Market report: Thursday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

THE DOLLAR slumped to an 11-year low today against the pound of $1.8951 and sent out a warning to the City about the impact on big dollar-earners in the UK.

Results from GlaxoSmithKline, down 43p at 1130p, came in below expectations - partly attributed to the greenback's continuing slide.

The dollar's weakness may be providing British companies and investors with an opportunity to pick up assets on the cheap, but it is taking a heavy toll of those companies that earn a large part of their profits in dollars and lose out when translating into sterling.

Brokers warn that investors may face a wave of profit warnings around the end of the first quarter as the true impact starts to be felt. Big dollar-earners hit today included AstraZeneca, down 31p at 2563p, and Standard Chartered, 12p to 901p.

Currency concerns saw the rest of the market lose an early lead, the FTSE 100 closed 18.3 points lower at 4,377.7, as Wall Street opened lower this afternoon.

But good times lie ahead for shareholders of Britain's biggest biotech company Celltech, in the view of one of the City's leading players.

Deutsche Bank today raised its recommendation on the shares from hold to buy and lifted its 12-month target price from 375p to 800p, compared with the current 415 3/4p, up 9p, and their record high of 1843p reached four years ago.

Deutsche was telling clients today that the imminent attraction of the right commercial partner for the group's anti-inflammatory drug CDP870 should ensure its status as a blockbuster product. Newsflow in 2004 is expected to emphasise the group's biotech effort and should be reflected in a higher re-rating of the shares.

The 20% rise in pre-tax profits at Barclays to £3.85bn was in line with forecasts. Mark Thomas of Fox-Pitt Kelton said income was better than expected but bad debts were slightly worse than expected. Barclays' chief Matt Barrett declined to comment on speculation he is in talks to buy US credit cards group Providian. The shares fell 20 1/4p to 495p.

In the wake of Comcast's bid for Disney, ITV continues to be viewed as a likely takeover target for American giant Viacom. ITV is currently valued at almost £6bn with debt of £560m while Viacom has a price tag of £41b, and £1.6bn of annual free cash flow. Brokers like Oriel Securities say a bid by Viacom would make commercial sense. But ITV fell 2 1/42p to 138p after an initial rise of 1 3/4p.

Satellite broadcaster BSkyB reacted to profit-taking with an 8 1/2p fall to 767 1/2p following yesterday's recovery in profits that enabled the first dividend for more than five years. Deutsche Bank is bullish about prospects and has set a price target of 875p while US securities house Lehman Brothers says the shares could rise to 825p.

Supermarkets owner Wm Morrison, which is in the process of buying Safeway, firmed 3 1/4p to 224 3/4p. US brokerage Smith Barney says now is the time to start buying the shares again.

BTG jumped 24 1/2p to 140p despite planning to raise almost £27m through a two-for-five rights issue at 70p. It wants the money to develop its treatment for varicose veins.

Hotelier De Vere Group rose 3 1/2p to 420 1/2p, near its five-year high of 450p. Broker UBS has taken a shine to the shares and raised its recommendation from neutral to buy. It has also raised its 12-month price target from 305p to 510p.

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