Market report: Tuesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

DISAPPOINTING trading news from Interbrew, Europe's biggest brewer, left the rest of the drinks sector with a hangover today.

The brewer of Stella Artois and Beck's shocked the industry by reporting a near-2% drop in like-for-like sales volume in the UK and western Europe, highlighting the tough trading conditions the big brewers are being forced to contend with.

Drinks companies were among the biggest blue-chip fallers with Scottish & Newcastle down 6 1/2p to 416 1/2p, Whitbread losing 16 1/2p to 836 1/2p and Allied Domecq off 7p at 455 1/4p. Pubs operator JD Wetherspoon slipped 1 3/4p to 236 1/2p after its second profits warning in three months.

Share prices generally posted modest gains in thin trading with the FTSE 100 index down 2.3 at 4357.7. At midday in New York, the Dow Jones industrial average was down 6.19 at 10,232.03 and the Nasdaq composite index was down 3.63 at 1,933.29.

In London meanwhile, soaraway oil group Cairn Energy touched a record 1495p before paring back to trade 9p cheaper at 1418p. But traders are still forecasting the company will later this year become a constituent of the FTSE 100 index.

This latest boost to the confidence of its growing army of investors came after the group revealed it has won Indian government approval to explore to the north of one of its existing oil finds in Rajasthan. The extension to Cairn's N-C 400m barrel oil discovery covers 850 square kilometres. This latest surge in its share price gives Cairn a price tag of £2.3bn and places it above the threshold needed to catapult it into one of the City's most exclusive clubs.

The shares have soared from 364p at the start of the year on the back of prospects for Rajasthan. Broker Merrill Lynch has repeated its buy recommendation.

Mining giant Anglo American rose 16p to 1136p, boosted by bullish comments from Merrill Lynch. It rates the shares a buy and has set a target price of 1600p. Merrill says it is impressed with the performance of diamond producer De Beers, where AA holds a 45% stake.

Brentford-based IT reseller and services provider Morse, down 18p at 111.5p, has made a recommended £50.2m offer for Surrey-based IT services company Diagonal, up 5p at 51 1/2p. The terms of 55p a share could flush out a rival offer from Microgen, which recently built up a 7.5% stake in Diagonal but saw its own offer brushed off in May by chairman Malcolm Gloak. Based on Morse's offer, Microgen is sitting on a £1m profit from its stake.

Rail engineer Jarvis ran out of steam after an early mark-up, slipping 2p to 40p. It is striving to come up with a strategic review that will reassure the banks, which are threatening to pull the plug on the business. Jarvis has debts of more than £230m but is capitalised at only £60m.

Plumbing and building supplies group Wolseley paved the way for a round of broker upgrades by publishing a bullish trading update. It showed the group making the most of buoyant conditions in Britain and the US. The shares rose 42 1/2p to 875p. Merrill Lynch has repeated its neutral rating while US brokerage Smith Barney has reiterated its buy ahead of full-year results on the 27 September.

Drugs supplier Warner Chilcott firmed 6 1/2p to 639 1/2p after broker UBS raised its recommendation on the shares from neutral to buy while keeping its price target of 850p.

BBA, up 1/4p at 267 1/4p, also came under UBS's microscope after the broker repeated its buy recommendation on the shares while lifting its 12-month price target from 310p to 320p.


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