Market report: Thursday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

SHARES of Railtrack returned to the stock market and true to form were running late. They had been expected to start trading last Monday, and even today market-makers appeared hesitant about making an opening price.

Eventually, the shares opened at 215p before touching 226p on turnover of more than 90m. That compares with the Government offer of between 245p and 255p a share and remains 58p below the price they were frozen at when the group was placed into administration in October last year. Dealers reported heavy selling of the shares by private punters, who were happy to take the money and run. A line of 3.45m shares went through at 216p. There were also lines of stock totalling 10m traded at prices ranging from 217p to 223p.

Under the terms of the £500m bid by the Government-backed Network Rail for Railtrack, shareholders will receive an initial payment of between 160p and 180p a share in January. As of yet, there is no timetable for the second and final payment.

After all the shenanigans over the abrupt way Railtrack was put into administration, it should come as no surprise that private shareholders were happy to sell in the market-place. Institutional investors have chosen to hang on for the ride to recoup as much value as possible, while the leveraged hedge funds have been active buyers of the stock. They take the view there is an acceptable risk involved even after financing costs have been stripped out.

Wall Street's resilient performance overnight heartened City investors. The Dow restricted its losses to just seven points having earlier been 200-points down in reaction to the WorldCom collapse. That provided the FTSE 100 with a sound base from which to recoup some of Wednesday's losses as it ended up 9.64 at 4540.6. Trading remains thin and investor sentiment has been rattled by recent events. The market remains braced for news of further corporate collapses.

Royal Bank of Scotland helped soothe frayed nerves by posting a positive update, which described trading as in line with expectations despite the current environment. RBS responded to the news with a fall of 6p to 1802p and remains the favoured play of the banking sector with several broking houses despite worries of rising bad debt provisions. The rest of the banking sector traded mixed with Abbey National up 9p at 746p while Barclays put on 2p to 540p.

Rallies were seen in mmO2, 3 3/4p dearer at 42 1/4p, Granada, up 3/4p to 107 3/4p, and GlaxoSmithKline, ahead 43p at 1396p. Reckitt Benckiser jumped 38p to 1137p after broker UBS Warburg moved from 'hold' to 'buy' and repeated its target price of 1330p. British Airways firmed 1p to 178 3/4p as Deutsche upgraded from 'market perform' to 'outperform'. It says the shares have fallen 38% since 10 September.

Premier League soccer side Leeds United slumped 1/2p to a new low of 5 3/4p on news that manager David O'Leary had left the club by mutual consent.

A profits warning left Geest nursing a loss of 192p at 571p. Poor weather in May and much of June have taken a heavy toll of its range of prepared, convenience and leaf salads. A profits warning also hit Avis Europe, down 54 1/4p at 118 1/2p.

Fitness First fell 42 1/2p to 357 1/2p. Interim pre-tax profits grew by almost 50% to £11.7m but progress at its French arm was slower than expected.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

The Daily Mail's Geoff Foster on yesterday's trade
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