Market Report: Erotica boom keeps WH Smith sizzling

  • @LauraHChesters

Investors really must be keen on giant bars of Dairy Milk for £1. The newspapers-to-stationery seller WH Smith, up 15.5p to 597.5p, got investors excited with a pre-close trading update that revealed it expects to reach profit of £100m for the first time in more than a decade. Shares hit an all-time high yesterday, so its strategy of selling bottles of water and magazines to captive audiences in train stations and airports has paid off.

Widely written off as high-street history, WH Smith under chief executive Kate Swann is back in vogue. It has been boosted by the bestselling erotic novel Fifty Shades of Grey, and analysts at Peel Hunt raised their price target to 600p from 525p. Analysts think the price will stay high as the retailer will spend a further £50m to extend its share buy-back programme to 2013.

The former BP boss Tony Hayward has certainly bounced back from his dark days at the oil giant during the Deepwater Horizon oil spill in 2010. Mr Hayward has had a new lease of life at the FTSE 250 firm Genel Energy. Hot on the heels of a deal with Tony Buckingham's Heritage Oil in Kurdistan this week, Mr Hayward has completed a deal to fund AIM-listed Mediterranean Oil & Gas's two exploration wells in Malta. Investec reiterated its buy recommendation for Genel, up 5.5p to 700p, but adjusted its target price to 1104p.

For Mediterranean Oil & Gas's chief executive, Bill Higgs, the deal is a reward for his hard work since he joined in January. Mr Higgs, who was at Chevron for 30 years and oversaw the construction of one of the largest man-made structures in the world, the BBLT oil well in Angola, was drafted in after a tricky time at Mediterranean. The oil and gas firm had to refinance last year when an Italian offshore drilling ban led to near-disaster. In an altogether better position now, Mediterranean jumped 22.8 per cent, up 2.6p to 14.1p.

Further good news on AIM came for the Falklands explorer Borders and Southern at its Darwin well. Shares rocketed 57.3 per cent, up 11.5p to 32p, after it revealed better-than-expected findings.

The FTSE 100 struggled up but couldn't reach 5,800 yesterday. After a morning boosted by hopes of US stimulus and signs that China will act on weak manufacturing data, investors checked their earlier enthusiasm and the FTSE 100 closed up just 2.4 points to 5,776.6. With the German Chancellor, Angela Merkel, and French President, François Hollande, still to meet the Greek Prime Minister, Antonis Samaras, the euro crisis is not far from investors' minds.

The big miners were leading the FTSE 100 up after the previous day's falls, with Randgold, up 255p to 6,400p, Fresnillo, up 60p to 1,586p, and Antofagasta, up 32p to 1,152p, topping the leader board, while Anglo American's confirmation that it has ended its long battle with the Chilean copper miner Codelco helped it move up 31.5p to 1941.5p.

The mid-cap miner Aquarius Platinum was up 2.1p to 41.1p on the soaring platinum price.

But Russia's gold mines haven't been shining as brightly as hoped. London-based Petropavlovsk saw its first-half profits plummet 90 per cent. It admitted that interest costs will be up in the second half as its debt mountain gets ever higher. Scribes at Liberum cut the mid-cap firm to hold from buy. Shares plummeted 74.9p to 394p – a 16 per cent drop.

Falling copper prices claimed their latest victim with Kazakhmys revealing a 65 per cent profits slump to $307m. The Kazakhstan miner was the biggest faller on the FTSE 100 and lost 24p to 680.5p.

It was joined by Royal Bank of Scotland, down 7.7p to 227.9p, after news that court papers filed in Singapore reveal new details from a former RBS trader on how it tried to influence Libor rates.

Analysts at Jefferies took their shears to property stocks, reducing Land Securities, down 17p to 788p, Hammerson, down 5.1p to 449.5p, British Land, down 6.5 p to 538p, and the West End specialist Great Portland Estates, down 2.5p to 435.3p, to hold from buy. The Jefferies property expert Mike Prew argued that real estate investment trusts have outperformed the market and are no longer excessively cheap.

The builder SIG warned of weak recovery in the UK's construction sector next year. But a slight fall in first-half profit and flat sales were in line with expectations and shares were up 8.5p to 102.6p, making it the biggest FTSE 250 riser.