Market report: Friday close

By MALCOLM WITHERS
Updated:

 

MANUFACTURING stocks enjoyed a revival today on talk that BAE Systems was about to sell off its aerostructures business to GKN.

Volume in the aerospace group's shares has been running high over the past few sessions and today was no exception. From the outset they were in demand, climbing to more than 27m shares, the price 6 1/2p firmer at 170p.

The aerostructures unit could go for a heady £300m although GKN, up 6 1/2p to 269p, denied talks and is in any case unlikely to pay top dollar. BAE was also helped along by an upbeat note from investment bank CSFB, with talk of a US bid in the background.

ICI was another star among the blue-chip risers, gaining 5 1/2p to 225 1/4p as the dollar firmed. Engineer Tomkins also benefited from the revival in manufacturing, rising 8 1/2p to 261p. Possible US interest in Granada firmed its shares 2 1/2p to 142 3/4p. Carlton moved ahead 7p to 276p.

Bank stocks continued to be in favour following the £31bn purchase by JP Morgan Chase of Bank One, creating the second largest banking franchise in the US. Dealers were predicting that Stateside banks led by Bank of America may soon be looking across the Atlantic for a bigger presence in the UK.

Alliance & Leicester firmed 6p to 906p and Lloyds TSB improved 7 1/4p to 473 3/4p. Barclays' wholesale banking unit Barclays Capital had relatively negligible exposure to Parmalat, said a spokesman after reports of a £45m hit, and the bank's shares rallied 8 1/4p to 536p.

Prudential was again the focus of attention as its shares ran up 8 1/2p to 506 3/4p on the back of the chase for its 79% stake in internet banking group Egg, unchanged at 179p.

Front-runner to make a bid is US banking giant MBNA, dealers saying that the Americans will make a move over the weekend. The Pru could pocket £750m from any deal, which dealers believe will amount to 200p a share.

Share markets were firm and the FTSE 100 climbed 31.8 to end the day at 4487.9.

Further job losses and sell-offs at Cable & Wireless boosted its share price 4 3/4p to 149p. Music group EMI enjoyed a Goldman Sachs upgrade to outperform that lifted its shares 19 1/4p to 230p.

The US World Baseball Series has attracted record bids from advertisers, reminding the sector that the European Soccer Championship in Portugal this year is likely to spur sporting ad spend.

London's official pitch for the 2012 Olympics, launched in Covent Garden today, led advertisers to look forward to the Olympic Games in Athens this year.

Big spender HSBC is reviewing its contract for advertising spending worth several hundred million dollars, and WPP has been shortlisted. UBS, in a wide-ranging review of the sector, forecasts that European advertising growth will increase from 3.2% to 4.3% in 2004.

WPP was lifted another 14 1/2p to 643p only 24 hours after Investec turned positive. Rupert Murdoch's BSkyB firmed 7 1/2p to 773 1/2p after the Swiss broker set a target price of 1000p and repeated its buy advice.

It also upgraded Reuters to neutral, and its shares rose 1 3/4p to 320p.

Oil mid-cap Paladin Resources edged 2 1/2p higher to 88 1/2p after revealing earnings for 2003 should be about £29m and unveiling a £75m investment programme for the coming year.

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