Market Report: Hanson and Wolseley build on US optimism

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The Independent Online

Trading in the United States may have become a riskier business in recent years, but for Hanson and Wolseley signs that US interest rates may have stopped rising, giving the construction industry a boost, gave traders ample reason to push the stocks higher.

Hanson generates 48 per cent of its profits in the US, while Wolseley, after a recent acquisition binge, is even more reliant on the US markets, generating 59 per cent of group profits across the pond.

Recent bid speculation surrounding Hanson appears to have died down but enthusiasm for its shares has not. Strong demand and good volume pushed Hanson up 31p to 760.5p, while Wolseley added 53p to 1,403p. Both stocks have significantly outperformed the market in the past three years and traders betan improving US construction market will mean more of the same over the coming months.

Hanson's former tobacco arm, Imperial Tobacco, was also in demand thanks to comments from the broker JP Morgan, which noted that the conditions for a bid for Altadis, the Franco-Spanish tobacco group, have never been better. The US broker also upped its target price for Imperial to 2,000p, sending its shares 69p higher to close at 1,754p. Its rival Gallaher was also well bid, mainly on vague rumours of a possible bid from Japan Tobacco, and closed 18p better at 868p.

The London market hit another high yesterday, breaking through 6,100 for the first time since February 2001, before a weak opening on Wall Street prompted some profit-taking. The FTSE 100 closed 45.7 higher at 6,089.8.

Once again there was good demand for energy stocks, with Centrica 7.75p better at 291.25p, British Energy up 16.5p to 730p and International Power 12.5p firmer at 304.25p. BP continued where it left off on Tuesday as oil futures continued to rise. BP closed above 700p for the first time, ending the session 7.5p better at 704p.

The list of fallers made depressingly familiar reading for anyone who has followed the London market since it turned upwards in March 2003. Reed Elsevier, 7.5p weaker at 535p, Rentokil Initial, unchanged at 161.75p, and Compass Group, a quarter of a penny weaker at 240.5p, are among a group of stocks that have failed to take part in a bull market that has seen the main index double in value over the past three years.

One trader said: "A two-speed market has developed over the past three years, with the commodity, property and energy sectors racing ahead while consumer cyclicals, pharmaceuticals and telecoms sectors remain unloved. There seems to be no sign of that imbalance changing in the near term."

The advertising and marketing group WPP was well bid before Friday's first-quarter numbers, with a number of short positions thought to have been covered, sending its shares up 29.5p to 701.5p, the best performer in the FTSE 100.

London Clubs International was again the subject of corporate activity chatter, with Ladbrokes and Stanley Leisure mentioned as possible suitors for the casino operator. The talk has done the rounds before but LCI stock has been weak in recent sessions, slipping from a year high of 149.5p. The bid talk helped its stock close 7.5p better at 115p.

Among small caps, ITM Power enjoyed a spectacular day's trading, surging 116.5p to 335p, a rise of 53.3 per cent, on the back of a bullish statement on technological developments in its hydrogen fuel cells. ITM shares have trebled in value since the start of the year but some traders believe that if the company successfully commercialises its technology there could be plenty more left in it.

There was huge volume in Central African Mining as almost 26 million shares changed hands. The group confirmed a small acquisition in South Africa on Tuesday, sending its shares 9p higher to 98p, an all-time high, before a bout of profit-taking saw them ease back to 89p, unchanged from Tuesday's close.

GVM Metals was also in good demand, 9.75p better at 27p as the company confirmed that it is in negotiations to acquire a coal mining prospect in South Africa. Its shares rose from 12.75p in early trade on Tuesday on the back of rumours that it was poised to make a major acquisition.

The industrial battery makerChina Soco has had a strong opening few months on AIM since listing in December. Its shares have doubled from their placing price of 100p, and added 23p to close at 206p yesterday as the company reported a 104 per cent increase in pre-tax profits to £3.625m.

Finally, Rift Oil enjoyed a positive debut on AIM after the broker Insinger de Beaufort placed its shares at 5p, raising £2.3m gross in the process. The company owns licences for oil exploration in western Papua New Guinea, and closed at 6.25p, a 25 per cent premium.