Market Report: Marks & Spencer on Citi's shopping list

We are richer, there are more jobs and we are saving less, so we must be shopping more. Analysts at Citi think "material upgrades to the UK economic growth" will benefit retailers. This coupled with "management initiatives" make high street stalwart Marks & Spencer a more attractive company than before.

Citi's Richard Edwards and his team say investment by the chief executive Marc Bolland in IT, logistics and the supply chain over the past three years has now paid off. They predict M&S's general merchandise will begin to see revenue growth and the amount of clothing sold at a discount will also reduce, so margins will start to improve.

Mr Edwards predicts that the retailer will now meet the double-digit growth forecasts that have been set, and he upgraded the group to buy. He raised its target price to 535p from 470p, and the shares were 7.5p better at 479.1p.

Next also benefited from Citi's viewpoint on retailers, adding 74p to 4,990p.

In contrast, the FTSE 100 index lost 51.13 points to 6,440.97 as fears of a US-led military response to the tensions in Syria grew. Weak US durable goods data on Monday also worried traders.

Michael Hewson, an analyst at CMC Markets UK, said: "It's been a rough day for European markets as investors decide to sit on the sidelines despite a positive German business survey showing that optimism was at its best levels for 16 months."

British Airways' owner IAG was 15.3p lighter at 300.5p following a downgrade to hold from analysts at Investec.

As traders' screens were awash with red, one of the few FTSE 100 risers gushed more than 8.5 per cent, with investors relieved that Petrofac's results were not any worse. The oil services group topped the benchmark index after saying it was positive over the second half of the year.

The group, which supplies infrastructure to oil and gas explorers, has had a tricky year so far, with investors ditching the stock amid concerns about the offshore energy market after profit warnings from rivals such as Italy's Saipem.

Petrofac is still down more than 20 per cent since the start of the year but news that first-half earnings had fallen no more than expected attracted investors.

Punters who had shorted the stock rushed to buy up shares to cover their positions. Data from the research group Markit found the number of shares out on loan was at a 2013 high ahead of yesterday's results, with about 5.5 per cent borrowed. Petrofac flared 108p higher to 1,373p.

The mid-table was having a worse time of it than the blue chips, and the FTSE 250 index was down 185.11 points, or 1.24 per cent, at 14,767.99.

The second-worst performer on the mid-cap index was gold miner Polymetal International, down 68.5p to 741p. The Russian precious metal digger was downgraded to neutral by analysts at HSBC because the shares have risen around 80 per cent in the past two months, although they think the second half of the year will be better.

The publisher and events business UBM rose 10p to 711.5p after a boost from UBS. Analysts at the Swiss bank upgraded it to buy and said its "portfolio clean-up" and the outlook for growth in the events business make it more attractive. They added UBM to their most preferred list and raised their price target to 830p from 740p.

The small-cap aircraft leasing company Avation soared 10p to 76p as it reported annual results and increased its dividend by 10 per cent. The group, whose customers include the tour operator Thomas Cook, Virgin Australia and Fiji Airways, said it has grown its fleet size to 23 aircraft.

British Polythene Industries reported a 17 per cent jump in pre-tax profits for the first half and improved 19.5p to 580p.

The technology group Globo has agreed a deal with IBM to use its platform. The Aim-listed mobile phone software specialist dialled up 3.5p rise to 58.875p.

Pittards, the leather goods business that supplies the likes of Marks & Spencer and Nike, reported a better half-year result. The AIM-listed group said it produced a profit of £1.1m against £100,000 in 2012, and the shares were 0.575p stronger at 2.62p.