Market Report: Broker provides a welcome boost for Reuters

REUTERS has not had a good time so far in 1998. Just three months into the year, the financial information giant's shares have taken a pummelling. While the market has soared to new highs, Reuters' shares have gone in the opposite direction.

First came the Asian crisis. Although Reuters maintains that financial upheaval boosts demand for timely and accurate information, the thought of collapsing Japanese banks handing back all their Reuters terminals was enough to give most investors the jitters.

Then Reuters was hit by allegations that it had stolen information from arch-rival Bloomberg and incorporated it in software used for analysing bonds. A Federal Grand Jury in New York is currently investigating the charges. While the company maintained a stony silence, investors ran for the hills, and the shares briefly touched a two-year low of 520p.

In recent weeks, however, the stock market has been taking a more considered view of Reuters. And the company was given a welcome boost yesterday when stockbroker Dresdner Kleinwort Benson slapped a buy recommendation on the shares with a target price of 750p. The shares promptly jumped 8.5p to 644.5p.

DKB argues that fears of slowing growth rates are overstated. It expects Reuters to expand as the market for financial information consolidates, while new products will boost sales. The broker forecasts that profit growth over the next five years will average about 11 per cent. While the US investigation remains a worry, the broker expects Reuters "to continue creating significant shareholder value."

The market staged a half-hearted recovery yesterday after a week of drift. But while Footsie was briefly showing a 71-point gain, it was dragged back by a fall on Wall Street and ended the day up a modest 33.7 points at 5939.3. The midcap and smallcap indices also posted slight gains.

Best performer in the Footsie was Billiton, the metals group which has had a torrid time since joining the stock market at 220p last summer. News that Venezuela is reviving plans to sell its state-run aluminium smelter, in which Billiton has shown an interest, helped revive investors' interests. The shares closed up 9.5p at 165.5p.

Advertising outfit More Group, which agreed to a 1030p-a-share bid from US giant Clear Channel Communications last month, soared 93.5p to 1122.5p as French rival JC Decaux announced that it was considering a counter- bid at a "meaningful premium" to Clear Channel's offer. More Group advised shareholders to take no action. Billboard group Maiden, which reports results on Monday, added 22.5p to 406p in sympathy.

Sports retailer JJB Sports ended its recent slide, bouncing 35p to 670p. The shares were 822.5p a few weeks ago.

Mobile phone operator Orange continued to slide amid suggestions that SBC Warburg had been unable fully to place the 16 per cent stake it bought from British Aerospace yesterday. Now that the sale has taken place several brokers have turned negative on the stock. The shares, bought by Warburg for 396p, closed down 8p at 389p.

Next also continued to suffer from yesterday's profit warning, giving up another 9p to settle at 535p.

Racal firmed 1p to a 12-month high of 330p on a buy recommendation from Henderson Crosthwaite. The stockbroker calculates that, on current valuations, Racal's telecoms arm is worth pounds 600m - valuing the rest of Racal at just pounds 340m. That value should be crystallised when the telecoms business is floated in the next 18 months. Sir Ernest Harrison, Racal's chairman, has already twice pulled off the trick of releasing value from the company by demerging mobile operator Vodafone and security group Chubb.

Persistent bid chatter and expectations of good first-quarter figures, due out next week, pushed Vodafone 9p higher to 602p.

General Cable firmed 6p to 155.5p on suggestions that rival cable operator Telewest, 2p better at 94.5p, was about to table a pounds 600m bid for the company. The group has already been holding discussions with NTL, the UK-based cable firm which is quoted on Nasdaq.

Aspen, providing specialist printing and marketing services, leapt 29.5p to 122.5p as Photobition, the photographic and printing services group, announced that it had bought a 2.9 per cent stake and might make a bid.

Printed circuit board maker Prestwick was dumped 17p to 35p as it announced that bid talks had been terminated and that, due to delayed call off of contracts from major customers, it was trading "below market expectations".

Lady in Leisure, operating women-only health clubs, jumped 20p to 217.5p. The shares have soared from below 130p since the beginning of the year.