Market report: Monday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

DWINDLING bid prospects today took some of the polish off glassmaker Pilkington and left the shares nursing a fall of 3¾p to 146½p.

Reports at the weekend claimed talks with its biggest shareholder, Nippon Sheet Glass, have failed. The Japanese own 21% of the UK's largest glassmaker and have offered 158p a share, which the likes of Deutsche Bank argue is fair in the absence of a counterbid.

If the bid does fail, Deutsche says, the share price could slump as low as 120p, reflecting tough trading conditions in Pilkington's key markets and a balance sheet that is not as robust as the sector average. Nippon appears determined to force through a bid, but there are doubts as to whether it can raise the necessary funding for an offer of up to 162p a share. The official version of events indicates talks are continuing.

Share prices traded below their best levels of the day following a hesitant start to trading in New York this afternoon. Investors here are reluctant to get too carried away ahead of the Bank of England monetary policy committee vote on interest rates later this week and the FTSE 100 index closed just 0.3 points lower at 5731.5.

Property developers came under the hammer after broker Merrill Lynch downgraded a clutch of companies following a strong showing in recent months. It has cut Land Securities, down 54p at 1577p, Hammerson, 36p off at 981½p, and Slough Estates, 13½p cheaper at 570Frac12;p, from buy to neutral.

Merrill says all three have risen by around 20% from October lows and, with the uncertainty over the Real Estate Investment Trust scheme (Reits), it is time to take a more cautious view. It has also downgraded Brixton Estates, 12½p lower at 415¾p, Derwent Valley, 36p down at 1500p, Great Portland, 20½p easier at 412½p, and Shaftesbury, off 9½p at 447½p, on price grounds.

International banking group Standard Chartered jumped 9p to 1330p after Citigroup raised its target from 1325p to 1500p to reflect the group's 'strategic positioning' and obvious potential as a takeover target. But, following last month's trading update, the US broker has downgraded its earnings forecast by 4% for 2005 to 79.1p and by a similar amount to 92.6p this year.

 

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Citigroup has also ditched its long-term sell recommendation on HSBC, up 22½p at 969p, and moved to hold. It has raised its sights from 925p to 950p, saying the valuation looks less stretched than at any time since 1998.

Satellite broadcaster BSkyB rallied off a five-year low, 3p to 517½p despite broker Cazenove cutting its earnings forecast for 2007 by 7% to 32.7p. The move was made to reflect the cost of the recent Easynet acquisition, a higher forecast bid for Premiership football rights and the cost of raising its £1bn sterling bond.

But Cazenove remains bullish of prospects for BSkyB ahead of interim results next month.

ICI, up 9p at 344p, should soon see the benefits of further cost cutting and the way it spends its money, according to house broker Merrill Lynch, which has raised its 12-month target for the chemicals and paints giant from 350p to 400p.

Merrill says ICI should see support from improving cashflow and a relatively low valuation and, if each division delivers its full potential, there could be scope for a 25% improvement in earnings in 2007.

Good news for dog owners who enjoy a wet nose and shiny coat. Biotech specialist Phytopharm stood out with a rise of 4¾p to 54¼p after finalising an exclusive marketing and distribution deal with US giant Schering-Plough's animal health division for Phytopica, a plant-based product which promotes a healthy skin and coat in dogs. Schering-Plough will distribute Phytopica around the world.

Aim-listed Clapham House jumped 10½p to a record 200½p. The group, which invests in and acquires restaurant chains, has signed a franchise deal with GGC Burger, a subsidiary of UAE-based Gourmet Gulf, to develop a number of GBK restaurants across the Middle East during the next three years.

Also on Aim, Global Oceanic Carriers fell 1½p to 49½p despite news that chief executive Vassilis Vintiadis has bought 113,402 shares at 4812p, taking his total holding to 116,017. Finance director Douglas Kearney has bought 20,619 shares at 48½p.

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