Market report: Monday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

CITY speculators continued to sniff around J Sainsbury, which led the top 100 companies higher with a rise of 9 1/2p to 267 1/4p.

They are pinning hopes on a bid emerging soon for the struggling food retailer. Weekend reports claimed Royal Mail chairman Allan Leighton - also the former boss of rival Asda - has raised the funding for a £5 billion offer.

Leighton is refusing to comment but speculation intensified last week after he resigned three directorships to seek 'new challenges'.

Sainsbury seems to be taking the threat seriously, having beefed up its defence by appointing US investment bank Morgan Stanley to its list of corporate advisers. An offer would hinge on the Sainsbury family, which holds a 35% stake. But even they must be getting fed up with the value of their investment being whittled away.

Share prices generally were squeezed higher in thin trading. All eyes are now on this week's US Presidential election. But in New York this afternoon, the Dow opened nervously in the wake of last week's 270-point rise, although spread bookie binexx.com points out Wall Street usually closes higher on the Monday ahead of election day.

London's FTSE 100 index today closed 49.6 points up at 4673.8.

Orthopaedics and artificial joints specialist Smith & Nephew extended Friday's gains with a rise of 13 1/2p to 476p ahead of third-quarter numbers due out on Thursday.

Brokers such as Lehman Brothers do not expect fireworks when the group reports, but say clients should take a look at the shares. Morgan Stanley says any bad news or subsequent weakness in the shares should be used as an opportunity to build a position.

The price is down almost 25% from a peak of 614p in July, depressed by a poor performance from the orthopaedics side during the second quarter as well as concerns about third-quarter trading and whether that will spill over into the final quarter.

Despite that, MS continues to rate the shares overweight with a 540p target.

Recruitment specialist Hays fell 9 1/4p to 119 1/2p following the spin-off of its business-to-business mail arm DX Services. The shares began life at 263p before climbing to 290p.

Imperial Tobacco was marked 24p higher to 1296p. Broker UBS has repeated its buy recommendation and lifted its target 80p to 1480p.

Mining giant Rio Tinto rose 20p to 1444p. Broker Merrill Lynch is urging clients to buy on dips in the share price.

Shares of DFS were suspended at 461p at the company's request, ahead of an announcement. Chairman and founder Lord Kirkham has just completed a bid for the company to take it private again after offering shareholders 460p a share.

Sportingbet was off its record high with a fall of 1 1/2p to 135 1/2p. Investec Securities is enthusiastic about the group's £60m acquisition of Paradise Poker and has raised its recommendation from buy to strong buy.

It says that the deal is an outstanding one for Sportingbet and has now raised its forecast for pre-tax earnings in the current year by 38% to £24.7m.

The forecast for 2005 is even more impressive with earnings up 43% and profits of £38.7m.

First Calgary fell 19 1/2p to 731 1/2p after the group, looking at a possible £1bn sale early in the new year, announced the discovery of yet more gas in Algeria.

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