Market Report: British Airways flies high on Deutsche forecast

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The Independent Online

Deutsche is confident the statement will act as a catalyst for analysts across the Square Mile to raise their estimates for the year ahead, and so upped its own by 4 per cent. The broker hinted that this measure could prove too conservative, but said it had decided against a more drastic increase in its forecasts because it was too early to make concrete predictions on pricing next year.

Nevertheless, Deutsche was confident enough to urge investors to pile into BA in the run-up to next month's figures and raised the target price on the stock to 335p. Despite this bullish talk, BA shares managed a rise of just 0.25p to 300p as the wider FTSE 100 lost ground. The blue-chip index fell 22 points to 5,263 as investors fretted about inflation across the Atlantic where producer price figures for September experienced their biggest monthly increase in more than 15 years. Economists said the data made further rises in US interest rates even more likely.

Commission-hungry brokers complained that punters were losing their ardour for takeover stories. A month ago they could not get enough of bid rumours, while when Merrill Lynch tipped Whitbread stock as likely to be the beneficiary of merger and acquisition activity in the near future, traders were uninterested and its shares fell 5p to 968p.

Corus was unchanged at 48.25p despite reports of a bid for the Anglo-Dutch group from Mittal Steel. According to the speculation, the world's biggest steel maker, controlled by the billionaire Lakshmi Mittal, is considering a 70p-a-share offer.

Meanwhile, analysts were sceptical that such a scenario will ever come to pass. First, Mr Mittal has made his fortune by producing cheap steel in emerging market countries. A move on Corus would be out of character for the tycoon. Most recently, he has bought assets in Eastern Europe and the Far East, and is said to be about to make a major investment in India. Second, there are no synergies between Corus and Mittal Steel.

Likewise, analysts poured cold water on reports of a private-equity bid for GCap Media sending shares in the radio group tumbling 8.75p to 322.5p. Oriel Securities pointed out that GCap is not a typical target for a private-equity player because of its relatively weak cash flows. The broker is also sceptical that Daily Mail & General Trust, which controls 15 per cent of the group, would be willing to sell out. Oriel believes investors should take profits from the recent jump in GCap shares.

Elsewhere, Vincent Bolloré announced that he had taken his stake in Aegis, steady at 127p, to 19.1 per cent. Market professionals note that the French financier used the same stake-building tactic to gain de facto control of the advertising group Havas. Many believe M. Bolloré plans to raises his holding in Aegis to 29.9 per cent and then try to engineer an all-share merger between it and Havas, where he has a 22 per cent stake.

Somerfield was unchanged at 194.25p as dealers reported that Credit Suisse First Boston continues to build its stake in the convenience-stores operator. Whether the broker holds the shares, which stand at 3.3 per cent, for its account or on behalf of a client is unclear. However, one thing is for certain: whoever owns the stock will be hoping for a counter bid to the 197p-a-share offer from Apax Partners. And as stock-market bets go, it is not a bad one.

If Apax turns out to be the only bidder in town, the Credit Suisse First Boston stake buildermakes about 2.5p a share on their stake, and if another offer emerges they will make a lot more. Either way it is a win-win situation.

At the small-cap end of the market, the Irish oil explorer Aminex, unchanged at 16.75p, boasted that it had been awarded rights to a 10,000 square metre plot onshore Madagascar. ZOO Digital added 0.25p to 10.62p after securing a contract from Walt Disney worth $1m (£571,000) in revenues to the company.

Vague talk that Medical Marketing International might be considering an acquisition pushed its shares 12.5p higher to 127.5p.

Grey Star Resources put on 13.5p to 372.5p after yet another bullish update from its Angostura gold-silver deposit in Colombia. Terrace Hill, off 0.75p to 40.75p, saw Philip Leech, the managing director of the property group, buy 20,000 shares at 41p. Finally, Polaron rose 1p to 83.5p on the back of a series of contract wins worth £1.7m.