Market Report: Former suitor Goldman takes dim view of ITV

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The Independent Online

The Chinese Walls must be in good working order at Goldman Sachs. Either that a very sour bunch of grapes is being passed around the investment banking giant's Fleet Street offices.

Less than three weeks after a consortium of bidders including Goldman dropped out of an ambitious bid for ITV, the bank has published a downbeat research note on the UK's largest commercial broadcaster. It said the group faces "structural issues as a result of increasing competition coming from multichannel television and poor audience share. Moreover the UK advertising market remains dull."

The bank has a fair value target on ITV shares of 126p after cutting 2006 and 2007 forecasts, and the note was negative enough to knock 2.25p off ITV shares, which closed at 114.25p.

The investment banking arm of Goldman, along with its fellow consortium members Blackstone and Apax Partners, must have had a very different view of ITV's prospects. They offered shareholders a bid worth, by strange coincidence, 126p per share on 31 March, a bid which was pulled after failing to gain the backing of the board.

Elsewhere in the FTSE 100, tension over the nuclear ambitions of Iran and suicide bombs over the Easter weekend in Israel drove oil futures to fresh highs, passing $72 per barrel in London. The oil giants BP and Shell, who together represent almost 25 per cent of the FTSE 100, were well bid as BP passed through 700p per share for the first time before some profit-taking saw the shares close 8.5p better at 696.5p. Shell added 33p to close at 2,003p.

Second-line oil stocks also performed well, topping the list of best performers in the FTSE 250 for most of the session. Venture Productions, probably the closest proxy for the oil price in the London market, added 30p to 770p, while Burren Energy was 82.5p better at 996.5p after the broker UBS increased its price target to 1,070p. Strong newsflow from Soco International helped the shares add 87p to 1,317p, with the broker Bridgewell Securities noting a successful conclusion to drilling tests in Vietnam could add another 100p to the company's net asset value.

Property stocks were in demand as the brokers UBS and Merrill Lynch upgraded British Land to "buy" on valuation and potential Real Estate Investment Trust benefits. Merrill increased its price target on the UK's second-largest property company to 1,500p while UBS raised its target to 1,450p. British Land ended 57p higher at 1,277p, while the rival Land Securities added 22p to close at 1,911p. Hammerson and Liberty International, two smaller FTSE 100 property stocks, were also well bid, with Hammerson 15p better at 1,183p and Liberty 4p firmer at 1,191p.

Miners were also in demand as base metal prices rose again on the futures markets, with gold hitting another 25-year peak and copper hitting another all-time high. The star performer was Rio Tinto, 117p better at 3,177p, while the rivals BHP Billiton was 56.5p better at 1,180.5p.

Strength in the major oil, property and commodities stocks gave the market a good start to the shortened week's trading, as banks were the only sector of the market to see much selling pressure. The FTSE 100 spent almost the whole day in positive territory, closing 14.7 better at 6044.1, although there was little in the way of rumours for traders to get excited about.

Strong first-quarter numbers from the online gambling company PartyGaming were not enough to stop investors booking profits, sending the shares 2.75p weaker to 149p. Revenue in the first quarter of the current year was up 54 per cent, slightly ahead of most brokers' forecasts and better than recent numbers from the rival 888 Holdings, down 1.5p to 233.5p. Despite the good numbers many traders remain concerned about the possibility of US online gambling prohibition even if legislation looks unlikely to get through Congress before elections in November.

Among the smaller companies Medisys took a hammering as plans to sell off its last remaining business asset and continue to trade as a medical investment company got a resounding thumbs down from investors. However, brokers conceded that with trading conditions at the company's remaining blood glucose monitoring business threatening to consume what remains of its cash, the company had little choice. The shares lost more than 50 per cent of their value to close 3.15p weaker at 2.95p, a long way from their peak of more than 160p in November 2000.

Finally, Sheffield United may have won promotion to the Premier League over the Easter weekend, but investors are not expecting much next season, as the shares fell 3p to 20.75p. Watford fans will have to sweat out the play-offs, and their club's shares, trading as Watford Leisure, fell 12.3 per cent to 28.5p. Life's tough at the top.