Market Report: Intertek tests highs on MSCI index inclusion

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The Independent Online

Intertek galloped ahead last night as fund managers piled in following its inclusion in a leading equity index.

The company, which tests the quality and safety of products for numerous companies across a wide array of sectors, saw its shares climb as high as 1,770p, up nearly 6 per cent, after being admitted to the MSCI World index, a free-float adjusted index that tracks leading equities in developed markets around the world.

The inclusion, which was announced as part of a review late on Tuesday, and which is effective from the end of this month, spurred interest from tracker funds that follow the World index, driving demand for Intertek's shares, which closed at 1,745p, up 4.2 per cent or 71p last night.

Overall, the market rally ran out of steam as traders moved to bank profits from the previous day's gains, with the mid-caps outperforming their blue-chip peers. The FTSE 100 fell to 5,302.9, down 47.68 points, while the FTSE 250 lost 25.1 points to 9,886.79. On Tuesday, the miners underpinned gains on the benchmark index, but last night the sector switched course amid pressure from profit-taking, with Eurasian Natural Resources Corporation taking the FTSE 100 wooden spoon. The miner, which fell by 41.5p to 926.5p, posted half-yearly results, sounding a note of caution on the outlook for the second half of the year.

BHP Billiton, which turned hostile in its gambit to take control of Potash Corp, was 66p worse off at 1,850p as Moody's said it was reviewing the company's ratings for a possible downgrade. In the wider sector, Anglo American was 52p lower at 2,421p in ex-dividend trading, while Lonmin, the strongest of the blue chips on Tuesday, fell to 1,564p, down 18p at the close. Vedanta Resources, the target price for which was cut to 2,710p from 3,100p at UBS, was also among the losers last night, easing by 43p to 2,177p.

A number of blue-chip stocks lost their payout attractions. Besides Anglo American, the precious metals miner Fresnillo was 26p behind at 1,025p after going ex-dividend. The property group Hammerson, down 5.7p at 363.7p, the cruise operator Carnival, down 19p at 2,176p, and the publishing giant Pearson, down 15.5p at 976p, were among those under pressure as income investors moved out.

The banks struggled to find direction. With little in the way of newsflow, the lenders drifted as investors looked elsewhere. HSBC was the weakest, shedding 14.9p to 652.8p in ex-dividend trading, while Standard Chartered lost 26.5p to 1,747p. Of the UK-focused stocks, Barclays was 2.35p lower at 324.75p, while Royal Bank of Scotland and Lloyds lost 0.3p to 46.94p and by 0.1p to 70.63p respectively.

Back on the upside, and the mobile satellite group Inmarsat rallied by more than 5 per cent or 38.5p to 725p as the bulls moved in on news that LightSquared, the wholesale broadband firm, had activated a co-operation agreement, paving the pay for millions of dollars-worth of payments for the FTSE 100-listed company. Inmarsat said it had already received $81.25m (£52m) and stood to receive further payments up to a total of $337.5m over the next three years.

In the insurance sector, Aviva was 8.9p weaker at 388.4p as traders secured Tuesday's speculative gains. The rumour-mongers found a new target, however, mooting the possibility of takeover interest around its sector peer Legal & General, which was 2.5p higher at 95.75p, its highest close since late 2008. Zurich Financial Services was the name in the frame, but, like Tuesday, when Axa was rumoured to be looking at Aviva, there was no official confirmation to the stock market.

Further afield, UBS boosted the mood around the broadcaster ITV, which gained 1.85p to 52.4p as the broker factored in the prospect of a stronger-than-expected performance over the fourth quarter. The broker said reports of higher advertising revenues had spurred a revision of its forecasts, which in turn bore an improved 72p target price for the stock, compared to 67p previously.

Hansen Transmissions, which makes gearboxes for wind turbines, was less fortunate, retreating by 5.45p to 65p as the bears moved in on the read-across from key client Vestas, the world's biggest wind turbine manufacturer, which posted a surprise second-quarter loss yesterday. Vestas also scaled back its earnings outlook for the year, dampening sentiment around Belgium-based Hansen.

Panmure Gordon failed to support Trinity Mirror, the newspaper publisher, which fell by 1p to 106.75p despite the broker reiterating its "buy" view. Panmure said that while the market "has written off Trinity's prospects", the company's operating performance was running ahead of its expectations. At the same time, Trinity stood to benefit from consolidation in the regional newspapers space.

Investors could also see a reinstatement of the payout, with Panmure arguing that "from a bottom-up perspective, based on our own forecasts, [Trinity] is now in a position to resume dividends". "Leverage has already been reduced. The company is generating free cash flow before and after debt service. This should help the investment case greatly," the broker added, sticking with its 175p target.