Market Report: Analysts engineer rises for IMI and Rolls-Royce

Engineering stocks were in focus last night, as both Rolls-Royce and IMI found themselves propelled up the blue-chip index by bullish brokers.

Noting that the increasing price of oil has hit shares in the aerospace sector "as investors fear that airlines may once again seek to preserve cash", HSBC described Rolls-Royce as "well insulated relative to [its] peers". Its analysts upgraded the group's rating to "overweight", saying it was "set on visible long-term growth", and it climbed 10.5p to 620.5p.

There was an even bigger move for IMI after being named by RBC as its "top pick" in the sector, bumping it up 19p to 1,030p. The broker's analyst Andrew Carter said the group, which was promoted to the top-tier index last December, has been "transformed" over the last decade and that it was now "a high return, growth business that is strongly cash generative".

Mr Carter also initiated coverage on a number of its peers, including Melrose and Cookson, and they added 5.9p to 332p and 4p to 693.5p respectively after both being given an "outperform" rating. Smiths, meanwhile, shed 15p to 1,304p as the analyst predicted it would underperform the sector over the next 12 months.

Overall, the FTSE 100 finished ahead for the sixth consecutive session, rising 16.13 to 5,948.3, although market voices were still bemoaning the low trading volumes seen recently.

One stock attracting attention, however, was Centrica as traders pointed to speculation doing the rounds that Qatar could take a stake in the British Gas owner.

Noting that the utility revealed a contract with Qatargas last month, Investec's Angelos Anastasiou said he believes the agreement could "become a longer-term deal, extending to perhaps 10 years plus".

"The strategic alliance is also likely to be expanded," added the analyst, who reiterated his "buy" advice, "and it would not surprise us to see a direct investment in Centrica from the Qatari Investment Authority or a similar body".

Centrica ended up 8.1p better off at 330.7p, helped as well by the return of vague bid gossip with the Spanish group Iberdrola once again linked with a potential offer. Burberry has also seen reheated takeover speculation around it this week, and the luxury clothing brand increased 23p to 1,185p.

The miners were generally enjoying a move higher, including BHP Billiton which was lifted 34.5p to 2,449p after revealing the proposed expansion of its Olympic Dam mine in Australia had reached the next stage of planning. Vedanta Resources, meanwhile, took the gold medal position, closing 76p stronger at 2,314p, following its house broker Morgan Stanley reiterating its "overweight" rating.

Tullow Oil spurted up 15p to 1,459p as it announced it had struck a deal with both Cnooc and Total for stakes in its Ugandan fields, which will net the company $2.9bn. Killik's Jonathan Jackson said the news came as "a big relief", adding that although "there are still a number of tax-related issues to be resolved... a clear plan for the resolution of tax disputes on the various asset sales has been agreed by the government of Uganda, the tax authorities and Tullow."

Not for the first time in recent months, the retailers were out of favour, prompted yesterday by Dixons issuing a profit warning. The electricals chain said a fall in consumer confidence, particularly in the UK and Ireland, has led it to expect its annual profits to come in at the bottom of previous forecasts, and it plummeted 3.06p to 13.69p.

The repercussions were felt across the sector, including by its high street peer Kesa Electricals, which was driven back 7p to 124p. Also dropping was Halfords, down 15.9p to 359.3p, WH Smith, down 13.3p to 445p, and Home Retail, down 8.5p to 192.9p.

Meanwhile on the top-tier index, Next declined 54p to 2,011p while Marks & Spencer took the wooden spoon, sliding 10.6p to 340.7p. The high street institution was not helped by Oriel Securities reducing its profit expectations ahead of the group's trading update next week, while MF Global started its coverage on the group with a "sell" rating in a large note on the sector.

The broker had nicer words for Wm Morrison, however, labelling the supermarket a "conviction buy" and saying that its "step up in investment... in new space, formats, own brands and the internet should underpin sales growth". The group subsequently gained 5.3p to 273.8p, but Tesco – which had its rating upgraded to "buy" – edged 0.7p lower to 385.75p.

Back on the mid-tier index, Lamprell shifted up 15.5p to 338p as it announced a $41m contract with Weatherfood Drilling International, while Evolution Securities decided to increase its price target to 450p from 400p.

It was plain sailing for YCO, which provides a variety of services to owners of large yachts, on the choppy waves of the Alternative Investment Market. The group predicted its full-year profit would reach £900,000, up from £31,000 the year before, and it surged forwards 1.38p to 12.88p.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project