Market Report: ABF defies Gap profits warning to rise to top

Many of the clothing retailers may have been wearing red after the rising cost of cotton led sector giant Gap to issue a profit warning, but Associated British Foods (ABF) was still top of the blue-chip index last night on hopes the problems facing the company are about to ease.

The Primark-owner, which also produces sugar and owns a number of food brands including Ryvita, jumped up 33p to 1,090p as Exane BNP Paribas raised its rating to "outperform". Pointing out in recent months it has been one of the worst performing stocks, the broker said many factors – including issues with its crops and consumer pressure in the UK – had "conspired to put ABF at the heart of an unprecedented storm".

However, Exane's analysts – who raised ABF's target price by 130p to 1,170p – said the "grey clouds will start to disappear and life should start to feel rather better," adding that they are particularly enthusiastic about the opportunities for Primark in Germany.

Although the budget fashion chain is just one part of its business, traders expressed surprise at its advance given the fact that Gap missed expectations with its first-quarter results, released late on Thursday. Blaming the increase in cotton prices, the fashion retailer said its net income had dropped nearly 25 per cent and lowered its full-year profit forecast by 22 per cent, prompting Next to decline 42p to 2,226p while Marks & Spencer eased back 1.1p to 398.8p.

Overall, it looked as if the FTSE 100 was going to bank a third consecutive session ahead, but Fitch's decision to cut Greece's credit rating by three levels to B+ gave investors an excuse to cut their risk before the weekend, leaving the index 7.5 points lower at 5,948.49.

The news it had agreed a settlement with Moex, its partner in the Macondo well, that will see it receive $1.1bn over the Gulf of Mexico disaster meant BP climbed 12.1p to 460p as the payment raised hopes others could follow.

The oil giant was also driven forwards by Investec, which recommended "a radical, full demerger of BP to close the acute discount to our view of fair value". The broker, which changed its rating to "buy" from "hold", suggested the company could be split into three parts while not destroying its " trading business nor the synergies of integration in markets like Midwest refining". It also warned that if BP did not find a way to strengthen its share price, it end up being an attractive target for Russian, Chinese or Indian aggressors.

On its second day of conditional trading, Glencore dipped back to 524p, 6p below its issue price. Meanwhile, the battle to survive the commodity trader's upcoming entry into the FTSE 100 next week was heating up, as Invensys managed a partial rebound of 2.8p to 302.6p after dropping over 3 per cent on Thursday following its full-year figures. The engineer is one of the favourites to be relegated, and RBC did it no favours, saying the bid hopes that have been helping it recently are "fading fast".

Another of the names in the frame to make way, Investec, was also refusing to go down without a fight, and the investment bank ticked up 8p to 495p as UBS reiterated its "buy" recommendation after the release of its 12-month numbers earlier in the week.

Imperial Tobacco was out of puff, retreating 28p to 2,186p following reports from Spain that it is cutting prices in the country. Although Citigroup said the immediate effects would be minimal, it added the move was "a sign that the pricing environment has indeed got less good," adding that "in an industry that has been marked by excellent price discipline in recent years, there is evidence that that discipline has weakened".

It has been a busy period for takeover activity in the technology sector, and yesterday proved no different. Micro Focus, which last month revealed it had received a preliminary approach, advanced 28.8p to 398.6p on the FTSE 250 after announcing a number of companies had now made their interest known.

Elsewhere, Kofax may have been the acquirer yesterday as it agreed to buy the US company Atalasoft for nearly $10m, but City scribblers were still talking up the attractiveness of the software group, which slipped back 5.6p to 473.4p. Saying the deal will provide "new product capabilities," Espirito Santo added the news "not only bodes well for Kofax's near-term revenue and earnings growth but also increases [its] attractiveness to a trade buyer over the medium term".

Mitchells & Butlers was stuck at the foot of the mid-tier index after the pubs group issued its figures for the first-half, despite its pre-tax profit of £63m meeting expectations. It ended up retreating 17.4p to 319p, with Royal Bank of Scotland noting "a slight frustration" given its failure to appoint a new chief executive or reinstate its dividend.

Down among the small-cap groups, Minerva – 7p better off at 102p – revealed it was in "advanced discussions" with a number of groups following reports that three bids had been made for the property developer.

FTSE 100 Risers

National Grid 632.5p (up 10p, 1.61 per cent)

Utility company advances after revealing a 25 per cent rise in its full-year pre-tax profits.

ITV 70.75p (up 1.05p, 1.51 per cent)

Analysts at Liberum speculate that recent weakness means broadcaster could attract potential bidders.

Randgold Resources 4,755p (up 32p, 0.68 per cent)

Miner benefits from Citigroup increasing its price target from 5,488p to 6,135p.

FTSE 100 Fallers

Lloyds Banking Group 51.61p (down 1.52p, 2.86 per cent)

Takes the wooden spoon as Goldman Sachs cuts its rating to "neutral".

Barclays 273.6p (down 3.85p, 1.39 per cent)

Share price dips despite Berenberg raising its recommendation on the bank to "buy".

Aggreko 1,753p (down 20p, 1.13 per cent)

Temporary power supplier falls behind even though HSBC raises its price target to 2,482p.

FTSE 250 Risers

TalkTalk 145.7p (up 5.6p, 3.99 per cent)

Telecoms company still rising following the release of its final results on Thursday.

ITE Group 243.6p (up 9.2p, 3.92 per cent)

Exhibitions organiser has its recommendation raised from "hold" to "buy" by Peel Hunt.

Northumbrian Water 361.5p (up 1p, 0.28 per cent)

Utility company eases forward as takeover speculation is reheated once again.

FTSE 250 Fallers

Babcock International 679.5p (down 25p, 3.55 per cent)

Defence services company knocked back by profit-taking after recent price rises.

Michael Page 529p (down 11p, 2.04 per cent)

HSBC initiates coverage on recruitment group with an "underweight" rating.

Mitie 210p (down 2p, 0.94 per cent)

Outsourcer's shares fall ahead of the release of its preliminary results on Monday.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Agretti is often compared to its relative, samphire, though is closer in taste to spinach
food + drink
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
The dress can be seen in different colours
i100
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?