Market Report: Heatwave goes down well at Wetherspoon

Thirsty traders were diving into the pubs group JD Wetherspoon as the heatwave helped to sell more pints and glasses of Pimm's. Wetherspoon raised its profit guidance for the year and the chairman and founder, Tim Martin, said he was "more bullish" after the positive period.

Its better-than-expected fourth quarter included a 3.5 per cent jump in sales for the 11 weeks to 14 July.

Traders were betting that the heatwave would further boost the business and the shares soared more than 12 per cent.

HSBC's analysts said they "expect a period of strong trading" for pubs groups and raised their target price for Wetherspoon to 700p, up from 520p.

Analysts at Numis raised their rating to add, and James Hollins at Investec said: "This is a very strong performance and we take further encouragement from the margin, given historic criticism of the group chasing revenue at the expense of margin." He raised his full-year pre-tax profit forecast by 4 per cent to £76.3m.

Wetherspoon, which has 800 pubs and plans to open 30 more in the next financial year, was 82p better at 750p.

Across the wider market, better-than-expected manufacturing data in Europe and good corporate updates helped the FTSE 100 index to advance 22.9 points to 6,620.43. The market remained reasonably quiet, and although the blue-chip index hit its highest levels since the end of May it has struggled to get past this.

Michael Hewson, an analyst at the spread betting group CMC Markets, said: "It continues to struggle to overcome the 6,660 area which has acted as a cap for the last few days, and given this lack of follow-through we've seen markets slowly drift back and the gains melt away in the afternoon sessions."

EasyJet soared 49p to 1,385p after it said third-quarter sales were strong and it raised its full-year profit guidance to between £450m and £480m. Fears that it had been hit by a slowdown in last-minute bookings due to the hot weather at home were allayed for now. Airline peer IAG also gained, up 5.5p to 291.4p.

Tate & Lyle was 29.5p sweeter at 853p after a first-quarter update that was in line with expectations.

Compass, the world's largest catering business and a key Wimbledon supplier, reported a 4 per cent rise in third quarter sales and was 9.5p healthier at 885.5p.

On the mid-cap index, a snub by the hi-tech manufacturer Renishaw left City analysts cross. Renishaw, which makes measuring devices for the healthcare and industrial sectors, said that after a review it had decided it would no longer see investors or analysts for one-to-one meetings.

The cold shoulder left the City slighted, and Investec said the decision would "do a disservice to the company and its external shareholders".

Renishaw, which announced the change at its full-year results yesterday, did reassure investors that it would still allow "shareholder meetings" with senior management, which could be "arranged where a shareholder wishes to communicate their views". It reported a 12 per cent drop in fourth-quarter sales growth and the shares fell 40p to 1,527p.

The department store chain Debenhams "is the cheapest stock" in UBS's European retail coverage, and it raised its price target to 125p and rated it a buy. The chain, which recently added the London Fashion Week designer Todd Lynn to its roster of brands, added 2.7p to 107.9p.

Ocado fell out of favour with analysts at Exane BNP Paribas who were concerned that there was no "imminent catalyst" for the shares to rise further. They rated it neutral and the shares lost 5p to 320p.

Exane does not rule out M&A activity, however, and said "Ocado's unique technology makes it a buyout target". But they expect others businesses to continue to develop their own technology first.

The price of gold soared for a third day to reach a one-month high, and the west African gold producer Avocet Mining felt the benefit with a 3p rise to 11p.

The Aim-listed "clean" energy expert Greenko Group released full-year results with sales up 10.4 per cent and it swept up 3.63p to 117.5p.