Market Report: Relief rally drives Enterprise higher

The pub groups Enterprise Inns and Punch Taverns bucked a weak market trend last night, rallying as investors bought in on news that regulators had decided against pursuing an investigation into "beer tie" arrangements, which force pub tenants to buy beer from landlords.

Enterprise saw its shares surge to a session high of 149p, up around 25 per cent, while Punch Taverns jumped by almost 17 per cent to 99p at one point after the Office of Fair Trading, responding to a complaint from the consumer group Campaign for Real Ale, said it had found that "there is generally effective competition between pubs", adding that in its view supply ties did not "contribute to higher prices or prevent pubs offering a wide choice to consumers". As a result the Oft will not be taking any further action on the matter, helping Enterprise to close at 147p, up 27.9p, and Punch to strengthen by 12.5p to 97.25p.

Mark Brumby, equity analyst at Astaire Securities, said the decision will "come as a huge relief to the pub companies". "Some 15 per cent to 50 per cent of their income could have been threatened, but the up to 24 months of investigation and the uncertainty is what would have really done the damage," he said.

"The companies and their tenants now only have the recession, the consumer squeeze, the ongoing impact of the smoking ban, aggressive supermarkets and soap-boxing politicians to deal with but, all things considered, [this] announcement is a good result."

Douglas Jack at Numis, while reiterating his "buy" stance on Punch and "hold" view on Enterprise, struck a more cautious note, saying that there will be "no time for the industry to dwell on this result". "Relations at the bottom end of the tenanted pub sector are still strained," he said. "The true problem relating to these pubs was not the tie, but the fact the sector is over-supplied with tail-end pubs, many of which will never again be economic."

Overall, both the FTSE 100, down 1 per cent or 50.49 points at 5,207.36, and the FTSE 250, down 1.1 per cent or 102.13 points at 9,318.91, came under pressure as investors moved to bank profits. Traders spoke of concerns about the recent equity market rally, with many saying it had gone to far. One market watcher was more precise and attributed the sell-off to nervousness ahead of this morning's GDP figures, particularly in light of news that UK retail sales had failed to grow for a second consecutive month.

The gloom offset the impact of some upbeat official figures from China, which showed that the country's economy had expanded at an annual rate of 8.9 per cent in third quarter. The heavily weighted mining sector showed little regard for the news, with Kazakhmys falling to 1252p, down 31p, Antofagasta declining to 845p, down 19.5p, and BHP Billiton losing 29p to 1796p.

Anglo American outshone its peers, rising by 9p to 2285p, after unveiling a management shake-up alongside a production report. Lonmin, down 9p at 1682p, also issued an update, and announced plans to shift its operational headquarters from London to Johannesburg.

Charles Kernot, analyst at Evolution Securities, said both Lonmin's production numbers and its outlook were "disappointing".

"Lonmin sold 683,000 ounces of platinum in the year to September – a notably disappointing number," he said. "The outlook is for broadly similar output in the new financial year, which again reduces attractions – especially against the backdrop of the strong South African rand."

On the upside, Lloyds Banking Group managed to fight off the downdraft, rising by 3.6 per cent or 3.3p to 94.8p amid rumours that the Qatari sovereign wealth fund may step in to aid the group in its bid to avoid participation in the Government's Asset Protection Scheme. There was speculation that the Middle Eastern investors might help the bank with a possible rights issue.

The wider sector fell back as investors scrutinised banking reform proposals from the Financial Services Authority, the UK market regulator, with Barclays declining to 359p, down 5.95p, and Royal Bank of Scotland losing 0.32p to 45.51p.

Vodafone was just behind Lloyds, rising by 3.4 per cent or 4.6p to 139.5p on the read-across from the results of its US peer AT&T. The telecoms group was also buoyed by some supportive comment from Citigroup, which said much of the bad news related to the stock was already discounted, and the results next month "could focus the market's mind on a return to growth and firm trading".

Elsewhere, Segro, the commercial property group, was 5.5p behind at 382p after Goldman Sachs weighed in, saying that the stock, with its exposure to industrial rents, had the greatest downside in the sector. The broker expressed a preference for Land Securities, which ended 1p higher at 661.5p, and Great Portland Estates, which ended 8p behind at 263.2p.

Echoing Bank of America Merrill Lynch, which issued a sector round-up on the day before, Goldman attributed its preference in part to their exposure to the London office market.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'