Market Report: Banks up on talk of imminent iShares deal

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The Independent Online

The banks ended the week on a high, after three days of straight rises. Lloyds Banking Group and Barclays have dominated throughout the week as whispers of serious investors piling in have kept them flying. Lloyds was up 10.29 per cent to 76.1p, almost doubling its share price from its low point at the beginning of the month.

The banks were lifted after the FSA gave Barclays a relatively clean bill of health, saying it would not need to bolster its balance sheet with more cash. Barclays surged 24.05 per cent to 173.8p.

The talk was that the Barclays board was preparing to meet last night to hammer out the final details of its sale of iShares, its exchange traded funds business. The chat from the floors was that the deal, with prospective buyers including Goldman Sachs and private equity group Bain Capital, could be announced as early as next week..

The financial stocks helped lift the FTSE 100 into positive territory in early trading, but once again enthusiasm was in short supply and on pretty healthy volumes the top tier sank into the red shortly after and failed to recover. It closed 26.35 points down at 3,898.85.

The miners were in focus. Rio Tinto was the pick of the bunch, rising 4 per cent to 2,478p as the gossip suggested BHP Billiton coming back for another crack at sealing the mega-takeover of its rival. Liberum Capital said there was a higher chance of a deal as the "stars are now aligning".

The rest of the big miners were knocked about by a sector note from Deutsche Bank. Xstrata was up 2.37 per cent to 474.75p after the broker upgraded its target price. Others fell of their own accord. Eurasian Natural Resources Corporation found that what goes up must come down. After its bumper surge on Thursday, it was handed the wooden spoon yesterday, down 7.45 per cent at 444.25p.

The profit-takers also piled into Man Group, the world's largest listed hedge fund. It enjoyed a brief rise in the morning as Citi upped its price target in a note to 250p from 200p. The broker backed Man's strong balance sheet and cost-saving plan, but the shares dropped 2.74 per cent to 213p.

Centrica has been on a downward curve since hitting a year high of 285.75p in February. It fell to 224.75p on Thursday, before firming 2.5p to 227.25p yesterday as investors decided the utility was firmly in bargain-basement territory.

Well, at least Johnny Rotten's big sellout benefited somebody. Dairy Crest leapt to second spot on the second tier following a cracking trading update, thanks in no small part to the advertising campaign fronted by the formerly Sex Pistol singer. The group strengthened 15.14 per cent to 258.5p as it said sales were up 25 per cent and announced it had divested its 49 per cent stake in Yoplait Dairy Crest for £63.5m. The group said the cash will be used to pay down debt, giving it more headroom for its banking covenants.

There was good news for Hochschild Mining, which had seen its shares plunge earlier in the week, as it announced the end of industrial action in Peru. It said all four operations in the country were now at full capacity and there had been no impact to its production target of 28 million attributable silver equivalent ounces. It rose 16.44 per cent to close top of the FTSE 250 at 217.75p.

The gambling group 888 Holdings had a nice end-of-the-week run-in as investors prepare for its results on Monday. It strengthened 3.21 per cent to 112.5p.

It was a sweet day for investors in Tate & Lyle, which lifted on broker support. The stock strengthened 5.83 per cent to 258.75p as Credit Suisse upped its rating from "underperform" to "neutral", saying it looks well valued following its slump since January.

On the downside, the exploration and production company JKX Oil & Gas admitted that a Russian gas project had been delayed. Investors sold in their droves, completely ignoring a 13 per cent leap in profits to $127.6m (£89.2m) in 2008, driven by a rise in gas prices. The Koshekhablskoye field will now be online at the end of 2010, two years later than hoped. The shares closed down 3.41 per cent at 234p.

In the wider market, ProStrakan Group was in need of pepping up after receiving a letter from lawyers representing Aventis Pharma. The stock plummeted almost 10 per cent as it revealed their ongoing tax dispute had intensified. It ended down 5.88 per cent at 56p.

It was a bad day for the construction group SIG as two brokers opened fire. Royal Bank of Scotland cut the stock to a "hold" rating from "buy" and took the knife to its share-price recommendation. It gutted the previous target of 435p , and reduced it to 114p. Brokers at Citi also cut their target to 120p from 173p and the stock ended 5.24 per cent down at 104p.

On AIM, it wasn't the lights, camera or action driving up Intandem Film's share price, but the cuts instead. The film production company pleased the market with a low first-half pre-tax loss, sending the stock up 28.57 per cent to 1.125p. The losses were better than expected, despite lower turnover because of a fall in library sales, following a cost-cutting drive, according to its chairman, Gary Smith.