Market Report: Bargain-hunters drive market as GKN rises 6 per cent

The stock market mounted a comeback last night, with the vehicle and aircraft parts-maker GKN rallying as bargain-hunters moved in to make the most of recent losses.

The stock soared by more than 6 per cent or 7.4p to 119.5p, with traders heeding a bullish call by UBS. The broker argued that recent share price falls meant that it was "time to buy", with GKN down sharply since the end of April. "Although our investment case and profit forecasts are unchanged, we believe the lower valuation now offers an attractive risk-reward profile for investors," UBS explained, adding that the upcoming half-yearly results were likely to be strong, with good headline numbers and a positive outlook statement.

"We believe there is some upside risk to our first-half profit forecasts from better margins in [the] automotive and powder metallurgy [divisions]," the broker said. "Recent comments from original equipment manufacturers and other auto suppliers also suggest that European car production volumes will remain solid through the third quarter."

Overall, bargain hunting was evident across the London market, with the FTSE 100 rallying by nearly 3 per cent or 141.47 points to 4,965 and the FTSE 250 swelling by around 2 per cent or 199.74 points to 9,501. Traders moved in to capitalise on recent falls in the mining sector following an upbeat assessment of the global economy from the Australian central bank. The Chilean copper miner Antofagasta rallied by more than 7 per cent or 57.5p to 818.5p, ending the day at pole position on the FTSE 100, while Kazakhmys rose by 69.5p to 1,037p and Lonmin booked a gain of 66p to close at 1,426p.

Recovery hopes also lifted the mood across the banking sector, with Barclays, up 15.4p at 274.6p, leading the rebound. Royal Bank of Scotland also stood out, registering a 1.95p rise to 40.91p after analysts at Exane BNP Paribas abandoned their negative stance. The broker said that with the UK Government having "de facto ruled out" any moves to offload its interest before the final quarter of 2011, worries about whether the Treasury's average buy-in price of 50.53p created a "glass ceiling" had been rendered redundant for now. That in turn should allow RBS to take part in any recovery in the wider sector, Exane added, moving the stock to "neutral" from "underperform".

Elsewhere, the commercial property group Land Securities was marked up by 18p to 563p after UBS warned investors that a focus on the short-term outlook was obscuring supportive long-term trends. The wider sector was also firm last night, with British Land gaining 12.3p to 450p, Hammerson adding 6.2p to close at 342.5p and Capital Shopping Centres rallying by 4.7p to end the session at 306.3p.

On a more speculative track, the supermarket group J Sainsbury, up 7.4p at 328.2p, featured in the market rumour mill last night. A bid was said to be in the pipeline, though traders were weary of suggestions of interest from the Middle East. The stock is a favourite of the speculators, who repeatedly tout theories of another approach from Qatar. In the wider sector, WM Morrison Supermarkets led the way, adding 7.9p to 275p, while Tesco closed at 391p, up 1.95p. The former was supported by Collins Stewart, whose analysts upped the stock "buy", citing the valuation relative to peers in the European food retail sector and the strength of the Morrisons balance sheet.

The broker also highlighted the strategic options available to the new chief executive, Dalton Philips, including the possibility of leveraging the company's property portfolio, the broadening of the non-food offer and the development of home shopping services. "We also see opportunities for further productive gains in-store (shelf-ready packaging and in-store wage costs), which will further boost the operating margin," Collins said, setting a new 300p target price on the stock.

The medical device manufacturer Smith & Nephew ended 7p higher at 587p, after Seymour Pierce, while scaling back its forecasts, reiterated its "buy" view. Investec also repeated its positive stance, saying that while consensus was likely to come down over the new few days, the company stood to gain from a recovery in the wider economy. "On our forecasts, the shares aren't expensive either in absolute terms or relative to peers, and with the likely second quarter weakness now [reflected] in the market, the risks appear to be on the upside," the broker said.

Further afield, UBS was behind the gains in the retailer Debenhams, which rose by 2.85p to 60.05p after the broker upped the stock to "buy". "Debenhams looks cheap on all metrics," UBS said, citing the recent run of weakness relative to the wider retail sector. "Although the 2.5 per cent fall in like-for-like sales in the third quarter is disappointing, we believe that this can be recovered in the fourth quarter to give flat like-for-like sales in the second half," the broker added, revising its target price to 77p from 75p. "The third quarter included the election, the Budget and the World Cup and believe that these disguised the underlying picture."

Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
PROMOTED VIDEO
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
News
ebooksNow available in paperback
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Life and Style
tech
Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
tech
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: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Carlton Senior Appointments: Sr Wealth Manager - San Francisco - Inv AdvisoryFirm

$125 - $175 per annum: Carlton Senior Appointments: Senior Wealth Manager – In...

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum