British Land was in the spotlight last night as analysts argued that the property group was well placed to stand firm in an environment where bank financing remains a fraught topic.
Goldman Sachs said that while the financing positions of European property companies had improved, "it is likely to take a long time for normal lending conditions" to return to commercial real estate (CRE) markets across the Continent. Given this background, companies with stronger financing positions were likely to outperform, something which bodes well for British Land.
It has limited refinancing needs over the next few years, given the £2.9bn of undrawn facilities and a relatively strong position in terms of accessing alternative sources of financing. Besides offering support against the backdrop of lacklustre financing conditions, this leaves the group well placed to make the most of potential investment opportunities.
"We believe British Land's shares can benefit relative to the sector in an environment in which European CRE financing needs become a greater concern," the broker said, upgrading the stock from "neutral" to "buy". "At the same time, we believe the possibilities for British Land to make attractive investments will increase as the banks begin to make headway in reducing their exposure to the sector."
The assessment drove British Land to a session high of 457.8p, up 9p. But its strength gave out as the market went south in response to some disappointing economic data from the US, leaving the stock 5.6p behind at 443.2p at the close.
Overall, the session began on a positive note, with the FTSE 100 higher in the morning. But the gains were wiped out after a widely followed index of US consumer sentiment fell to its lowest level in 11 months. The data was supplemented by disappointing revenues at Bank of America, Citigroup and GE, leading to early losses on Wall Street.
That in turn knocked the FTSE 100, which ended 52.44 points lower at 5,158.85. The mid-cap FTSE 250 index came under similar pressure, sliding by 77.14 points to close at 9,775.31. BP was among the few blue-chip stocks that managed to overcome the weakness. The oil giant attracted some cautious support, adding 5.4p to 407.15p, as traders bought in on news that the company had finally plugged the flow of oil from the leaking wellhead in the Gulf of Mexico.
The miners had no such luck, however, as the US data triggered concern about the demand outlook for metals. Anglo American, for instance, went from a session best of 2,433.5p, up nearly 3 per cent, to 2,338.6p, down 27.5p, at the close. The Chilean copper miners Antofagasta proved more resilient, ending flat at 903p, but was also off the day's highs as market sentiment soured near the close.
Over in the banking sector, stocks were hit as the market looked ahead to the European stress tests, the results of which are due at the end of next week. Barclays was the weakest of the lot, claiming the FTSE 100 wooden spoon after falling 15.7p to 284.65p. Lloyds and RBS were also behind, shedding 2.29p to 59.61p and 1.49p to 43.71p after Seymour Pierce reiterated its "sell" view on the two. "We think the focus on short-term profitability could be doing irreparable damage to the franchise value of Lloyds and RBS," the broker said, capturing the mood towards the lenders.
British Airways managed to stand firm, gaining 0.2p to 203.8p, following a push from Goldman, which reiterated its "buy" view. The broker also boosted Easyjet, which was 7p better off at 421.5p after being raised to "buy". "We raise our estimates for the airlines as current trading conditions are proving very fertile with business traffic and cargo demand remaining vigorously strong ... against easy comparatives," the broker said. "There are no signs yet of softness creeping in, and though we are mindful of softening in some lead indicators, we remain above consensus for this year."
Elsewhere, Aegis was broadly unchanged, edging lower by 0.2p to 107.2p, after RBS analysts switched their view to "buy". The broker said that the recent share price weakness meant that the valuation premium to peers – the factor behind RBS's move to "hold" following the full-year results – had closed. Moreover, the upcoming half-year results in August should confirm that the recovery is now under way, RBS added, revising its target for the stock to 140p from 130p.
On a more speculative track, the data centres specialist Telecity continued to attract bid rumours. The stock rallied by more than 4 per cent or 16.7p to 420p amid unconfirmed chatter of interest from Japan's KDDI. There was also talk of interest from an unnamed American peer and, to the surprise of market watchers, Aggreko, the FTSE 100-listed temporary power provider which ended 2p behind at 1,578p last night.
Further afield, the retailer Mothercare was held back, easing by 6p to 524p as analysts weighed in on the trading statement issued earlier this week. Execution said the update confirmed its fears about the outlook for the UK and switched its view to "sell", while UBS, also disappointed by the domestic picture, lowered its earnings estimates for the business.
FTSE 100 Risers
Invensys 265.3p (up 3.5p, 1.3 per cent)
Overcomes market slide as UBS switches its stance to "buy" from "neutral".
BAE Systems 318.6p (up 2.1p, 0.7 per cent)
Defensive stocks attract support following disappointing US economic data.
Rolls-Royce 579.5p (up 2.5p, 0.4 per cent)
Defensives in favour after US consumer confidence hits market sentiment.
FTSE 100 Fallers
Wolseley 1,364p (down 40p, 2.9 per cent)
Retreats as US consumer confidence figures cause worries about the recovery.
Man 209.4p (down 6.1p, 2.8 per cent)
Loses ground as market moves lower and the recent string of bid rumours fade.
Kazakhmys 1,024p (down 27p, 2.6 per cent)
Mining sector rises, but then falls back as US data causes worries about the demand outlook.
FTSE 250 Risers
Dana Petroleum 1,483p (up 67p, 4.7 per cent)
Posts an exploration and drilling update; cut to "sell" from "neutral" at Evolution.
Croda International 1,133p (up 11p, 1 per cent)
WH Ireland revises its target price for the stock to 1,200p from 1,100p.
Dimension Data 122.5p (up 07.p, 0.6 per cent)
Stands firm following recent recommended offer from Japan's Nippon Telegraph and Telephone.
FTSE 250 Fallers
Aquarius Platinum 256p (down 45.5p, 15.1 per cent)
Says it's gauging impact of regulatory instructions in the north-west region of South Africa.
JD Wetherspoon 418.4p (down 2p, 0.5 per cent)
Target price reduced to 560p from 580p at UBS, and to 540p from 740p at Citigroup.
Hays 95.3p (down 0.7p, 0.7 per cent)
Société Générale initiates coverage with a "sell" recommendation, 81p target price.Reuse content