Market Report: BSkyB picture dimmed as the analysts tune out

 

The Footsie may have reached a five-month high last night, but punters were switching off BSkyB amid claims the satellite broadcaster has fallen out of touch with the great British public. The group has become increasingly friendless in the Square Mile, and yesterday it dropped another 23p to 666.5p after Bernstein Research's Claudio Aspesi became the fourth analyst in a matter of days to hit it with a downgrade.

Mr Aspesi's decision to cut his advice to "underperform" was particularly notable, given it is the first time he has turned negative on BSkyB. Pointing to the recent success of BT (down 0.8p to 203.1p) and Virgin Media in signing up customers to superfast fibre broadband, the analyst said BSkyB was complacent over the threat from the technology, which raised "the question of whether [it] has lost sight of what the market really wants".

Slashing his target price by a huge 41 per cent to 500p, he also fretted over recent reports claiming the group could face more competition for the rights to show Premier League football as well as the possibility the Competition Commission may force changes to the number of exclusive films it can show on its Sky Movies channels.

The subsequent fall left BSkyB shares at their lowest since October, continuing a tough 2012 in which it has already shed more than 9 per cent. Last week UBS, Citigroup and Investec removed their "buy" ratings, with the former warning that the group may end up paying a significant amount more for Premier League rights.

Overall, the FTSE 100 was lifted 38.78 points to 5,741.15 – a level it hasn't closed at since last summer. The rally was all about the banks, with Barclays gaining the top spot by surging 20.25p, or 10.07 per cent, to 221.3p while Royal Bank of Scotland and Lloyds were not far behind, climbing 2.22p to 27.05p and 2.68p to 32.27p respectively.

While positive figures from their peers across the Atlantic – including Bank of America – helped, rising sentiment over the eurozone also did its part. It meant stocks in the wider financial sector were going well, including Aviva, which finished 17p stronger at 342p as takeover speculation around the insurer refused to die.

The news that India's Supreme Court will pass judgement today on Vodafone's appeal against a $2.2bn (£1.4bn) tax bill caused some jitters around the mobile telecoms giant. It dipped 0.55p to 174.65p while its European peer Deutsche Telekom was the subject of vague rumours it could become a target for China Mobile.

There are less than six weeks to go until the start of legal proceedings against BP, but Morgan Stanley's Martijn Rats said there was as much as an 80 per cent chance the oil giant could agree a settlement with the US Department of Justice before the trial begins.

However, he warned this would be likely to involve a fine of up to $25 billion for BP – a much higher sum not only than what the City is expecting but also what the company itself has made provisions for – yet BP still crept up 1.05p to 482.45p.

Tesco outperformed its fellow blue-chip supermarkets by charging up 6p to 327p after the news that US billionaire Warren Buffett has raised his stake in the retailer to more than 5 per cent following its recent profits warning.

Takeover talk around Invensys was being reheated yet again, with US giant General Electric put forward as a possible bidder this time. The suggestion was made by Credit Suisse's Julian Mitchell, who said the mid-tier engineer – which was 15.9p better off at 200p – "would fit well with GE's portfolio of assets".

Heritage Oil bumped up 8p to 192p as market gossips revived familiar bid speculation, but traders were instead highlighting improving sentiment towards its operations in the Kurdistan region of Iraq.

Talvivaara's fantastic run continued, with the nickel miner jumping up another 19.3p to 358.3p. Earlier in the week, the Finnish government's investment arm raised its stake in the company – whose share price rose 80 per cent in 2011 alone – to more than 11 per cent.

The mid-tier index's gold medal position went to Dixons Retail after the electricals chain moved 1.72p higher to 13.55p, meaning it has gained more than a third in the three days since releasing its Christmas sales figures.

The punters were once again getting excited over Rockhopper as the Falkland Islands-focused explorer powered up 10.75p to 327.25p on AIM. The latest vague speculation claimed it could be nearing a farm-in agreement with a US company, although dealers were treating the whispers with a large pinch of salt.

Meanwhile, President Petroleum –which is searching for black gold a bit further west in Argentina – spurted ahead 13.67 per cent to 39.5p after striking oil.

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