher LaFemina said he doubted whether Xstrata would increase its rejected £33 a share offer, and could even walk away, while a white knight bidder was unlikely to emerge.

Supermarket group J Sainsbury was the subject of Friday bid speculation, up 19.75p to 365p on unsubstantiated talk of a possible offer of 510p to 525p a share this weekend. Fashion retailer Next closed up 63p at £11.49 as Cazenove moved its recommendation from in-line to outperform.

Recruitment group Michael Page was 9.75p better at 319.75p. But analysts said the likelihood of a bid from Swiss rival Adecco had receded after the death of its founder Klaus Jacobs. Analyst Kean Marden at Kaupthing said: "We believe Jacobs was a driving force behind Adecco's interest in Michael Page and, in the absence of his influence, a formal bid above the previous rejected 400p level is unlikely."

Travel companies benefited from the removal of a competitor following the collapse of XL Leisure. TUI Travel rose 16.25p higher at 238p, Thomas Cook climbed 15.75p to 250.75p.

And on the day XL went under, there was better news from a travel industry minnow. Dart Group rose 6.25p to 30.5p after it issued an upbeat trading statement, saying its Jet2.com was set to report a record summer and first half profits would be ahead of market expectations at £30m.

Finally, another side effect of the Lehman chaos: it appears enterprising webbies are snapping up domain names relating to the bank and its possible purchasers. Good luck on that.