Market Report: Lloyds set for £400m St James's Place boost

Taxpayer-backed Lloyds is set to bank more than £400m from a sale of shares in St James's Place, giving investors a chance to grab a larger chunk of the wealth manager. Last night, after the markets closed, Lloyds Banking Group announced its plans to sell 102m shares in St James's.

The part-nationalised lender inherited the stake via its rescue of HBOS in 2008.

The sale of 20 per cent of its stake – which could raise around £400m – leaves it with 37 per cent in the assurer, advisor and wealth management group. It is expected existing investors in St James's will snap up the shares being placed through Bank of America Merrill Lynch.

Rumours of the sale have circulated for months but the size of the stake is smaller than expected.

Mid-cap listed St James's shares edged back 0.5p to 536.5p before the announcement while Lloyds' lost 0.07p to 50p.

Punters were filling their baskets with shares in supermarket group Morrisons and online grocer Ocado yesterday as speculation of talks resurfaced.

Yesterday chat centred on reports that Morrisons may look at working with Ocado to help it move into online food retailing – rather than a previously rumoured full-on bid for the mid-cap group.

Morrisons' under-pressure chief executive Dalton Philips is expected to announce a move into online grocery retailing at its results on Thursday.

Shore Capital's Clive Black and Darren Shirley are not fans of either stock, but they say after Thursday's update that "we should be able to put to bed one way or another whether or not Morrison is likely to bid for Ocado."

Morrisons' shares rang up a 5.5p gain to 268.5p and were further boosted by news that Invesco Perpetual fund manager and investment guru Neil Woodford had upped his stake to 7.69 per cent. Ocado picked up 3.5p to 138p.

The markets were deathly quiet - no new European or US data meant traders could be forgiven for falling asleep at their desks. The market moved sideways for much of the day but ended the day up 20.05 points to 6503.63 – the highest since 12 December 2007 and was 10.27 per cent up on the beginning of the year.

The only economic data out there was higher-than-expected inflation numbers on Chinese government spending which weighed on the banking and mining sectors. Barclays, down 7.1p to 311.5p, and Royal Bank of Scotland, 4.9p weaker at 301.3p, were some of the worst performers.

Software scribblers at Bank of America Merrill Lynch took the red pen to Sage yesterday amid concerns of its foray in to cloud computing.

The "cloud" — a network of remote internet servers to manage and store data — is the big new trend and the software group has been trying to make its mark.

But the analysts think rival SAP's "aggressive push to accelerate growth in its cloud business" with a €2 billion (£1.7 billion) revenue target by 2015 looks more promising. They think the market "should remain sceptical (on Sage)… given that historically very few companies have managed to transform themselves… to credible cloud players."

Aggressive share buybacks could affect the stock's liquidity and Bank of America's tech team slashed the stock's rating from neutral to underperform with a 330p price target for the shares.

The shares lost 7.5p to 341.9p — ending near the bottom of the blue chip index.

Staying on the tech theme, over on the mid-tier index, Anite dialled up a 25p loss to 130p, after its update spooked investors with a cautious outlook.

There was better news for London Stock Exchange after UBS upped its share price target to 1,350p and the shares added 9p to 1392p.

But analysts at UBS were not so keen on broker Icap and said "volume declines could be material as clearing becomes compulsory, costs increase and users turn to futures." They rate the shares of the group, which was founded and run by Michael Spencer, a sell with a 305p price target for stock that is down 12.4p to 330.2p.

The UK's biggest bookmaker Ladbrokes gained ground with plans for a new website after it struck a deal with online software firm Playtech. Ladbrokes was up 14.6p to 239.8p and Playtech rose 18.5p to 570p.

Over on AIM, a decision to defer a referendum on the future of offshore oil exploration in the Bahamas to allow Bahamas Petroleum to dig for oil helped it up 1.25p to 6p.

Berkeley Mineral Resources will announce that production is now expected before the year end at its processing plant in Zambia. The shares were static at 2.42p.

Biofutures has raised £32.5m via share placement in conjunction with its proposed acquisition of Malaysian biofuels specialist Platinum NanoChem and the shares returned from suspension and added 3.72p to 6.82p.

Buy: KIRKLAND LAKE GOLD

Snap up shares in Kirkland, Investec urges. The broker gives a target price for the precious metal explorer of 692p a pop - almost double the present price of 369p - and says yesterday's "weak" third-quarter numbers "are not reflective". Investec adds that Kirkland "is close to delivering the growth turnaround it has been targeting".

Sell: RENTOKIL INITIAL

Liquidate your holding in Rentokil, Canaccord Genuity advises. The broker is expecting 7 per cent profit growth from the Queen's ratcatcher, assuming a "smaller loss" at courier unit City Link. But "the scope for a meaningful improvement in profitability is limited". Shares are 90.5p with a 72p target.

Hold: HYDROGEN GROUP

Cantor Fitzgerald wants us to hang on to shares in Hydrogen, giving a target price to match the current price of 93.5p. The broker says there are "reasons to be positive" about the recruitment group, with management highlighting "a pick-up in trading towards the end of the year". But "caution is still warranted".

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