Market Report: Barclays buoyed by talk of bumper growth

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The Independent Online

Credit Suisse First Boston led the way by upgrading its earnings forecasts for Barclays for this year and next. The broker said: "We are expecting revenue growth of 15 per cent that we believe could be the fastest underlying growth rate among the UK banks this year."

Barclays is performing well across all of its main operations, according to Credit Suisse. It believes the group's investment-banking business, Barclays Capital, and its fund-management division, Barclays Global Investors (BGI), are doing particularly well, while the UK retail business is also holding its own. The Swiss broker calculates that Barclays Capital will deliver a 27 per cent rise in profits this year, BGI a 56 per cent jump and Business Banking a 13 per cent increase.

Meanwhile, Deutsche Bank added Barclays to its Pan-European Focus List, a compilation of the brokers favourite stocks across the Continent. Deutsche slapped a 670p price target on the stock. Elsewhere in the sector, Lloyds TSB rose 4.75p to 469.5p, Northern Rock added 3p to 821p and HSBC ticked 5.5p higher to 896.5p.

The wider FTSE 100 broke through the 5,400 level for the first time in a month thanks to a slew of better-than-expected results from a plethora of blue chips. London's index of leading shares closed 73.3 points higher at 5,431.9. Bullish economic data from the US also supported sentiment on this side of the Atlantic.

The pharmaceuticals sector was boosted by news the US giant Merck was found to be not liable for the death of a person using its Vioxx painkiller. Analysts believe the decision will reduce further claims against the company and the industry as a whole. HenceGlaxoSmithKline rose 21p to 1,482p while AstraZeneca added 26p to 2,575p. SkyePharma ticked 0.25p lower to 38.75p after announcing that it had received 83 per cent acceptances for its 1-for-5 rights issue at 30p.

In the telecoms sector, Kingston Communications was the main talking point. Its stock put on 1p to 57p as gossips said a takeover bid could be just around the corner for the Hull-based fixed-line operator.

Scottish & Newcastle, up 2.25p to 478.5p, was held back from further gains by a downbeat note from Morgan Stanley. The US broker worries that the brewer is suffering from lacklustre markets in France and the UK, and suggested that its earnings growth in Russia could be dampened by competition. Morgan Stanley argued that S&N shares are expensive at current levels and so reiterated its "underweight" stance.

ARM Holdings, 5.75p higher at 115.25p, did a lot better out of Morgan Stanley as the broker upgraded its rating on the semiconductor designer to "overweight" from "equal weight" on valuation.

Bid rumours pushed Business Post 35p higher to 400p. Market professionals suggested that the mail operator could be vulnerable to takeover by a larger rival such as FedEx after the recent slump in its share price.

Emblaze jumped 9p to 137.5p after Fidelity sold its remaining 8.5 per cent stake in the Israeli technology group. The fund manager has been selling down its shareholding for months and this is believed to be behind the recent drop in its shares. Yesterday, Collins Stewart finally cleared this overhang of stock from the market. Meanwhile, the restaurant group Gondola Holdings rose in its debut session on the main market. The owner of the PizzaExpress, ASK and Zizzi chains raised £135m at 320p and said it would use the money to pay down its £350m debt pile. Its stock closed at 326p. Nevertheless, Gondola's issue was at the bottom end of the 320p to 430p range its private-equity owners had set for the float.

Urals Energy, one of the many companies from the former Soviet Union to float in London this year, rose 11.5p to 261.5p after buying £40m worth of oil assets in the Komi region of Russia. Cazenove upgraded its stance on TTP Communications to "outperform" from "in line". The heavyweight broker told investors there is significant value in the business and that, at worst, this will be realised by an acquirer of the company. TTP finished the day pegged at 27p.

Finally, Abcam enjoyed a stellar first day of trading on AIM. The bioscience group listed at 167p and closed at 201.5p as investors piled into the company, which is one of the few in its industry that makes a profit. Numis raised £10m of new money for Abcam that it will use to fund future expansion. The broker also helped management sell £5.2m worth of shares at the issue price.