Market Report: Schroders is bright spot on grey day for FTSE

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The Independent Online

Despite a significant sell-off across the London markets, the fund manager Schroders managed a decent move to the upside after an upbeat note on the stock from the broker Citigroup.

It highlighted the 16 per cent discount the shares trade at in comparison to its peers, in spite of the fact the company is heavily weighted to the equity markets.

In the midst of a very gloomy day, Schroders was one bright spot, closing 25p firmer at 1,153p. The company reports first-quarter figures on Tuesday and investors will hope the equity markets recover before Schroders updates the markets on progress.

Worries over a weakening dollar fuelled the prospects for further interest rate rises in the US and led to the London market having its worst day since March 2003, following on from the Dow Jones's 141 point decline on Thursday. By the close only three stocks in the FTSE 100 were in positive territory, with the index 129.9 lower at 5912.1.

There was not one particular disaster in the FTSE 100, but companies with dollar exposure were hardest hit with losses being shared across the market. The building industry suppliers Wolseley and Hanson each derive more than 50 per cent of profits in the US, and a weak dollar translates into lower sterling profits. Wolseley lost 50p to close at 1,289p while Hanson, recently the subject of intense speculation over splitting off its US operations, lost 20.5p to close at 716.5p.

Mining and oil stocks, whose underlying products are all traded in dollars, were also weak despite the price of crude rising. BP lost 14p to close at 659.5p while Shell ended 51p lower at 1,879p. In the mining sector, there was a slight retraction in the precious metals and copper price, leading to big falls for Anglo American, down 122p to 2,425p, Randgold, the worst performer in the FTSE 350, - 173p cheaper at 1,196p - and Lonmin, 168p weaker at 2,922p. One commodities trader said: "This market is definitely getting more nervous and traders are easily spooked. The metal market will correct itself at some point but anyone going short, even today, could get badly burnt."

Outside the main index, a very bearish note on MFI Furniture, from the German investment bank Deutsche Bank, sent the shares tumbling. The broker believes MFI's valuation looks "extremely stretched" and does not expect the company to improve much on last year's £85m loss, while the medium-term outlook has little clarity. The only threat to the downbeat outlook is a possible bid from a private equity group. With the talk in the market being that MFI may still need a rights issue to support its finances, the shares closed at 114.5p, 5p lower.

One stock not affected by the weak dollar was Enodis, the industrial oven and fridge maker, which generates 72 per cent of its profits in the US. Talk of an improved contract from fast-food giant McDonald's gave its shares a good boost before first-half results on Tuesday, closing at 175.5p, 10.25p better. The stock has also been the subject of some corporate activity chatter in recent sessions and has staged a remarkable turnaround since nearing bankruptcy in 2003.

In the small-caps, the all-business class airline Silverjet enjoyed a strong start to trading after raising £25.3m through a placing at 112p organised by the broker Arden Partners. The shares closed 10.5p better at 122.5p on the back of good demand, with 732,000 changing hands.

The best performer of the day was the tiny online gambling stock betinternet, 3.13p better at 12.25p. The company confirmed it is on target to launch a new version of its sports bookmaking website in time for next month's World Cup.

At the other end of the spectrum it was a bad day for shareholders in Northern Recruitment, as the company warned full-year profit would fall well short of 2005 levels. It blamed lower-than-expected revenues from two new contracts for the warning, which sent the shares 19.5p worse to close at 120.5p.

The sun might have been shining on England's cricketers at Lord's but it was a bad day for the former Middlesex and England spinner Phil Edmonds. Shares in White Nile and Central African Mining, two companies he chairs, were on offer as traders said no news might mean bad news. Traders had hoped for a positive outcome from a Sudanese court in which White Nile is battling the French oil giant Total over ownership rights to oil prospects in the African country, but so far there has been no resolution. White Nile fell 10.75p to close at 158.75p while Central African Mining lost 9.5p to close at 83.75p.

Finally, shares in the football club Sheffield United rallied 1.25p to at 16.75p, after having lost almost 40 per cent of their value since winning promotion to the Premier League.

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