Tonight:
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Commercial property developers today received a welcome shot in the arm from big US broking outfit Morgan Stanley, which reckons they have been unfairly depressed by persistent talk of rights issues.
The broker says there is more risk of fundraising among property companies in Europe than in the UK, with the euro set to weaken against sterling in relative terms this year. British Land, 4¼p higher at 447¾p, and Land Securities have already signalled they are looking to dispose of their interests in big shopping centres to offset growing debts.
MS has lifted British Land from underweight to equalweight with a price target of 340p. It has also raised Brixton, ¾p lighter at 86p, with a 110p target, Hammerson, 12¾p better at 401p (480p), and Land Securities, up 34½p at 668p (640p) from equalweight to overweight. Liberty International, up 11¾p at 371p, has been upgraded from underweight to overweight with a 330p target.
The rest of the market had that Friday feel to it with investors happy to square up their positions and take a profit ahead of the weekend. But the FTSE 100 index retreated with a loss of 9.01 points at 4181.10 ahead of expected opening falls on Wall Street this afternoon. Latest US gross domestic product figures showed the American economy shrinking by 3.8% in the fourth quarter.
The banks recovered their poise after yesterday's sell-off to post further gains. Barclays' open letter to the City on Monday, and growing hopes that the Government will create a “bad bank” in which toxic assets can be dumped has led to a change of sentiment among investors.
Royal Bank of Scotland led the way with a rise of 0.8p to 21.8p while Barclays added 5.4p at 105.7p and Lloyds Banking Group put on 2.1p at 91.1p.
Rio Tinto responded to the news it has disposed of its potash interests to Brazil's Vale for $1.6 billion (£1.1 billion) with a rise of 36p to 1586p. Dealers say the sale takes some of the pressure off the mining outfit to rush out a rights issue on the heels of Xstrata, which did so yesterday. But Rio has already conceded it will need to turn to shareholders for extra funds. The group is already committed to reducing its debt burden by $10 billion by the year end.
Xstrata dropped a further 38p to 607½p in the wake of yesterday's £4 billion rights issue, which has upset some institutional shareholders.
They accuse the Anglo-Swiss mining outfit of structuring the cash call to favour its biggest shareholder, Glencore. Part of the deal involved Xstrata buying assets from cash-strapped Glencore with the sole purpose of enabling it to take up its entitlement.
Wolseley, up 9p at 179.8p, is almost 40% lower than at the start of the week. Collins Stewart reckons it has now fallen too far, and has raised its rating from sell to hold, claiming the UK's biggest supplier of plumbing equipment has paid a high price for Monday's gloomy trading update, which showed debt rising as profits collapse. But it has dropped its target for the shares from 220p to 170p.
Citigroup has lowered its rating on drugs giant AstraZeneca, down 35p at 2645p, from buy to hold in the wake of yesterday's profit numbers and bearish outlook. It has also cut its target price from 3100p to 2800p, and expects weaker earnings growth of 4% this year.
It says the shares remain a defensive play, but further improvement in the price will be difficult to achieve. Deutsche Bank has moved from hold to buy, and has tweaked its target from 2950p to 3000p.
Shares of Irvine Energy were suspended on AIM at 0.41p pending clarification of the company's financial position. A temporary halt was also called to trading in shares of Mama Group, also on AIM, down 0.12p at 4.62p. The shares will remain suspended until the group publishes its annual report and accounts for the year to 31 July 2008. The music and media specialist blames the delay on its live music tie-up with HMV, involving 11 venues for which an initial payment of £18.2 million has now been received.
