Market report: Tuesday 16.30

By THIS IS MONEY
Updated:

 

Unilever has outstripped Nestlé as the world's largest food producer today after sealing a £16bn cash and debt deal to buy US group Bestfoods. The shares, up 5p at 442p, recovered from earlier losses as investors warmed to the prospect of Unilever adding Marmite and Hellman's mayonnaise to its product lines after Bestfoods called off its counter proposal to swoop on soup maker Campbell.

The Germans are following Elisabeth Murdoch out of the door at BSkyB. Kirch Pay TV, an arm of the Leo Kirch media empire, has sold nearly a third of its 4.3% stake in the UK television operator at more then 100p below the market rate.

With 20m shares going through at 1260p, the market was swift to mark the group's price down 96p to 1275p. A Kirch spokesman said the sale was part of its plans to 'raise funds for its war chest' for investment in its own core business and it would retain its remaining 58 million BSkyB shares as a 'strategic investment'.

BSkyB shares were the second top traded share after market behemoth Vodafone, which was down 5p to 320p. Vodafone was again underwater on talk that it could be facing a bumper tax bill. AstraZeneca, off 93p at 2665p, was still wobbly after a second broker in two days put the shares under pressure. Glaxo Wellcome was also in the firing line, falling off 30p to 1750p, as was SmithKline Beecham, which lost 10p to 789p.

After see-sawing around its overnight close for most of the day, a soft start on Wall Street saw the FTSE 100 shed 15.9 points to 6530.8, but the techMARK 100 added 4.80 points to 3637.81.

The Dow fell 66.59 points to 10,748.71 though Nasdaq was 17.02 points higher at 3838.78.

With the Bank of England's verdict on interest rates due tomorrow, the market was looking for direction. The smart money is on rates staying the same, especially after Halifax data today showed house prices fell in May. That was limited incentive for a market which has already mostly priced in a 'no change' call, though banking shares lifted with Lloyds TSB adding 27p to 740p and Barclays warming 40p to 1771p.

Cable & Wireless, down 55p at 1133p, succumbed to profit-taking after an early rally fizzled out. It unveiled an agreement with Microsoft to develop e-commerce solutions for small and medium-sized businesses. The deal builds on last year's tie-up with Compaq and should see the partners rolling out a near-global service over the next 18 months.

Emap dropped 57p to 1138p after its finance director jumped ship to Reuters, down 2p to 1160p. Heavily traded Invensys, on the rebound from its recent Baan acquisition, faltered as its shares dipped 1p to 250 1/2p. Sainsbury's was also on the comeback trail, adding 19 3/4p to 318 1/4p. Music group EMI, slumped 53p to 632 1/2p on concerns about the possibility of a European probe into its joint venture with Time Warner.

Freeserve fell 16 1/2p to 510p as bid fever subsided, and British Airways lost 19p to 381p as investors lost patience waiting for a much-touted tie-up deal with KLM.

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