Market report: Tuesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

WILL City banker and broker Singer & Friedlander become the next financial services outfit to come under the hammer? That was the story doing the rounds in the City today as the shares stood out with a rise of 2 1/4p to a two-year high of 208p, making it one of the best performers among the second liners.

The move came after Icelandic investment bank Kaupthing-Bunadarbanki spent some of the money it had raised from a e500m (£340m) bond issue in the summer buying an extra 6.9m shares in Singer. That raises its total stake to 18.37m shares, or almost 10% of the company. City speculators say a full bid is likely to follow.

Kaupthing-Bunadarbanki is known to be keen to expand in the UK and recently bought BMY Corporate Finance. The group first appeared on Singer's register last month, leading to suggestions it may be interested in buying Carnegie, in which Singer held a 31% stake.

But most of its stake in Carnegie was sold yesterday for £97.5m and now Singer itself may have become the target. Last year, it was being linked with broker Collins Stewart, which was formed by a management buyout from Singer. Broker Numis Securities has put a take-out price on the bank of 275p, valuing it at £529m.

Elsewhere in financials, HSBC briefly touched 919p, giving the banking giant membership of that small but exclusive club made up of companies worth £100bn or more. Profit-taking later saw the shares trade 7 1/2p cheaper at 906p.

HSBC last week became Britain's biggest company, easily outstripping its nearest rival BP, 2 1/4p firmer at 418 1/2p, which is now valued at a mere £92bn.

Share prices generally traded within a narrow range. The FTSE 100 index fell 2.3 points to 4330.3, unable to glean support from an encouraging performance by the Dow overnight in New York.

The City gave an enthusiastic thumbs-up to better-than-expected interim results from Marks & Spencer although the shares lost an early lead to trade 2 1/4p down at 285p. Broker Cazenove rates the shares a buy and has pencilled in £775m of pre-tax profits for the full year. That compares with market forecasts of between £772m and £721m. Where Cazenove leads, others will certainly follow.

Builders' merchant Travis Perkins was marked 37p higher to 1234p after US securities Smith Barney raised its recommendation on the shares from hold to buy while sticking with its price target of 1380p.

Biotech specialist Celltech fell 25 1/4p to 418 3/4p after UBS downgraded the shares from buy to neutral while repeating its 480p target price.

Shire Pharmaceuticals came under fresh selling pressure, rising 7 1/2p to 448 3/4p with US securities house Lehman Brothers downgrading the shares to underperform and repeating its 410p target price.

FirstGroup came within a whisker of a two-year high with a rise of 1 3/4p to 303 1/4p, while Go-Ahead came off recent highs with a fall of 29 1/2p to 1028p.

The Strategic Rail Authority has selected FirstGroup as preferred bidder for the Thames Trains franchise over Go-Ahead.

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