Market Report: Liberty leads charge on property values

Liberty International led the real-estate sector higher last night, advancing to pole position on the benchmark index after a new survey sparked hopes of a recovery in commercial property values. Data from the Investment Property Databank (IPD) revealed that commercial property values had climbed by 1.9 per cent in October, compared with a 1.1 per cent rise in September. The index showed gains in all three sub-sectors, with retail property rising by 2.6 per cent, industrial property climbing by 1.5 per cent and office values growing by 1.1 per cent. Traders soon piled in, driving Liberty to 504p, up almost 4 per cent or 19p. British Land, at the number two spot on the FTSE 100, rose to 498.2p, up 2.8 per cent or 13.5p, and Hammerson gained 2.3 per cent or 10.1p to 445p. Land Securities was also strong, closing 16p higher at 726.5p.

Overall, the FTSE 100 was broadly unchanged, with a weak start on Wall Street hampering progress in London. At the close, the benchmark was 19.88 points ahead at 5296.38p, while the FTSE 250 was 77.82 points stronger at 9373.74. Traders booked profits following the release of the Reuters/University of Michigan consumer sentiment index, which fell to 66 points in November, down from 70.6 points in October. Analysts had pencilled in a rise to 72.

The hospitality group InterContinental Hotels gained ground on the back of a new Credit Suisse poll of large listed European companies, which showed that 66 per cent expect to "either maintain or increase spending" over the next 12 months. "IT and travel spending are the areas that are expected to improve the most compared to the previous six months," the broker said, aiding InterContinental, which climbed to 857p, up 19p, as traders saw scope for an uptick in the demand for hotel rooms.

British Airways stood firm, rising by 2p to 217p, after confirming plans to merge with Spain's Iberia. Panmure Gordon, which raised its target price for the stock to 225p from 160p in response, said that overall, "the deal makes sense". "There is greater potential for future growth by optimising the dual hubs of London and Madrid," the broker said, maintaining a "hold" stance on the stock. "The combined network is a stronger one and there are attractive synergies."

On the downside, parts of the mining sector remained unsettled, as the profit-taking trend persisted. The Eurasian Natural Resources Corporation, the target price for which was scaled back to 965p from 1010p at Nomura, was among the weakest, easing by 2.6 per cent or 23.5p to 883p. Kazakhmys, which was downgraded to "reduce" from "buy" by the same broker, lost 12p to 1258p.

"We expect both ENRC and Kazakhmys to suffer from the potential appreciation of [the] Kazakh Tenge and [the] absence of reduction in Kazakh tax rates," Nomura said. The broker retained its "buy" stance on ENRC, however, saying that its "long-term chrome price forecasts were probably conservative".In the wider sector, Vedanta Resources fell to 2330p, down 59p, while Lonmin retreated by 22p to 1592p. The copper miner Antofagasta eased to 868p, down 12p.

The banking sector was mixed, with Barclays declining to 320p, down 4.1p, and Lloyds Banking Group easing by 0.15p to 89.85p. The Royal Bank of Scotland managed to rise, gaining 0.23p to 37.44p, as traders bought in on recent weakness. HSBC was the strongest, advancing to 741.6p, up 9.1p, while Standard Chartered fell back to 1665p, down 18.5p.

Elsewhere, Marston's, the pubs group, gained 2.15p to 86p, thanks to some words of support from UBS, which said the shares were now fairly valued. "A fairly priced valuation on most metrics causes us to upgrade the shares to Neutral, while uncertain prospects and the lack of an immediate catalyst mean [they] are not yet a 'buy'," the broker said, abandoning its "sell" stance on the stock.

Further afield, Goldman Sachs supported sentiment around IMI, which gained 7p to 526p after the broker issued a new capital goods sector review, reiterating its "buy" stance and raising its target price for the stock to 640p from 580p. The broker also repeated its positive stance on Cookson, which was 3.9p firmer at 432p at the end of play. Weir, which is rated "neutral" by Goldman analysts, was 2p ahead at 744.5p, after the broker revised its target price for the stock to 820p from 722p.

ITV edged up by 0.6p to 51.3p after Credit Suisse weighed in, raising its estimates and upping its target price for the stock to 50p from 40p to reflect the update last week. "We see upside given the momentum behind operationally leveraged cyclicals such as ITV; regulatory upside; and the eventual resumption of takeover speculation," the broker said, adding that it nevertheless remained "neutral" stock owing in part to its concerns that the bounce in TV advertising as a recovery takes root may disappoint.

Further afield, housing sector stocks rose with their large-cap commercial property peers, with Barratt Developments gaining 1.7p to 140.2p and Bellway rising by 19p to 780p. Bovis Homes was also strong, gaining 9.8p to 440.8p, while Taylor Wimpey advanced to 42.51p, up 2.01p or almost 5 per cent.