Market Report: Michael Page beats the unemployment blues

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The Independent Online

A Citigroup "buy" note boosted Michael Page, the staffing group, which motored ahead 4.33 per cent or 8.75p to 211p.

Unperturbed by the rising tide of unemployment and recession, the broker said yesterday that, while it was mindful of the tougher trading conditions faced by the group, investors should focus on "longer-term franchise valuations over guess the [earnings] near-term multiple valuations".

"We are also keen to avoid the 'valuation confusion' that affected parts of the analyst community during 2008, particularly after Adecco's failed attempt to acquire Page. Our fundamental valuation of Page stands on its own and does not depend on Adecco coming back or not," Citi said, highlighting the stock's "deep discount to franchise-value," and advising investors to buy.

Overall, the FTSE 100 tried but failed to end its losing streak, losing 7.65 points to 4,052.23. Last night's fall means that the benchmark has ended in the red in 11 out of the last 12 sessions.

The FTSE 250 fared better, edging up by 7.63 points to 6,167.13.

Barclays remained on the back foot, dropping 10.44 per cent or 6.9p to 59.2p amid concerns that if it seeks government capital, the bank is at risk of ending up firmly in the clutches of its Middle Eastern investors, who currently own around 32 per cent of the group.

The worries were down to a clause in the bank's recent fundraising agreement, under which it would have to offer the Middle Eastern investors additional stock – possibly ceding more than 50 per cent of the group – if it raised capital at its current depressed share price before June.

Traders said the clause appeared to bar access to government capital, as, under the agreement, the British taxpayer may end up funding what would end up as a foreign-owned bank.

Cazenove, which weighed in on the concerns, played down the fears however, saying out that Barclays could raise a substantial amount of funds at current prices without yielding a controlling stake.

In the wider sector, the picture was mixed, with the Royal Bank of Scotland easing 2.4 per cent or 0.3p to 12.2p, while Lloyds Banking Group surged to 49.1p, up 8.87 per cent or 4p.

Elsewhere, firmer crude prices underpinned gains in the oil and gas sector. Cairn Energy was among the strongest, swinging to 1797p, up 3.69 per cent or 64p after Bernstein Research initiated coverage with an "outperform" rating.

The broker also set an "outperform" on Tullow Oil, up 2.24 per cent or 14p at 639.5p, saying that concerns over financing for the group's Jubilee field development "appear unwarranted".

On the downside, BT slumped to 111.8p, down 9.11 per cent to 11.2p after the company revealed a £340m one-off charge at its troubled global services division.

In response, Bank of America/Merrill Lynch moved its target for the stock to 115p from 140p to reflect lower margin services at the underperforming division.

"We do not see the dividend expectations changing further, with consensus already factoring in a cut to 10p," the broker said.

"The big factor for the dividend will remain the outcome of the triennial pension review due in May at the full year results."

On the second tier, a better than feared update from Enterprise Inns, up 18.9 per cent or 6p at 37.75p, was said to be behind some short covering in parts of the pubs sector.

As a result, Punch Taverns – moved to "hold" from "sell" at Numis – surged to 39.25p, up 21.71 per cent or 7p and Marston's firmed up by 6.58 per cent or 6p to 97.25p.

The latter moved up despite some negative comment from Bank of America/Merrill Lynch, which warned that the group may cut its dividend in a bid to pay down its debt.

"We find it hard to see how management keep this dividend intact given the expected fall off in trading," the broker said, downgrading the stock to "neutral" from "buy".

ITV continued to underperform, losing 5 per cent or 1.5p to 28.5p after Goldman Sachs reduced its target price for the stock to 27p from 35p.

Reiterating its "conviction sell" stance, the broker said it was discounting the prospect of M&A following Ofcom's move to back a merger between Channel 4 and Five.

"We believe RTL/Bertelsmann, the most credible bidder, is now likely to focus attention of a merger of their 100 per cent-owned channel Five with Channel 4."

Also on the downside, property group Great Portland Estates retreated to 227.25p, down 2.36 per cent or 5.5p, as investors moved to take profits from intra-day gains.

Earlier, the stock jumped to 239.5p, up 6.75p, after chief executive Toby Courtauld said the company had no plans to raise funds from shareholders as its debt levels were among the lower in the sector.

Among smaller companies, Helphire suffered a bruising 45.45 per cent or 45p fall to 54p after the accident claim-handling firm issued another warning on first-half profits.

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