Market report: Friday close

By JAMES MCLEAN
Updated:

 

CASH-strapped telecoms group Redstone's fall from grace accelerated, the shares sliding 2 1/2p to a record 3 1/4p low as it ran out of alternatives to a rescue rights issue at 1p a share. The company said talks to raise £22m were advanced but that there was no certainty they would succeed. A failure to refinance could spell its demise.

Redstone has 115.5m shares in issue, so a possible new line of two billion would force shareholders to fund the group from scratch or give new investors a chance to undercut them. Those not prepared to dip into their pockets were heading for the exit. Buyers who were close to the top last year at
949 1/2p may have a chance to secure fresh stock at more realistic valuations.

Buyers were bottom-fishing for bombed-out technology and media stocks, which took a lift from the Nasdaq's third consecutive gain overnight. Heavyweight banking and pharmaceuticals stocks also gave the market a helping hand, with Barclays rising 74p to 2249p, Royal Bank of Scotland gaining 71p to 1700p, and Standard Chartered ahead 8p to 948p.

But further selling of BP, down 1p at 614p and Shell, off 5p at 605p, ensured the blue-chip FTSE 100 was unable to sustain a strong early gain. At one stage more than 50 points up, the Footsie ended 24.3 higher at 5665.7.

NatWest's Jeremy Batstone thinks a US interest rate cut could inspire a rally, backed by short covering from the hedge funds next week. But negative earnings news spreading beyond the tech sector will probably see investors selling.

Vodafone was one of the main drags on the market, as it extended its recent slide to touch lows not seen since late 1998, sinking a further 4 1/4p to 153p. The wider telecoms sector was also friendless as Cable & Wireless fell 10 1/2p to 398p, Colt slid 15p to 470p and Energis dipped 6 1/2p to 184p.

Tech-sector gainers included Marconi, which added
8 1/2p to 259p as bids of about £2.5bn came in for US rival Lucent's fibre optic unit, proving there is some fundamental value in the sector.

But Lord Hollick's United Business Media was down
20 1/2p at 614p after a warning that US ad revenues continue to disappoint. Merrill Lynch is cautious on Reuters, up 40p to 890p.

Business software provider Misys added
23 1/2p to 483 1/2p as its unveiled plans to quit the consumer internet sector. Autonomy rose 25p to 446p on talk of an upgrade from Deutche Bank.

Retailers were among the stronger performers, Dixons putting on 7 1/4p to 228 1/2p as Merrill Lynch added to recent broker upgrades. Boots gained 10 1/2p to 595p, Kingfisher added 9p to 401 1/2p, and Sainsbury rose
4 1/2p to 428p. But Kookai chain owner Forminster dipped 3p to 25 1/2p after full-year profits fell by more than half.

Elsewhere Character Group, off 1 1/2p to 24p, unveiled a 1-for-1 rights issue priced at 20p aimed at raising £4.23m as part of a near-£9m refinancing package.

• 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.

Geoff Foster of the Daily Mail on yesterday's trade

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