Tonight:
4°c
The smell of burnt fingers wafted through the City today as the bears dumped their rapidly-rising pub stocks.
Punch Taverns led the mid-tier higher with a rise of 10.9p to 141.8p, adding to yesterday's gains of over 20%.
Its rivals Marston's and Enterprise Inns jostled for second place on the index, up 6.8p to 108.2p and 9.1p to 172½p.
The sector's recent rally has left the many investors betting on their decline nursing a nasty hangover.
Punch issued a gloomy trading update yesterday, warning that recession-hit drinkers are still cutting back and that its many drinking haunts with beer gardens were hit by the lack of summer sun.
But analysts were turning more positive on the group, as it has trimmed its debts by more than expected through selling off some of its prize pubs.
Bank of America Merrill Lynch and Shore Capital are now buyers of Punch. Merrill noted that the company is currently trading at a 62% discount to its net asset value, which suggests that either the City believes its days are numbered or that its property portfolio is massively overvalued. Since analysts think neither of these is true, they have upped their price target from 120p to 200p. Shore says that the risks of refinancing have now eased.
Shares in London lost early gains in volatile trading. The FTSE 100 dropped 15.43 points to 4901.37 as a sell-off of mining stocks dragged down the index.
Banking shares were a mixed bag but Royal Bank of Scotland's hefty gains on talk that it is going to announce a bond buyback mean that the taxpayer is now in the black for the first time on its stakes in RBS and Lloyds Banking Group put together. RBS added 2.1p to 55.9p.
It came as the bank's research arm was ignoring the plank in its own eye to point out the splinter in its former rival's. RBS stuck the knife into HBOS, now merged with Lloyds Banking Group, about its “disastrous” corporate lending strategy.
The black horse bank reportedly faces write-offs of up to £500 million on loans it made to pubs group Admiral Taverns.
RBS warns investors to expect more of this type of exposures as the recession drags on and corporate bankruptcies mount. But it is still a buyer of Lloyds, whose shares rose 0.7p to 108½p.
Commodity stocks were again nursing their wounds from the drop-off in global demand with shares in Antofagasta and Tullow Oil tumbling after reporting a plunge in profits.
Chilean copper miner Antofagasta was the biggest dud among top stocks, diving 34½p to 755.5p as it warned that copper prices are likely to remain volatile for the rest of the year.
Pre-tax profits plummeted by 71% to $477 million (£292 million) during the first six months of the year on lower metal prices, a worse drop than had been expected. The FTSE 100 miner has also been hit by rising costs.
Mexican silver producer Fresnillo lost 27½p to 609½p and Xstrata dropped 34½p to 827p in sympathy.
Meanwhile, Africa-focused oil explorer Tullow shed 40p to 1056p as it posted an 81% plunge in pre-tax profits to £34.8 million for the first half of the year on the back of lower prices and a drop in production. But it had some small ray of sunshine for investors, announcing that one of its major wells in Uganda may contain significant crude reserves.
Marks & Spencer's self-help programme is finally paying off. That's according to Singer Capital Markets, which today raised its target price to 320p for the High Street chain.
This is still below the 340p the shares were changing hands for, down 2.3p, because Singer reckons M&S still looks expensive in comparison with its peers in the grocery and retail sector.
But it is still a fan of the new initiatives, including the trial of branded-food goods and its meal-for-two for £5 deal and it thinks that M&S's clothing offering is improving.
Singer also notes that the retailer's lingerie range is again winning customers away from the competition. It came amid speculation in the City that M&S could be guiding the market higher ahead of its interim results at the end of September.
Shares in property developer Minerva rocketed 9¾p to 30.4p as a stock overhang was cleared and amid rumours that Hammerson, which owns the Brent Cross shopping centre, is circling. But some traders gave the talk short shrift, saying Hammerson already has enough on its plate handling the downturn in the commercial property market.
