Market Round-up: Pound’s woes leave holiday companies out in the cold

Shares in Britain's two biggest package tour operators sank today with Thomas Cook the biggest loser on the top flight, off 4.7p to 235.2p, and Tui Travel down 3.4p to 282.7p.

The two holiday companies have seen strong bookings so far this year as the miserable weather has left consumers desperate to top up their tans. But investors today were concerned that the weakness of the currency could bring that trend juddering to a halt.

Shares were in retreat in London today as investors booked profits after the late surge on Friday thanks to better-than-expected unemployment figures from the US. The FTSE 100, which ended last week at an 18-month closing high, slipped 16.40 points to 5583.36.

The retreat came as UBS gave its verdict on why investors remain so nervous about the UK. The broker said the economy is in recovery, but that "the large fiscal deficit and a possible policy impasse in the event of a hung parliament are worrying the market".

Analysts at the bank believe these concerns will continue until a fiscal austerity plan emerges post-general election. They reckon equities have further to rise, predicting the FTSE 100 will hit 6250 by the end of the year.

Drugs group AstraZeneca was on its sick bed, sliding 52p to 2943½p, after its cancer pill Recentin failed in a late stage trial against Roche's Avastin in patients with colorectal cancer.

Recentin was developed to challenge Avastin — both treatments are intended to starve tumours by preventing them from building blood vessels.

Collins Stewart recommended ditching the shares, warning that the disappointing results leaves Astra's strategy exposed. But stockbroker Panmure Gordon suggested using today's decline to snap Astra's shares up on the cheap and said that Recentin was always a "high-risk development".

GlaxoSmithKline dropped 10½p to 1228p amid continuing fears over the bill from US lawsuits resulting from its diabetes drug Avandia.

Petrofac claimed first place on the Footsie leader board after the oil services group beat market forecasts for full-year profits thanks to a series of contract wins.

Resolution, Clive Cowdery's insurance vehicle, appeared to be making a last ditch attempt to remain in the FTSE 100, rising 1½p to 70p. The company is expected to be booted out of the top flight at this month's review, along with London Stock Exchange, whose shares fell 2½p to 705p today.

Miners were mostly marked lower as investors booked profits. Xstrata shed 16½p to 1170½p as some investors seemed to follow the lead of one of the mining giant's bosses in reducing their holding. Executive director Santiago Zaldumbide has taken advantage of the recent rally in the industry's shares to sell 408,553 at 1161p a pop.

City heavyweight Deutsche Bank trimmed its price target for Xstrata from 1555p to 1530p.

Vedanta Resources fell 37p to 2656p, Kazakhmys was off 21p at 1525p but BHP Billiton rose 12p to 2219p.

Forth Ports was the best performer on the mid-tier as investors bet that a takeover could be on the horizon.

The ports operator's bosses rejected a £612 million takeover bid last Friday from a consortium of three of Forth Ports's shareholders, Arcus Capital, privately-owned Peel Ports and Deutsche Bank's infrastructure fund, Rreef. Between them, they control 27.4% of the company.

Management at Forth Ports, which is Britain's last remaining listed ports operator, said the offer "falls shorts" of valuing the company fairly.

"We believe it is likely that further discussions will be held, although clearly the parties appear some way off any agreement on price," said Dominic Edridge, an analyst at UBS.

"We believe that an offer of at least 1500 pence would be needed to make a deal succeed."

Forth Ports's shares rose by almost a quarter, trading 271p higher at 1388p.

The battle to stop infections spreading in the nation's hospitals has given Tristel a boost.

The Aim-listed cleaning products group, which uses chlorine dioxide to kill off bugs including C. difficile, rose 2p to 64p after announcing sales were up 28% last year, with pre-tax profits 40% higher at £656,000.

The shares were also helped by a prediction from Tristel bosses that National Health Services spending on infection control won't be cut if the Government squeezes hospital budgets.

Trader talk

NewSmith Asset Management is one of a group of investors who have picked up shares in Tom Black's newly listed venture Digital Barriers PLC.

Black was chief executive of data security group Detica when it was sold to BAE Systems for more than £500 million back in 2008 and netted £24.5 million from the deal.

His latest AIM-listed venture is also in the security business, providing specialist products and services to the homeland security market. He hopes the ongoing threat from international and domestic terrorism means the business has plenty of opportunity to grow.

The group has raised £20 million from its listing. The flotation was well received attracting a number of investors including NewSmith Asset Management whose UK funds are managed by former Merrill Lynch manager Steve Thompson. NewSmith picked up 1,340,000 shares giving the group a 5.41% stake in Digital Barriers, valued at £171.5 million.

Tomorrow's agenda

Antofagasta posts preliminary results. The copper miner had to put operations at flagship Los Pelambres mine in Chile on hold after the recent earthquake temporarily disrupted power supplies.

It said operations in Antofagasta — about 1,500km north of Chile's capital Santiago — were not disrupted but investors will have questions about the earthquake's impact. Nick Raynor, analyst at The Share Centre said: "These figures will not take into account the recent disastrous earthquake in Chile — fears that the disaster may affect the ability to mine in the area have caused prices for the commodity to soar." Last month, Antofagasta posted a 7.4% fall in annual copper production but said it would rise this year because of expansion projects.

Liberty International, the biggest owner of shopping centres in the UK, also posts preliminary results. Last month it said it was in talks to sell its $560 million (£371.5 million) US mall business to an investment trust based in Florida and will be expected to provide an update on progress. The development is part of Liberty's plans to demerge into two companies, a £2 billion shopping centre firm and a £1 billion developer focused on London.

International Power posts full-year results amid speculation that the firm could be a takeover target for French utility giant GDF Suez. It will need to deliver a strong set of figures to push its share value and help any potential defence.

Portfolio

BUY: MARSHALLS
KBC Peel Hunt says investors should splash out on Marshalls, the landscape paving and gardening group. Analysts note that the firm's trading environment is "still very poor" and add that public sector spending is set to fall steeply. Plus forthcoming tax hikes on Britons are "likely to hit the prime customer of Marshalls hardest". KBC adds that the firm could benefit from its position in environmental solutions "but this is small beer against other drags". However, KBC thinks the firm's strong UK market position, good minerals assets and weak sterling make it vulnerable to a takeover — and a bid would push up the price.

SELL: PROVIDENT FINANCIAL
It's time to sell off shares in small loan provider Provident Financial, say analysts at Collins Stewart. Last week Provident reported a 2.4% fall in profits to £125.7 million for 2009. But Collins Stewart says the firm has successfully built a sub-prime credit card business and is responsibly lending to vulnerable consumers through its home credit division. It describes Provident as "a well-managed business generating high returns for shareholders". But it notes that the impact of a review of the industry by the Competition Commission is uncertain and names the stock a sell, with a target price of 800p.

HOLD: MICHAEL PAGE
Altium Securities tips shareholders in recruiter Michael Page to hang onto the stock, rating it a hold. The broker says that the company's results came in lower than expected, although it notes that the firm's management reckons it will see growth across a number of its markets and geographies this year. Analysts flag up the fact that the strength of the recovery is "uncertain" — they also warn that Michael Page is likely to be hit by an increase in the tax rate in subsequent years, which will affect earnings this year and beyond. Altium gives the stock a 40p target price.