Market report: Wednesday close

By MALCOLM WITHERS
Updated:

 

ONE of the last of the blue-chip tech stocks, Arm Holdings, plunged closer to expulsion from the FTSE 100 as UBS Warburg downgraded the stock to 'sell' from 'hold', sending the share price plummeting to 180 1/2p. It later recovered to 187 1/2p, a loss of 14 1/2p.

The broker has cut its price target to 150p from 260p on fears that revenue growth from licences is under pressure. It forecasts that licence revenues will grow by 22% year-on-year in 2002 while revenue from royalties will fall 2% in the same period. In 2003, forecast licensed revenue growth will be 15% and 27% royalties growth, moving to 19% and 16% respectively in 2004.

The Footsie future of Arm is likely to depend on the meeting of the independent FTSE committee on 12 June. Changes throughout the FTSE indices will be based on prices at the close of business on 11 June. At this rate, Arm will not survive in the Footsie - and neither will Sage, despite a gain of 1p to 180p that still left its market cap below £3bn.

There was not much of a welcome awaiting GKN when the engineer returned to the blue-chip index having been expelled last December. The shares fell 4p to 341p.

Sharp falls overnight in the US left London depressed, and buoyant retailers initially failed to keep the Footsie in the black. The index was off 7.3 points at 5066.9 just ahead of Wall Street's open but then edged up to show a gain of 8.8 points at 5083.0.

Heavyweight drug stock AstraZeneca shed 49p to 3017p on fears of generic competition to its ulcer drug Losec. Worries about delays in the group's new drugs portfolio weighed on other pharmaceutical counters.

Bid talk still persisted at Legal & General . Volume in the shares increased by another 38m to take the total number of shares traded this week to nearly 175m. Gossip that the bid could be around 200p once again circulated, but at the end of the day the shares were 3 1/4p down at 155p.

The French and Germans appear most likely to be chasing L&G via their Axa, Allianz and Munich Re groups. NatWest failed with a bid thought to be worth 210p a share three years ago, and the bank was eventually swallowed by Royal Bank of Scotland. Barclays up 2p at 595p, has pension ties with L&G, but the insurer also sells investment products at Alliance & Leicester, up 4p at 874p, and mortgages at Northern Rock, down 17p at 723p.

The telecoms sector was weak again. MmO2 figures disappointed, and the share price fell to 42 1/2p, down 5 3/4p. Former owner BT was also a weak market, off 8 1/2p at 276p.

Hanover International added 5 1/2p to 118 1/2p on speculation that it could be the next target for Jack Petchey. The veteran property man has a stake via his Trefick investment group, and Hanover's four-star hotels portfolio is similar to Queens Moat Houses, where Petchey attempted to gain control. Hanover warned on profits last week and Petchey's stake now amounts to 3%.

Bodycote International led the FTSE 250 fallers with a 36 1/2p slump to 212 1/2p after it disclosed an 11% slide in sales for the four months ended April.

The Daily Mail's Geoff Foster on yesterday's trade
World markets, updated every 15 minutes
Every share, updated every 15 minutes
AIM, updated every 15 minutes
techMARK, updated every 15 minutes
Today's gainers and fallers

Most watched Money videos