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There are signs the property sector may be enjoying a spot of massage by fund managers as the month draws to a close.
JPMorgan has moved to overweight in Hammerson, which led blue-chips higher with a rise of 23¼p to 334p ahead of the start of trading in the nil-paid shares tomorrow. This follows the company's deeply discounted seven-for-five rights issue at 150p to raise almost £600 million, announced earlier this month.
Citigroup and UBS are taking a more bullish approach to British Land, up 30¾p at 432¼p, and Land Securities, 29½p better at 529p, after similar fund-raisings. British Land is raising £740 million and Land Securities £756 million.
The sector has also benefited from a move by high-flying hedge-fund operator Crispin Odey to cut his short position in British Land. His Odey Asset Management previously had a short position of 0.27%, worth almost £6 million. That has now been cut to below 0.25%.
Segro, formerly Slough Estates, rose 13p to 100p. It has been in talks with the banks, and has thrashed out a deal on covenants covering loans worth £1.7 billion. The property developers have been staggering under a big surge in debt following the collapse in commercial property values. A number have been forced to go cap in hand to shareholders to raise funds and strengthen their balance sheets, rather than breach their banking covenants. This has led to talk of a share placing at Liberty International, up 18p at 334½p.
There was relief among investors at the bounceback on Wall Street overnight and in Asia this morning. But shares in London traded below their best levels after a brisk start. Persistent concerns about the ongoing bank crisis continues to dampen sentiment. The FTSE 100 index saw its lead cut to 48.49 points to 3864.93 after touching 3884.06.
Financials led the charge amid signs some punters had chosen to close their short positions. Royal Bank of Scotland put on 1.3p to 23.4p while Lloyds Banking Group added 5.1p to 59p ahead of results on Friday. HSBC was up 24¼p at 496¼p ahead of next week's full-year results. Deutsche Bank has cut its target from 532p to 510p, warning the outlook for the bank remains challenging as a result of rising loan losses and further risk-asset writedowns.
Action may be needed to bolster HSBC's capital ratios, but a large-scale rights issue will not be easy to get away in the current environment. Elsewhere, Prudential's helter-skelter performance continued apace with the shares accelerating 9¾p to 276½p, having traded within a range of 250p and 305p during the past week. Keefe, Bruyette & Woods says the Pru appears to have moved into pole position in the bidding for American International Group's Asian arm. It has repeated its outperform rating on the Pru and 797p target. Revived bid talk lifted Old Mutual 2.5p to 42.8p ahead of next week's results.
Talk of stakebuilding was behind a rise of 15¼p to 228p in pubs chain operator Mitchells & Butlers as more than 1.2 million shares changed hands. At the last count, billionaire financier Joe Lewis held 88.3 million shares, or 21.7% of the company. The price has dropped from a peak of 892p since the summer of 2007 with the smoking ban, recession and competition from the supermarkets taking a toll.
Aero-engines maker Rolls-Royce jumped 11¾p to 291¼p after UBS raised its rating from sell to neutral and repeated its 280p target following recent results.
White van man's favourite Northgate slammed into reverse with a loss of 29¼p at 39¾p after yet another profits warning. The van-rental group is regarded as an accurate barometer of the economy. The company says trading condition have deteriorated further, and it is now looking to renegotiate its banking covenant terms.
Investors drew some crumbs of comfort from Barratt Developments' latest trading update. Barratt rose 10½p to 82p and there were also gains for Berkeley Group, up 49½p at 857p, Bovis Homes, 14p at 363p, and Persimmon, 27¼p at 321½p.
