Market Report: Gaz-guzzler stocks motor ahead as oil drops

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The Independent Online

As the oil price fell from its lofty perch, dealers seized the opportunity to buy shares in the gas guzzlers who will benefit the most.

After hitting a record $147 a barrel in July, the price of crude continued back down the slippery slope to $112 as economists predicted that demand in Western countries faced the steepest decline in 25 years.

FirstGroup runs more than 9,000 buses as well as operating railway services in the UK and Greyhound coaches in the US, and will be a major gainer from falling fuel prices, driving the shares up 23.5p at 581.5p

Carnival, the big cruise line company, has always been highly sensitive to shifts in fuel prices and it too went better, up 68p at £19.85. British Airways, up 7.25p at 261p, was also in demand after announcing an agreement with American Airlines and Spain's Iberia for a transatlantic tie-up. The oil producers, however, weakened with BP down 11.5p at 515p and Royal Dutch Shell 41p lower at £17.97.

John Lewis, Middle England's so-called favourite store, came to the rescue of the downtrodden retail sector delivering a sparkling rise of 9.3 per cent in weekly sales, helped by strong trading in fashion and electricals.

That was taken up by dealers as a sign that there is still life in the high street yet and Next, up 28p at £10.37, Marks & Spencer, 276p, up 10.25p, and Carphone Warehouse, 4p up at 201p all moved ahead. Debenhams was a lone exception down another 1.5p at 54p.

But some dealers said it was still early to embrace a retail recovery pointing out that the John Lewis figures compared with weak numbers the previous year and were also assisted by unseasonably poor weather driving shoppers into the stores.

The FTSE 100 fluttered 41 points higher but failed to hold its nerve ending 42.6 points down at 5,454.8. On Wall Street, the Dow benefited from the prospect of lower energy prices and was trading 79 points ahead as London closed.

Housebuilders continue to give traders the jitters. The broker Kaupthing downgraded Barratt, Persimmon and Bovis. The shares have staged a mini revival but investors are probably still not giving sufficient thought to the fragile state of the market. Despite cutting its target price for all three stocks they all went better, Barratt to close at 131p, up 6p, Persimmon at 351p, up 8p, and Bovis at 451p, up 35p.

Punters looking for value should consider upmarket Berkeley , up 6p at 789p, the only stock in the sector worth buying, said the broker, and well placed to use its big cash pile to pick up land cheaply for the revival – if and when it comes.

Michael Page fell 17p at 317p after the recruitment firm ended takeover talks with the potential bidder Adecoo. The Swiss-based Adecco offered 400p a share which was rebuffed before coming back with a different package giving investors 200p a share and a minority stake in the merged business. Altium Securities said the ball was now in Adecco's court but anything below 500p would be thrown out.

London Stock Exchange gained 6p at 803p after a sharp fall on Thursday on fears it will be hit by the launch of Project Turquoise, a new share trading exchange backed by nine leading investment banks which is aiming to offer a platform to buy and sell up to 1,300 leading shares in 13 European markets.

As the new Premiership season gets underway in England, one of Scotland's finest, Celtic, issued a timely reminder of football's fluctuating fortunes. A fall of 3 per cent in turnover coupled with heavy investment in players and facilities left the club £4m in the red last year. The year before it made a £15m profit. However, Celtic remains optimistic about trading for the current campaign. The shares, which have lost a quarter of their value in the past three months, were steady at 50p valuing it at £44m.

Lo-Q, which sells gadgets enabling visitors in theme parks to know when it is time to use attractions rather than having to waste time queuing, jumped 7p to 31p on a rise from £14,000 to £182,000 in first-half profits. Six Flags, the fourth largest theme park chain in the world, uses the systems in eight of its 14 parks. Broker Arbuthnot sees the shares climbing to 37p.

Scotty, the video satellite equipment specialists, edged 1.4 per cent higher at 1.6p after saying it would top market expectations of £600,000 operating profit for the year. The company is also reducing the ridiculous one billion shares in issue through a 50 for one consolidation.

Addworth fell 20 per cent to 1p after warning that it expects losses of £560,000 for the half just ended, compared with £19,000 previously. The group, which nurtures fledgling companies for floating on AIM and the junior Plus Markets, said it had not brought a company to either market because of tough conditions.