Market Report: Barclays wilts amid concerns over update

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The Independent Online

The banking sector, after being depressed by a disappointing update from Bradford & Bingley on Wednesday, ended the week with a whimper as investors remained nervous ahead of other updates, which are due next week.

Barclays, which is expected to reveal a 2 per cent drop in its annual profits on Tuesday, was one of the worst performers, down 3.5 per cent or 15.5p at 427.5p. Lloyds TSB, which will update the market on Friday, was also down. The bank, which is being watched for signs of any further write-downs in debt-related assets, suffered despite expectations of a steady growth in profits, losing 3.59 per cent or 14.75p to 396.75p.

Bearish sentiment also hit others in the sector, including Royal Bank of Scotland Group, which lost 2.84 per cent to 350.75p, HBOS, which lost 3.57 per cent to 608.5p and Alliance & Leicester, which lost 3.4 per cent to 525p. Bradford & Bingley was down 5.5 per cent at 176.25p.

The FTSE 100 ended the week in the red, down 1.56 per cent, or 91.7, at 5,787.6. The benchmark index, after suffering under the pressure of weak financial stocks, was deeply depressed by a negative start on Wall Street, which was worried by yet more discouraging economic data.

The first blow was dealt by the New York Federal Reserve's Empire State manufacturing survey, which registered its first negative reading since May 2005, tendering further evidence of a worse-than-expected slowdown in the US. By mid-afternoon, as the FTSE 100 tried to pare back some losses, a second blow from the University of Michigan's preliminary consumer sentiment index, which fell to a 16-year low against market expectations of a slight dip, magnified the losses.

The FTSE 250 also had a bad day and closed down almost 2 per cent, or 191.3, points at 9,897.9.

On the FTSE 250, Serco got a boost after analysts at Deutsche Bank initiated coverage with a "buy" recommendation and a share price target of 545p. DB said the group has "the ability to continue to deliver double-digit top-line growth". Investors took note, and the company's shares edged up 2.5p to 448.5p.

The engineering group Morgan Crucible was also up as the market remained optimistic about its full-year results, due next week. The company is expected to survive the impact of a slow second half to post a 7 per cent rise in pre-tax profits, to around £54m. The bullish sentiment lifted the shares 5.25p to 451.25p.

The betting and gambling group Ladbrokes remained buoyant as a speculative run, suggesting a prospective bid from an unidentified private-equity group, continued. Investors pinned their hopes on an approach, and the company's shares gained 7.75p to 329p.

Transport sector stocks, on the other hand, buckled under the pressure of some bearish sentiment. Investors, unimpressed with some bad numbers and a relatively downbeat outlook from Go-Ahead Group, turned on the some of the biggest names in the business. Go-Ahead was the number one loser on the FTSE 250 as it retreated 17.67 per cent, or 395p, to 1,840p. Stagecoach was right behind it, losing 9.64 per cent to 222.5p, while National Express lost 5.68 per cent to 1,063p.

On the FTSE Smallcap index, there was more talk about Oxford Biomedica. Shortly after the market opened, the company said that Cubana Investments had acquired a 5.7 per cent stake in its business. Who is Cubana? Well – we don't know. The company was notified of the stake by Cubana's agents, but it is not even clear if Cubana is UK-based or if, as its name suggests, it has more exotic origins. Either way, the mystery buyer excited investors, some of whom remain convinced of the likelihood of a bid from the French pharmaceutical giant Sanofi-Aventis, and Oxford Biomedica's shares rose 3.03 per cent to 25.5p.

Interestingly, Cubana has also acquired a stake in Oxford's sector counterpart Proteome Sciences. The unidentified investment vehicle owns more than 6 per cent in Proteome, whose shares closed down 1.94 per cent or 1p at 50.5p.

On AIM, shares in Weatherly International, which operates four copper mines and a smelter in Namibia, rallied following news of an approach which may lead to a bid for the company. Weatherly declined to reveal the name of the suitor, sparking investor speculation which took its shares up 33.78 per cent, or 6.25p, to 24.75p.

Also on AIM, the renewable energy company Novera said it too had received an informal approach to take over the company. Reports pegged the offer at around 90p per share, helping the company's stock climb by 26.4 per cent, or 16.5p, to 79p.

Finally, TMN Group gained 8.21 per cent to 36.25p after issuing an in-line trading update. Its shares were also boosted by Investec reintroducing coverage of the stock with a "buy" recommendation.