FTSE 100 close: Media, water stocks get broker boost

By Adrian Lowery
Updated: 12:18 EDT, 27 May 2009

Positive broker notes on media and water utility stocks failed to provide direction to the Footsie today.

Reasons to be cheerful: Will shares rise on better news from the service sector?

The FTSE 100 index closed 4.5 points higher at 4,416.2, having meandered in a narrow range all day. Little inspiration came from Wall St, where the Dow Jones was 8.9 points down at 8,464.6.

David Fineberg, chief dealer at CMC Markets, says the 4,400 level continues to prove a challenge for the blue chip index to break away from.

'Although we're above there for the time being, it's hardly testament to any bigger recovery in stocks,' says Fineberg.

'The sell in May phenomena still has time to take hold and knock the wind out of stocks but at the same time we do need to recognise that equities are holding onto gains in difficult circumstances.'

ITV and other media stocks surged today after Goldman Sachs issued an upbeat note on the sector, raising their price targets as well as upgrading a number of companies' recommendations.

'Following more positive macro data, we increase our 2010 forecasts by 23% on average,' Goldman analysts said in a note.

The broker upgraded ITV to 'buy' from 'sell' and added the commercial TV broadcaster to its 'conviction buy' list, sending the shares 12% or 3.5p higher to 31.5p.

Johnston Press was lifted to 'neutral' from 'sell', boosting the stock 0.25p to 24.25p, while Goldman reiterated its 'buy' recommendations on Reed Elsevier - 4p up at 510p - and Aegis, 4p to the better at 86p.

Water utility shares also benefited from a broker upgrade from Credit Suisse, which has become more bullish on the sector. In the top flight, Severn Trent surged up the leaders' board, gaining 19p to 1,158p. United Utilities, which is due to post figures tomorrow, rallied 1p to 543p, while Northumbrian Water added 3.25p to 249.75p.

Home Retail Group's shares surged 8.75p to 235.25p on recovery signs from smaller rival Topps Tiles. Small-cap stock Topps cheered 21% or 13.5p to 78p after it said current like-for-like sales were down 11.9%, against a fall of 18.5% in its first half.

That couldn't help fellow retailers Next and Marks & Spencer, as they went ex-dividend: shares were down 25p at 1,452p and 1.75p lower at 286p respectively.

Royal Dutch Shell is poised to announce a wide-ranging restructuring under its new chief executive, Peter Voser, the Financial Times said, with the changes started on Monday by the sudden departure of Linda Cook, head of the firm's Gas & Power division and a former contender for the CEO's job. Shares fell 15p to 1,648p.

The biggest Footsie risers were Intercontinental Hotels up 38p at 675p, Man Group ahead 12.75p at 250p, Old Mutual up 3.4p at 73.5p and Thomas Cook up 9p at 233.75p.

The biggest Footsie fallers were Lonmin down 55p at 1301p, Fresnillo off 28.5p at 679p, Legal & General down 1.8p at 61.9p and Cobham down 4.7p at 181.5p.

In corporate news, Jessops shares tumbled 52% after the company said any debt restructuring of its business would leave shareholders with nothing. It also reported losses of £6.3m for the six months to March 31, as the beleaguered stock slipped 4.2p to 2.43p.

Northern Foods shares were 2.75p down at 58p, despite issuing profits against expectations. The Leeds-based firm - which makes Goodfella's pizzas and Fox's biscuits - said around a fifth of annual sales were coming from goods aimed at cash-strapped shoppers as the firm steers a path through recession.

Pre-tax profits for the year to 28 March were down 5% to £47.5m.

TOMORROW'S AGENDA

Tate & Lyle, the Splenda sweetener and Golden Syrup maker, unveils full-year results, with the City keen to hear its new chief executive's priorities. Javed Ahmed, executive vice-president of household products giant Reckitt Benckiser, will step into Iain Ferguson's shoes in November.

It will hardly be a sweet inheritance: under Ferguson's watch, profits have slid and Tate was recently booted out of the FTSE 100. The sugar giant has already warned that underlying pretax profits will be slightly lower than the £244m it posted for the previous year, so the focus is likely to be on the dividend. analysts expect it to be maintained, warning that a cut could trigger fresh concerns about its trading performance.

Chip Hornsby, Wolseley's chief executive, is unlikely to find much to cheer investors when the plumbing and builders merchant updates the market on trading. Wolseley launched a cash call to boost its balance sheet in March and this month sold a majority stake in its ailing US arm, Stock Building Supply.