Market Report: Reuters rises on talk of impressive numbers

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The Independent Online

CSFB told investors to expect the information provider to unveil underlying sales growth of nearly 2 per cent for the third quarter, easily beating analysts forecasts of 1.5 per cent growth. The broker expects such news to drive Reuters' shares higher in the coming months and hopes to see them heading towards the 600p level.

How does the broker know that the group is performing strongly? Well, it has been following various indicators which it believes show that business is booming at Reuters. Among them is the fact that the number of people working in the UK and US financial-services industry continues to grow healthily. This is very important for Reuters as these workers are the group's key customers.

Given these buoyant market conditions, CSFB calculates that Reuters should be able to raise its prices by more than 2 per cent on average next year. It may even be able to enact a 5 per cent price increase on some of its more popular products, according to the broker. This is bound to enhance its earnings.

Elsewhere, WPP rose 13p to 569.5p on the back of an upgrade from Citigroup. Raising its recommendation on the advertising giant to "buy" from "hold", the US broker said present City estimates for its earnings look too conservative.

Antofagasta rose 41p to 1,505p, Xstrata gained 36p to 1,430p, BHP Billiton improved 14.5p to 840p and Rio Tinto added 50p to 2,284p as Numis Securities raised its forecast for earnings in the mining sector. The broker said: "The upgrades are based upon the continuing strength of commodity prices over the next six to 12 months.

"It seems apparent that low inventories and continuing supply/demand deficits for key commodities may serve to maintain higher than previously expected price levels."

Numis sees little chance of a let-up in demand for commodities from China. It points out that 20 million people move from rural China into cities each year. This is creating buoyant demand for housing and, in turn, substantial demand for bulk commodities and metals. Modern and more rapid forms of construction require the use of increasingly amounts of steel, stainless steel and copper, the broker noted. Peter Hambro Mining added 39p to 824p after bullish analysts visit to the group's gold development in Russia's far east. Peter Hambro is known to be benefiting greatly from record gold prices.

After last week's heavy falls, the FTSE 100 recovered some of its losses, closing 12.2 points higher at 5,374.5. The FTSE 250 added 26.3 points to 7,769.3. Keith Skeoch, the chief executive of Standard Life Investments, believes we are heading back into a bull market. He said: "We would, given the pace of equity returns and their resilience in the face of bad news, appear to be back in bull-market territory." In Mr Skeoch's view, a classic bull market tends to be characterised by equity markets that not only perform better than other assets, especially bonds and cash, but also do so persistently in the face of potentially adverse news.

ScottishPower dropped 14.5p to 572.5p as investors were disappointed by the group's trading statement which failed to give an update on the status of takeover negotiations at the electricity provider. ITV ticked 0.5p higher to 109.5p on reports that the Express Newspapers owner Richard Desmond is looking to team up with a private-equity partner and table a bid for the broadcaster.

Speculation that Marconi could soon receive a takeover offer from Ericsson pushed shares in the UK telecoms-equipment maker 28.75p higher to 337p. Although Marconi stock hit a five-month high, the company refused to comment on the rumours.

Thomas Langer, an analyst at WestLB, was not convinced by the speculation. He believes there is little chance the Swedish group would pounce on Marconi. He said: "I do not think that such a deal would be value enhancing and attach only a 10 per cent likelihood to such a scenario occurring."

Regus put on 1.75p to 94.75p as the office-space group geared up to make a series of presentations to the City this week. SSL International rose 270p to 7.75p after a bullish trading statement. The condom maker enjoyed a 7 per cent jump in first-half sales to £220m. Analysts expect SSL to notch up a 30 per cent rise in first-half profits to £22m. In the run-up to the statement, nervousness about trading at the group sent its shares spiralling lower.