Market report: Thursday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

US HEDGE fund Appaloosa Investment Partnership has taken a profit after selling the stake of nearly 5% it bought in loss-making power generator British Energy only six days ago.

So much for claims that the Americans had bought the stake in order to squeeze out better terms for shareholders from the Government's refinancing deal of British Energy with the banks.

Appaloosa says it no longer has a notifiable interest in the debtladen group. British Energy ordinary shares were chased to an 18-month high of 11.68p today as a further 90m shares changed hands, before settling to trade 3.35p lower at 6.90p. The A shares marked time at 5.5p.

The price has more than doubled during the past few days as more than 500m shares were traded, fuelled by a big short position and the decision to call a halt to stock lending. Under the present terms of the refinancing deal, equity shareholders will be diluted to 2.5% of the company by an issue of new shares, with warrants accounting for a further 5%. It was said Appaloosa argued that the terms were too generous to creditors.

British Energy is awaiting approval from the European Commission for the Government's terms. Without that approval, it will be sunk. Share prices traded in a narrow range, with the Bank of England monetary policy committee's decision to raise interest rates a quarter-point to 4% widely expected. A disappointing start to trading on Wall Street dampened sentiment in London and the FTSE-100 index slipped 14.1 to 4384.4.

Music publisher EMI jumped 9 3/4p to 231 1/4p, buoyed by the news that French rival Vivendi Universal had lost market share.

The tale of woe continues at oil giant Shell, down 7p at 358 1/2p, as the market was distinctly unimpressed by full-year numbers. There was heavy selling of the shares, with lines of nine million and six million going through at 363 1/2p.

Reuters rose 4 1/2p to 342 1/2p after Deutsche Bank raised its recommendation from hold to buy. It reckons the news agency and financial information supplier is the cheapest cyclical stock in its European media portfolio.

Full-year pre-tax profits from Smith & Nephew, up 13 1/2p at 498 1/2p, saw a 15% rise to £242m with the healthcare group upbeat about prospects this year. It described market conditions as robust. Chinese energy supplier Fortune Oil rose 0.4p to 5.2p. The group is selling its 24.5% stake in South China Bluesky Aviation Oil to China Aviation Oil (Singapore) for almost £32 m. That is double its net asset value and almost half Fortune's stock market value.

Man Group gained 5p to 1579p as broker Credit Suisse First Boston raised its target from 1800p to 1900p while repeating its outperform rating.

Hotels operator Hilton dipped 2 1/4p to 226p after being downgraded by US securities house Goldman Sachs from in-line to underperform with a 200p target.

The Financial Services Authority has suspended shares in Jarvis Hotels at 144p pending details of a proposed £228m management buyout. For the past three months, chairman John Jarvis has been working on a 145p offer to take the mid-market hotels group he founded private.

Steelmaker Corus rose 1 3/4p to 40 1/2p after saying it would try again to sell its aluminium business. The group tapped shareholders last year for £300m.

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