Market Report: Broker's note puts a fizz in can maker Rexam

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The Independent Online

With the London market struggling to find much to cheer about, the world's largest aluminium can manufacturer Rexam stood out after a bullish note from the US broker Citigroup.

Shares in Rexam have under-performed the wider market so far in 2006, despite bullish predictions over canned beer sales thanks to the World Cup, falling a little more than 3 per cent since January. Citigroup thinks the market has missed a trick with Rexam and believes it is a stock that should perform well in tougher market conditions. The broker also believes Rexam will play a part in the further consolidation of the US can market.

With the rest of the market in subdued mood, the Citigroup note encouraged support for Rexam, sending the shares 6p firmer to close at 493.5p, among the best performers in the blue- chip index.

Traders don't seem to want to let bid talk for the broadcaster ITV lie. The latest talk in the market is that buyout groups Kohlberg Kravis Roberts and Permira are set to launch a bid for the group, three months after it rejected two offers from a competing group of private equity houses. Although the shares dropped a penny to 101.75p, volume was good with 46 million shares changing hands, and traders are convinced that another bid will come for the group. Meanwhile, Fidelity, the world's largest fund management group, upped its stake in rival broadcaster BSkyB to 3.1 per cent, although the news did nothing for the media giant's share price, 7p weaker at 547.5p.

Bid talk for the steel maker Corus Group continued to do the rounds. The battle for control of Arcelor has excited investors in the sector and many believe Corus will be the next European steel group to take part in the consolidation of the industry. Shares in Corus spent most of the day in the black before a late sell-off to close at 428.25p, down 0.25p, on good volume of 22.3 million shares.

Overall, it was another very quiet day in the London markets, with initial hopes of a big rally after a strong Wall Street close on Monday soon dashed as the Dow opened marginally lower. The FTSE 100, having traded as much as 48.6 better early in the session, closed 28.9 lower at 5652.3.

Volume in the plant hire group Ashtead was heavy ahead of full-year results due today. The group is expected to report a threefold rise in pre-tax profits to £66m, and the stock was very active with more than 9 million shares changing hands. The improvement in Ashtead's performance, three years after accounting clouds threatened the group's existence, has also led some traders to speculate that the group could face a bid in what remains a highly fragmented market. The shares closed 9.25p firmer at 185.75p

WH Smith gave an update on its plans to demerge its news distribution and retail operations, although not everyone is bullish on prospects for the two groups. The broker Shore Capital, in a note to clients, recommended selling the shares, saying the outlook for both parts of the business remains challenging and the Office of Fair Trading review of the retail business could further damage prospects. Initial enthusiasm for the developments pushed the shares 13.5p better before a bout of profit-taking saw them close at 472p, a rise of 5.75p.

In the small caps, Mobile Tornado Group is facing an unusual problem after attempting to raise £2.33m in a placing in April. The chief operating officer, Jorge Pinievsky, subscribed for more than 12 million of the 14.5 million new shares issued, but so far has failed to stump up the cash. The company announced Mr Pinievsky's resignation from the board, although he will remain as an employee, and the group hopes to resolve the matter without resorting to legal action. Even so, investors did not like what they heard and the shares halved, closing at 8.5p.

Technology investors will shed few tears for Baltimore Capital, the investment company which was once, as Baltimore Technologies, a FTSE 100 stock whose share price peaked at more than 14,000p, giving it a market capitalisation of more than £4.8bn. Its former chief executive Fran Rooney made more than £200m by selling stock during the technology boom, but the company received an offer yesterday from Oryx International Growth Fund worth just £29.5m, the net asset value of the group. The company has rejected the bid, but it is a stark reminder for investors, if any more were needed, that any company promising jam tomorrow can end up delivering gruel. The shares closed a penny firmer at 16p.

Nanette Real Estate, a housebuilder based in Warsaw, with operations in Poland and Hungary, made an encouraging start to life as a publicly quoted company after raising £10m via a placing with institutions at 77p, giving it a market capitalisation of £103m. The shares closed at 81.5p, a 5.8 per cent premium.