Market Report: BAT climbs back as defensives recover

British American Tobacco traded higher last night, as defensive stocks, depressed by some sharp selling in the session before, staged a recovery.

The cigarette maker was the worst-performing blue chip on Tuesday, as investors bought into riskier cyclical plays. But the trend was reversed last night, with BAT gaining 4.8 per cent or 71p to 1,566p.

Investec said investors faced a conundrum – although BAT remains attractive, and while it has suffered in recent weeks, on a two-year view it has still outperformed cyclical stocks in the financial and mining sectors. "The risk therefore exists that cyclicals continue to rally despite our view that BAT is looking highly attractive," the broker said.

For now, the investors appeared happy to live with the risks. Besides BAT, other defensives, including Reckitt Benckiser, the consumer goods giant, which gained 4.3 per cent or 108p to 2,612p, and Shire, the pharmaceutical group, which added 2.7 per cent or 22p to 825p, also firmed up during the session.

Financial issues fell back as defensives recovered, with investors moving to secure profits in the banking and insurance sectors. As a result, Legal & General, which was among the strongest in the session before, retreated to 50p, down 8.3 per cent or 4.5p. Royal Bank of Scotland, which was reported to be in talks with three banks interested in snapping up its Asian assets, eased to 27.7p, down 5.1 per cent or 1.5p, and Lloyds Banking Group lost 4.3 per cent or 3.8p to 84.1p.

Overall, the FTSE 100 was 20.6 points behind at 3,968.4, while the FTSE 250 fell back towards the 7,000 mark, losing 42.8 points to 7,109.4 amid lacklustre volumes.

Traders remained relatively upbeat, with many highlighting a call by Crispin Odey, the widely followed hedge fund manager, who said the recent upturn in equities may signal the beginning of a new bull market.

Elsewhere, miners were unsettled as investors took profits from the previous session's copper price inspired rally. Vedanta Resources, which was the best-performing blue chip on Tuesday, was among the worst last night, losing 7.5 per cent or 76p to 932p. Xstrata was 6.5 per cent or 40p lower at 573.5p while Kazakhmys retreated to 487.25p, down 5.1 per cent or 26.2p.

The Eurasian Natural Resources Corporation was also weak, losing 3.7 per cent or 20.5p to 533p. The company sidestepped a sharper fall thanks to Citigroup, which told clients to "buy" on any short-term weakness. Setting a 600p target price on the stock, the broker added that ENRC had a promising portfolio of assets, which it could exploit as and when market conditions improve.

On the upside, Tesco gained 1.7 per cent or 5.7p to 329.2p as ING weighed in, predicting a 7.5 per cent increase in underlying pre-tax profits when the company reports full-year results later this month. "These results are important and will enable the market to assess UK margin progression in the context of the ongoing market share erosion of the business in recent quarters (as measured by TNS)," the broker said, adding that the outlook for the UK for the current year was "increasingly challenging". It added: "Although management still retains a long-term 3-4 per cent like-for-like growth target for the UK business as a whole, we do not expect this will prove attainable again in the near term."

Further afield, parts of the pub sector were lifted by a positive update from Marston's, which touched a session high of 174.5p before retreating to 158p, up 1.25p, as investors banked profits. Enterprise Inns, which was initiated with an "equal-weight" rating and a 135p target price at Barclays, was the strongest of the lot, climbing to 125.75p, up 10.5 per cent or 12p. Punch Taverns, which has rallied strongly over recent weeks, supplemented gains, rising to 112.25p, up 4.4 per cent or 4.75p, amid vague speculation regarding a possible bid for its Spirit pubs business.

Mitchells & Butlers failed to rise, however, losing 4.7 per cent or 13.5p to 270.25p after Barclays set an "underweight" rating and a 230p target on the stock. The broker said that although the company's managed pub operation is faring "much better" than peers, "the valuation more than fully reflects its prospects".

Among smaller companies, Afren, the Africa-focused oil and gas prospector, eased by 0.25p after unveiling an £85m share placing to help finance the development of the Ebok field in Nigeria. The company placed 265 million shares with institutions at 32p apiece.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
This weekend's 'Big Hero 6' by Disney Animation Studios
arts + ents
News
i100
News
Budapest, 1989. Sleepware and panties.
newsDavid Hlynsky's images of Soviet Union shop windows shine a light on our consumerist culture
Arts and Entertainment
Eleanor Catton has hit back after being accused of 'treachery' for criticising the government.
books
News
In humans, the ability to regulate the expression of genes through thoughts alone could open up an entirely new avenue for medicine.
science
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

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee