FTSE close: BA, M&S up; Rexam down

By THIS IS MONEY
Updated: 11:57 EDT, 13 November 2009

The London market was in subdued mood after a busy corporate week, despite the news that BA and Iberia had finally tied the knot.

At the close, the FTSE 100 index stood 19.8 points higher at 5,296.4, after the Dow Jones Industrial Average closed off nearly 1%.

British Airways shares had been up as much as 4% but fell back to stand just 2p higher at 217p as investors chewed over the details of last night's £4bn merger announcement with Spain's Iberia.

The struggling airline, whose shares rose 8% yesterday in expectation of the deal, expects to generate £360m a year of savings from the tie-up, which will create the world's biggest airline.

Doubts have emerged, however, as to whether the sticking point of BA's massive pension deficit has actually been fully resolved.

Retailers did well after John Lewis said department store sales surged by more than 13% last week. Marks & Spencer was the main beneficiary as shares lifted 3.4p to 372.3p. Rival Next was 8p up at 2,021p.

Platinum specialist Johnson Matthey was boosted by higher platinum prices and a Banc of America-Merrill Lynch upgrade. Shares were 37p up at 1,558p.

On the fallers' board, Rexam shares were 3% lower after the packaging firm said volumes remained under pressure, although this was offset by cost reduction initiatives and currency gains. Shares were down 5p at 284p.

The FTSE 250 index risers' board featured a number of housebuilding stocks as the sector gears up for another batch of trading updates. Persimmon, which is due to post figures on Monday, rose 17.1p to 460.1p, while Taylor Wimpey added 2.01p to 42.51p.

Toy maker Hornby was unchanged on 140p after it cut its interim dividend due to the weakness of sterling.

Interdealer broker Tullett Prebon topped the list of FTSE 250 fallers, as its shares plunged 12%, or 49.8p to 349.5p, after the company said employees poached by arch-rival BGC account for a greater-than-expected 7.5% of revenues.

'Tullett hadn't put a number on the revenue impact. It's much higher than the market was expecting,' says Noble analyst Nitin Arora, who estimates Tullett's earnings per share for 2010 would fall 12% if none of the departing brokers were replaced.

Shares in Firestone Diamonds gained 5%, or 1.5p to 32.5p, after the Aim-listed miner reported its full-year results, which Evolution Securities says demonstrates 'the group's transformation', while repeating its 'buy' rating.

Aim-listed Red24 was boosted a hefty 28% by the announcement it has won two contracts worth a minimum of $700,000 over the next calendar year with two major US insurance underwriters.

Hoodless Brennan, which repeats its 'buy' rating, says in a note: 'This looks like excellent news for Red 24 which is hardly expensive on the basis of existing forecasts.'

Shares were 1.75p up at 8p.

• CITY DIARY: Companies reporting and economic data next week