Market Report: Scottish & Southern shines on gloomy FTSE day

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The Independent Online

With the FTSE 100 suffering its worst single-day decline since early July, Scottish & Southern Energy provided one of few bright spots for investors to cheer yesterday, as the broker Citigroup upped its stance to "buy" and increased its price target to 1,350p.

According to the US investment bank, its outlook for Scottish & Southern's earnings remains positive under all of its energy price scenarios, even in the unlikely event that wholesale energy prices decline. On a day when only 11 members of the blue-chip index ended in positive territory, Scottish & Southern stood out with a 15p gain to close at 1,230p.

Also outperforming the weaker market, albeit it with a 2p decline to 558p, was BSkyB, on the back of a bullish note published late on Wednesday by the broker Numis Securities. The analyst Lorna Tilbian believes the broadcaster could generate £500m in broadband revenues over the next five years, as well as double digit margins. In a note to clients, Numis said: "The more we work through the implications of Sky Broadband, the more convinced we are that it is a strategy which will enhance the competitive position and long-term financial prospects of BSkyB." Numis upped its target for the shares to 622p.

In the wider market, fears over US interest rates and the arrest of the chairman of Sportingbet sent shares lower across the board. The Dow also opened up to a bout of selling pressure, flushing out more sellers in London as the FTSE 100 closed 71.2 worse at 5,858.1.

The broker Goldman Sachs placed a line of BT Group shares in the market at 246p, 3.5p below Wednesday's closing price. Traders said Goldman placed the shares "without too much difficulty", and although the underlying seller remained anonymous, the speculation is that the move is the result of profit-taking rather than any fundamental change in view on BT, which closed 4p worse at 245.5p.

Bumper results from the mid-cap oil exploration and production group Soco International sent the shares high up on the FTSE 250 leader board. Thanks to the strong oil price, the group posted a 72 per cent rise in first-half pre-tax profits. Brokers were quick to sing the group's praises with Bridgewell Securities, Teather & Greenwood and Merrill Lynch urging clients to buy the shares. Soco closed 23p firmer at 1,351p. Takeover rumours continue to do the rounds at Countrywide, the estate agency group, with talk of a 500p-per-share offer for it. Sceptics pointed out any offer would have to be considered hostile at this stage because the group is in the middle of a share buy-back programme. The stock nudged 5.25p firmer by the close to 438p as ABN Amro reiterated its "buy" advice.

In the small caps, news of a positive trade reaction to Bright Things' new Tomb Raider interactive DVD sent the shares into the stratosphere, climbing 435.7 per cent to close at 18.75p, up 15.25p. The shares have been dogged by talk of poor sales and market makers have marked them down aggressively recently to try to flush out some buyers.

A strategic review at the alternative lottery group Chariot failed to convince traders that the company will be able to relaunch a serious competitive threat to the National Lottery. The shares have been in freefall since peaking at 215p two months after coming to the market in February, but fell 0.5p to 2.87p yesterday.

The fallout from the arrest of Sportingbet chairman Peter Dicks caused panic selling across the online gaming sector, as investors dumped shares in anything remotely involved with the industry. NETeller, the money transfer business, fell 94p to 336p, a fall of 21.9 per cent, while Leisure & Gaming declined 25.5p to 48p, a 34.7 per cent fall. The software provider Playtech also tanked, shedding 25p to close at 247.5p. Most traders believe that with little sign of a catalyst to move prices higher, the entire sector is likely to remain out of favour for the foreseeable future.

Yule Catto followed its relegation from the FTSE 250 with an uninspiring set of interim results, sending the shares 37.25p worse to 206.25p. The speciality chemicals group warned its restructuring drive will mean lower full -ear profits than previously forecast.

The struggling information technology group iSoft took another hit as the broker ABN Amro reiterated its "sell" advice and 15p price target, nearly 70 per cent below yesterday's closing price of 45p, down 4.75p. The Dutch bank believes iSoft will have to refinance, probably by an equity issue, sooner rather than later.