Market Report: Techs take a battering after bad news from US

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The Independent Online

London-listed tech stocks were knocked by a double whammy of bad news from across the Atlantic yesterday. US tech giants Cisco and National Semiconductor disappointed Wall Street with their latest figures and accompanying outlook statements, and their UK peersresponded quickly by dropping into negative territory. ARM Holdings fell 4.25p to 94p, Marconi retreated 14.5p to 553.5p, Dimension Data lost 0.5p to 27p and Wolfson Microelectronics gave up 8.25p to 196.75p.

London-listed tech stocks were knocked by a double whammy of bad news from across the Atlantic yesterday. US tech giants Cisco and National Semiconductor disappointed Wall Street with their latest figures and accompanying outlook statements, and their UK peersresponded quickly by dropping into negative territory. ARM Holdings fell 4.25p to 94p, Marconi retreated 14.5p to 553.5p, Dimension Data lost 0.5p to 27p and Wolfson Microelectronics gave up 8.25p to 196.75p.

The news from National Semiconductor was particularly negative as the group indicated that it would miss its forecasts by some way. It blamed the shortfall on weaker-than-expected orders for its flat-panel display chips and mobile phone parts in China.

Meanwhile, from Cisco, investors were surprised to hear management at the computer network giant become more cautious about the future. They warned that major corporations remained hesitant when it came to committing to investment in new technology.

The FTSE 100, which contains just one tech stock, also had a bad day, closing 38.7 points lower at 4,312.2. Although the oil price held on to its recent highs, Shell dropped 11.75p to 389.75p and BP fell 12.5p to 494.5p as both stocks went ex-dividend.

But it was not all gloom. International Power jumped 5p to 144p after it emerged that the assets which the group hoped to buy from Edison Mission Energy were actually performing better than most analysts had forecast. The news came from Edison's latest results filing in the US. Also driving IP higher was the fact that a large sell order was finally cleared from the market by brokers. Heavy demand from institutional investors drove Northumbrian Water 5.5p better to 145.5p.

Egg improved 1.25p to 102.75p on the back of the purchase of 10,000 shares at 101p by Leslie Priestley, a non-executive director at the internet bank. On an altogether bigger scale, Frederick Watt, the finance director of Royal Bank of Scotland, bought 50,000 shares at 1,474p, thereby spending £737,000 on stock. RBS dropped 31p to 1,471p.

William Hill ticked 5p better to 510p thanks to some very bullish comments from ABN Amro ahead of interim results from the bookie next month. ABN said it expects another strong set of figures and forecast first-half profits to surge by as much as 39 per cent to £120m, due to the increasing popularity of the company's fixed-odds betting terminals and internet gaming. "The message will be that William Hill is growing strongly across all its betting platforms," the Dutch broker predicted.

Man rose 14p to 1,312p after an improved performance from the group's now closely followed AHL fund. The fund (its full name is AHL Diversified Futures) registered a 2.9 per cent rise in its net asset value last week. This allayed investors' fears about the fund's performance, which generates a good chunk of Man's profits. Go-Ahead Group put on 22p to 1,107p while Stagecoach jumped 2p to 85.25p as Credit Suisse First Boston raised its rating on both transport groups to "outperform" from "neutral". The Swiss broker believes investors are underestimating the potential sales growth that the duo could achieve going forward.

Rentokil Initial added 3.75p to 151.5p as yet another broker hinted that disposals could be on the cards at the pest control group. ING yesterday mirrored a move by Deutsche Bank earlier in the week by upgrading its rating on Rentokil to "hold" from "sell" ahead of interim results on 26 August. It suggested that at least one of the group's seven operating divisions could soon be sold, with proceeds returned to shareholders.

HMV recovered 2p to 219p as Evolution Beeson Gregory was heard reassuring its clients that all is going to plan at the music retailer. This was despite some rather downbeat data for July from the British Retail Consortium. There has also been some worry among market players that HMV has been negatively impacted by the poor weather we have recently been experiencing.

Evolution believes the group's shares represent a fair bet at current levels. They traded as high as 250p in June. A stock overhang of about 225,000 shares is said to have dragged Domino's Pizza 6p lower to 200.5p. Incepta Group, the public relations specialist, dropped 6.5p to 69.5p as brokers argued that the stock looked expensive when compared with peers.

And finally, UK Coal improved 11p to 154p after Seymour Pierce pointed out that the coal mining group is slowly becoming a property player and one that is likely to boast some impressive value. As old mines close and permission for new mines is refused, UK Coal's land is becoming available for redevelopment, the broker noted. It believes the redevelopment value of this land bank is substantial and argued that as a result, the company's shares may be worth nearly double their current value.

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