Tonight:
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There is still no sign that the slump in the housing market has hit rock bottom. In fact, some property experts are predicting prices will continue falling throughout the remainder of this year, by as much as another 10% to 20%.
But that has not deterred Bank of America Merrill Lynch from upgrading some of the biggest operators. The broker seems to think that although most of the major players have seen their share prices rally from January's low point, they continue to look good value for money.
It has raised its rating on Persimmon, ¼p off at 349¾p, and Taylor Wimpey, 1p better at 34¾p, from neutral to buy, convinced that their shares are already more than discounting a worst-case scenario for land and writedowns. Bovis Homes, down 5¼p at 366p, is raised from underperform to neutral while Merrill repeats its buy rating on Redrow, ½p cheaper at 196½p.
It does not believe that trading for housebuilders will improve significantly any time soon, but it reckons that from the net asset value perspective there is a strong case for saying they have been oversold.
Shares generally managed to claw back yesterday's losses although they traded below their best levels of the day as the dollar rallied against sterling. Even so, the FTSE 100 index rose 52.3 points to 4301.6.
Mining shares led the way higher, drawing encouragement from the latest economic growth numbers from China. Bid target Anglo American put on 36p at 1799½p while potential suitor Xstrata added 30.1p at 687.4p. Xstrata has already seen its preliminary approach rejected by the Anglo board. It gave a presentation in the Square Mile yesterday at which it expanded upon its plan to pursue a merger of equals that would yield savings of a billion dollars.
It also expects the deal to help it diversify into commodities such as iron ore, platinum, manganese and alumina. But it had little to say about plans of its 37% shareholder Glencore. Antofagasta added 17p at 604½p while Vedanta Resources jumped 108p to 1396p after the India-based miner boosted the size of its share buy-back programme by 40% to £213 million.
Marks & Spencer's latest trading update received a warm welcome, with the City deciding the decline in like-for-like sales was not as bad as feared. The shares were among the better blue-chip performers, climbing 13½p to 319½p. Retail analyst Nick Bubb at Pali International is urging clients to sell into the rally while Citigroup has a hold rating and 320p target.
On AIM, telecom and internet services provider Freedom4 returned from suspension 0.93p higher at 4.07p. The group is paying £123 million for two companies, Daisy and Vialtus. The deal will involve a placing to raise £83 million. The Daisy vendors will receive 53.75 million shares, valued at £51 million, while the directors of Vialtus will get £13 million in cash and 36.2 million shares valued at £29 million.
Intercytex, the developer of cell-based therapy pies for skin and hair, slumped 6.38p, or 54%, to 5.37p after failing to finding a buyer for the business. Talks on selling part of it are continuing.
Logistics specialist Wincanton slipped ½p to 195p despite having won a £40 million, three-year contract to manage and deliver goods for the Argos retail chain.
Goldman Sachs has repeated its neutral rating on Yell, ½p cheaper at 26p, following yesterday's profits warning. However, it has slashed its target price by almost half, from 60p to 32p.
