Market Report: Ocado delivers the goods as index finishes stronger

  • @greentoby

For once there were plenty of Ocado fans in the Square Mile yesterday, and not just those camped outside St Paul's.

The online grocer – which has been reportedly delivering supplies to the protesters in the financial district – was driven up 4.05p to 88.8p as investors' fears over whether there is enough demand for its services were soothed.

After floating last year at 180p, the mid-tier group has endured a torrid 2011, plummeting nearly 70 per cent since February. With a number of analysts having turned increasingly critical following evidence of a slowdown in sales growth, there was a rare show of support yesterday from Bank of America Merrill Lynch.

The broker's analyst Andrew Gwynn said a trip around its Hatfield warehouse had persuaded him capacity constraints, rather than a lack of customers, were to blame for September's disappointing trading update.

Claiming that a fix to the problems was "imminent", Mr Gwynn raised his advice to "buy" and highlighted the recent growth of Waitrose's rival online business as evidence that there is "plenty of demand for the product". He also played down recent speculation that Ocado could be forced to launch a fund-raising, saying such a move was "unlikely".

France and Germany may have ruled out a decision being made on the eurozone debt crisis at tomorrow's meeting between the region's leaders, but that did not stop the FTSE 100 charging ahead. After climbing steadily throughout the day, the top-tier index finished 103.97 points stronger at 5,488.65 – its highest level for more than two months.

While some put the move down to short-covering in preparation for the summit, others claimed the market was getting increasingly confident an agreement would be reached, even if it did not emerge until next week. "There is something coming, which – until we know the specifics – is good news," said one trader. "However, the devil will be in the detail."

Xstrata led the way, advancing 55.7p to 951.5p after HSBC upgraded its rating to "overweight". The broker gave hope to the miners in general by playing down concerns a crash in copper and iron prices could be just around the corner, predicting the commodities will settle "higher than the stocks are currently discounting".

Over in the wider mining sector, Petropavlovsk strengthened 39.5p to 727.5p on the mid-tier index as bid rumours made a return. Yet dealers were not too keen on the vague speculation, which suggested an approach could come from a fellow Russian group, and instead pointed to encouraging comments from both Citigroup and Credit Suisse in the wake of its production report on Thursday.

The former also helped by raising its gold price forecast for 2012 to $1,950 (£1,224) an ounce, arguing that the "macroeconomic and financial factors which have propelled... prices over the last three years" would continue for at least another 12 months.

Brokers were lining up behind Weir, with the engineer lifted 98p to 1,773p as UBS kept the company in its "1st XI" of favourite UK stocks while Bank of America Merrill Lynch reiterated its "buy" recommendation.

Kesa Electricals was bumped up 3.05p to 94.6p on the FTSE 250 amid chatter that the retailer could be nearing a sale of its struggling Comet business. The rumours sweeping trading desks suggested buyout vehicle Opcapita may be about to win the race for the electricals chain, beating the turnaround company Hilco, which – if successful – has been reportedly planning to appoint Dragons' Den star Peter Jones to a senior role at Comet.

News that it had managed to reach an agreement with its banks meant Thomas Cook surged 5.95p, or 13.06 per cent, to 51.5p. However, despite the troubled tour operator securing a new £100m facility, it still remains around 60 per cent lower than before July's profits' warning.

At the other end, Domino's continued to slide, retreating 11p to 440p in the wake of vague whispers earlier in the week that the pizza delivery company could be considering a share placing.

Takeover rumours made a return yet again around Gulf Keystone, as the Kurdistan-focused oil explorer shifted up 1.75p to 137.5p on the Alternative Investment Market. The vague reheated chatter suggested that the punters' favourite could attract an approach worth 180p a share, although – with further details scarce – traders were unimpressed and urged caution over the wild whispers.

Bid talk also helped Jubilee Platinum spurt ahead 1p to 14.12p after Shore Capital's Yuen Low said it was "potentially worth more to others". The analyst started coverage on the Africa-focused digger with a "buy" rating, choosing it as his favourite junior platinum producer.

FTSE 100 Risers

Petrofac 1,372p (up 59p, 4.49 per cent)

Oil services group manages to bounce, having dropped on Thursday despite announcing it was on course to meet the City's full-year profit expectations.

BG 1,354.5p (up 36p, 2.73 per cent)

Explorer gets a boost from Nomura starting coverage with a "buy" rating and 1,750p price target, saying it "remains a stand-out resource and long-term growth stock".

FTSE 100 Fallers

Wm Morrison 301.1p (down 0.9p, 0.3 per cent)

Supermarket knocked by Bernstein slashing its rating to "market perform" from "outperform", citing the recent strength of the company's share price.

Arm Holdings 567.5p (down 0.5p, 0.09 per cent)

Chip designer slips as Peel Hunt notes that since peaking at 650p last January it has failed to move higher and asks whether "600p may now represent a ceiling".

FTSE 250 Risers

Premier Foods 4.12p (up 0.14p, 3.39 per cent)

Despite enjoying a major shift higher, Hovis owner remains nearly 60 per cent lower than before releasing a profits warning earlier in the month.

Britvic 340p (up 12p, 3.66 per cent)

Soft drinks company continues to advance after strong trading update earlier in the week in which it announced a 0.3 per cent rise in its fourth-quarter revenues.

FTSE 250 Fallers

Aquarius 170.7p (down 3.5p, 2.01 per cent)

Platinum producer left near the foot of the mid-tier index, falling for a fifth straight day as Morgan Stanley initiates coverage with an "underweight" rating.

Rank 126.1p (down 0.9p, 0.71 per cent)

Mecca Bingo owner finishes in the red after disappointing update, saying it expects consumers in the UK as well as Europe to remain under pressure into 2012.