Market report: Wednesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

SHARES of Sir Martin Sorrell's advertising agency WPP Group took a tumble as whispers swept the Square Mile that a huge line of shares was about to be placed in the market.

The world's biggest advertising agency fell 20 1/2p to 784 1/2p amid claims that one securities house had tried to find a home for 58m of them - almost 5% of the company - worth £446m. The shares are thought to be part of a tranche issued to help finance last year's £3bn acquisition of advertising agency Young & Rubicam.

The market was forced to digest a large line of shares in accountancy software specialist Sage Group, down 4p at 264p, as several directors sold stock. Broker UBS Warburg placed 4.8m shares, worth £12.14m, with various institutions at 253p.

News of the latest US interest rate cut failed to impress, with share prices in retreat for much of the session. The speed with which Federal Reserve chairman Alan Greenspan has been forced to move suggests that the economy is in worse shape than we had been led to believe. But the FTSE 100 index staged a late recovery, ending ahead 41.1 at 5884, as New York rallied from opening falls.

Boots collected 5p to 583p, recouping some of the loss from the previous session after supermarket chains were given the go-ahead to sell over-the-counter drugs cheaply. Brokers say Boots will suffer and Deutsche Bank has said it is the equivalent of 10% off the chemist chain's share price.

But rival broker Credit Lyonnais Securities says this issue has hung over the group for some time and now the shares appear oversold. It has raised its recommendation from 'reduce' to 'add' and says the group is more than capable of making up any margin decline. US securities house Schroder Salomon Smith Barney has retained its 'underperform' rating on Boots but has raised its target price from 525p to 550p.

The breakdown in talks with an unnamed bidder left Scottish Radio nursing a loss of 157 1/2p at 1075p. It now wants to hold talks with its near-30% shareholder SMG Group, down 13p at 203 1/2p. SMG also had to contend with a profits downgrade from broker ABN Amro, which has slashed its pre-tax estimate from £50m to £46m for 2001 and from £55m to £50m for the following year.

ABN has also cut its estimate for Carlton, down 2p at 382p, from £230m to £202m in 2001, with the following year's forecast cut from £193m to £152m. Granada Media, 4 1/4p cheaper at 160p, was cut from £262m to £230m this time round and from £326m to £280m the following year.

Capital Radio also came under the hammer, losing 37 1/2p to 690p with talk of a profit warning with its results on Thursday. This might also have been the reason behind a fall in media giant Pearson, off 48p at 1360p. Broker Dresdner Kleinwort Wasserstein is worried about weak advertising revenues for radio and rates Capital and GWR, down 50p at 430p, a 'hold'. Only Chrysalis, down 17p at 226 1/2p, is seen as a 'buy'.

• 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.

Discuss the markets on our messageboards

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