Market Report: Rank slides after Darling calls its number

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The Independent Online

Rank, the owner of Mecca Bingo and Grosvenor Casinos, tumbled nearly 9 per cent last night as investors digested the implications of the Budget, which outlined increases to bingo duty and poker taxation.

The company said the new measures were likely to dent its finances by around £6m this year, or around £9m on an annualised basis, sending its share price sliding to 67.5p, down 6.5p, as the markets priced in the potential impact on profits.

Investec said the rise in bingo duties was a surprise, and would probably accelerate the rate of club closures across the industry.

"The Budget highlights how exposed the gaming sector is to regulation and tax, especially at a time when a cash-strapped government needs to raise revenue," the broker said, trimming its target price for Rank's shares to 85p from 95p.

The new measures overshadowed a well-received trading update, which was published after the close on the day before, and ensured that Rank ended last night's session as the weakest stock on the FTSE 250.

Overall, the markets were broadly unchanged, with the FTSE 100 easing 12.43 points to 4,018.23 as another round of gains in the retail sector was offset by sharp falls among financial stocks. Things were also quiet on the FTSE 250, which gained just 21.57 points to 7,181.53.

A better-than-forecast earnings update from Debenhams, which climbed to its highest level in over a year, up 21.7 per cent or 13.7p to 77.25p, boosted blue-chip retailers such as Next, up 6.6 per cent to 1,529p, and Marks & Spencer, which gained 3.3 per cent to 340p.

Traders said the results, which follow a week of upbeat newsflow across the sector, had served to cement the feeling of an earlier than expected recovery on the high street, with analysts moderating their bearish stance on the prospects for trading in the months ahead.

On the downside, financial stocks were broadly unsettled, with the fund manager Schroders, which upset the market with its interim management statement, losing almost 7 per cent or 56.5p to 760.5p.

Among the banks, Lloyds Banking Group was 4.5 per cent or 4.5p weaker at 96p after announcing plans to cut around 1,000 jobs, while Standard Chartered eased to 968p, down 2.8 per cent or 27.5p, on the back of reports that it has called in advisers to explore a possible listing in India.

Aviva was the weakest of the insurers, losing just over 5 per cent or 13p to 239.25p after JP Morgan scaled back its target for the stock to 285p from 360p.

The broker advised investors to reduce their exposure to riskier plays in light of the recent recovery in sector share prices, downgrading Prudential, which was 3 per cent or 10.7p lighter at 347p, to "neutral" from "overweight".

The mining sector was mixed, with a number stocks trading higher with Lonmin, which gained 9.5 per cent or 118p to 1357p after positing an update production report, while others eased under the pressure of profit-taking.

As a result, Rio Tinto was 4 per cent or 99p stronger at 2571p, while the Eurasian Natural Resources Corporation retreated to 550.5p, down 6.3 per cent or 37p. Kazakhmys was also down, losing 4.75p to 476.5p, while Vedanta Resources firmed up to 935p, gaining 16p.

On the second tier, London Stock Exchange rose to 690p, up 2.6 per cent or 17.5p, as new reports suggested that rivals Deutsche Börse and NYSE Euronext have relaunched merger talks to form the world's biggest operator of stock markets.

A German magazine said discussions between the two bourses were at an advanced stage, and that a deal may be completed next month.

Elsewhere, the engineering consultancy WS Atkins fell to 558.5p, down 10.5p, after Goldman Sachs removed the stock from its "conviction buy" list on account of recent outperformance.

The broker nonetheless kept the stock at "buy", telling clients that the company was well-positioned to gain market share, both organically and through deal activity, during the current slowdown without losing control of margins, which should be able to draw support from its flexible operating model.

UBS boosted Rightmove, the online property website, whose shares climbed to 302.75p, up 4.75p, after the broker upped its target price to 300p from 205p.

"The housing market appears to have passed its point of greatest declines," the broker said, striking an optimistic note.

UBS reckons that the improved conditions will temper the pace of estate agents – Rightmove's subscriber base – closing shop, and thus increased its earnings estimates for the company by 11 per cent for this year, and by 12 per cent for 2010.

Among smaller companies, while investors in Rank were cursing the Chancellor, those with money in Nautical Petroleum were cheering. The company, which saw its share price climb to 56.75p, up 22 per cent or 10.25p, stands to benefit from new incentives for North Sea oil companies announced in the Budget.