Market Report: Ratings boost gives drugs firm Hikma a healthy glow

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The Independent Online

Investors were told to stop worrying about the Arab Spring and pile into Hikma yesterday. The Jordan-based generic drugs maker was driven up 35p to 665p after Morgan Stanley argued that despite recent conflicts, the pharmaceuticals market in North Africa and the Middle East remained on course to soar.

Upgrading his rating to "overweight", the broker's analyst Peter Verdult said that the region – which currently provides almost 60 per cent of Hikma's revenues – contained "some of the fastest-growing pharma markets with relatively high entry barriers".

The company has already said that despite some disruption to its operations, it expects to benefit from the fallout of the Arab Spring, claiming governments will be forced to listen more closely to their citizens and subsequently increase spending on healthcare.

Hikma's quest to expand in the region took a further step earlier in the month after it agreed to buy more than 60 per cent of Morocco's Promopharm for $111.2m (£69.8m). Mr Verdult said the acquisition "reinforces the growth story" and estimated that this year it would contribute $55m worth of sales.

There was a lot of support from the City for the drugs makers in general, with Shire shooting up 53p to 2,005p on the blue-chip index. Société Générale's analysts issued a "buy" note on the group, saying that "high quality, defensive stocks offering good growth prospects are going to be increasingly valued if as now seems likely we see a recession".

With no solid news expected from the meeting of European bigwigs until well after the bell, it was a session full of speculation over proceedings in Brussels but little optimism. Despite one of the rumours doing the rounds during the day suggesting that discussions over Greek debt haircuts had hit an impasse, the FTSE 100 still managed to rally just before the close and finish 27.7 points ahead at 5,553.24.

However, the banks failed to keep their heads above water, with Barclays sliding 1.4p to 178.6p while Royal Bank of Scotland and Lloyds retreated 0.31p to 24.78 and 0.73p to 34.25p respectively.

Jittery investors searching for safety meant gold remained in demand, rising for the fourth straight session.

Its popularity pushed the yellow metal diggers higher, including Fresnillo (up 70p to 1,654p) and Randgold Resources (up 170p to 6,880p).

At the other end, Smiths Group dropped 42.5p to 928.5p as the engineer traded ex-dividend, while Costa Coffee-owner Whitbread – which dipped 22p to 1,674p – also lost its payout attraction.

Marks & Spencer was hit by Nomura not only slashing its pre-tax profit estimates for the year but also claiming that the High Street institution's £600m refurbishment programme and celebrity advertising campaign starring Ryan Reynolds would not boost next month's first-half results. The Japanese broker's analyst Fraser Ramzan predicted that the recent Indian summer will have resulted in "extremely weak trading", although he said the benefits of the makeover would emerge in the medium term.

With Heathrow-owner BAA revealing a rise in the number of travellers using its airports, International Airlines Group managed to ease up 1p to 166.3p. This was despite Liberum suggesting that traders might want to short the group ahead of results from it and its peers, forecasting a number of downgrades in the sector.

The figures from BAA also helped Restaurant Group, whose airport concessions are popular with hungry flyers. The owner of Frankie & Benny's climbed 3.3p to 298p on the FTSE 250 even though analysts from Goldman Sachs slashed its sales estimates and reduced the company's price target to 275p.

The mid-tier index was led by Rank, with the bingo club operator advancing by 8.53 per cent to 140p. Traders put the extreme move down to the scarce availability of stock not held by Malaysian gambling group Guoco, which owns 74 per cent of Rank following a messy takeover earlier in the year.

Down on the Alternative Investment Market, MDY Healthcare was congratulating itself on a deal well done. The investment firm's share price more than tripled, powering up 29.5p to 42p, after making a considerable profit by disposing of its stake in the medical technology company Medivance for more than $20m.

Eros International charged up 16.5p to 248p after the Bollywood film company signed syndication agreements with a number of television channels from countries including Israel, Singapore and Iraq.

However, Norseman Gold lost its lustre, sliding 36.5 per cent to 6.35p. Investors reacted badly to the Australian digger's announcement that it was raising around £12m through a share placing as well as convertible loan notes.