Market Report: Return of drachma could be good news for De La Rue

  • @greentoby

While markets were panicking over the future of the euro yesterday, not everyone appeared so worried. Trading screens may have been swamped in red, but De La Rue managed to climb amid suggestions that the banknote printer could be in the money if the eurozone breaks up.

The group ticked up 31.5p to 1,024p as dealers speculated whether it may find itself in line for new contracts if currencies need to be revived. Back in November, De La Rue's boss, Tim Cobbold, said the crisis "can create opportunities for us" although he refused to go into great detail.

Some of the more cautious voices in the City argued that Greece's size meant a return to the drachma may not be that lucrative, while Mr Cobbold has pointed out that the country has its own state-owned printer. However, Panmure Gordon's Paul Jones – who called De La Rue "a good stock for political turmoil" – argued that even if De La Rue did not win the contract it "would be a beneficiary", saying that "the knock-on effect would probably be to tighten the market given the speed of printing necessary".

At the same time traders were pointing out that the group – which rejected two takeover bids from France's Oberthur in 2010 and 2011 – would get a boost if the Bank of England decides that another round of quantitative easing is required.

The fears over Greece saw the FTSE 100 slump 110 points to 5,465.52, a new low for 2012. With the benchmark index now having given up 6 per cent in just eight sessions, Capital Spreads' Angus Campbell warned that the "likelihood of [a Greek government] being able to steer the country through the crisis whilst staying in the euro is very slim".

The banks were among the worst hit as Barclays (13p off at 189.8p), Lloyds (1.71p off at 29.38p) and Royal Bank of Scotland (1.11p off at 21.85p) followed their peers on the Continent down.

China's decision over the weekend to raise the reserve ratio requirement for its banks failed to keep the miners' heads above water. ENRC was the heaviest, dropping 23.7p to 492.8p.

Unsurprisingly those stocks that did manage to rise were largely in demand for their defensive qualities. Severn Trent advanced 11p to 1,704, having been the subject of revived speculation recently that it could be the next utility to be snapped up.

Sage took the gold medal position with a surge of 3.8p to 265.5p, which traders put down to the sell-off since the software firm's interim results last week.

The might of Google was scaring investors in, which was smacked back 10.3p to 116.2p on the FTSE 250. The US internet giant has recently launched its own free service allowing users to compare credit cards as well as current and savings accounts, and Numis Securities' David McCann decided it was time to get out of the comparison site as a result.

The analyst warned that two-thirds of the profits of the group – whose adverts (below) are trying to popularise the slogan "You're so Moneysupermarket" – could be at risk, adding that hopes Google would not extend the service into other products were "somewhat naive".

The recent rumour mill favourite Invensys was lifted 6.5p to 209p following reports over the weekend claiming that a number of industrial groups have made informal contact over a possible takeover of the engineer, whose full-year results are out on Thursday. Meanwhile Oriel Securities' Harry Philips argued that "should one bid come in, the others have little choice but to have a look".

Despite announcing an oil find off the shore of Nigeria and being picked by both JPMorgan and Deutsche Bank as one of their sector favourites, the oil explorer Afren failed to hold on to early gains, closing 0.7p worse off at 120.8p.

Down on AIM, strong updates from their drilling in Canada and Somalia respectively helped Enegi Oil to climb 1.75p to 16.62p and Red Emperor spurt up 5.5p to 34.38p.

It was a different story for Chariot Oil & Gas, which finished 74.25p lower at 75p as it admitted its Tapir South exploration well in Namibia was dry.

Thomas Cook crashed down 2.5p to 19p following a warning to shareholders that unless they give the green light to two disposals it was in danger of collapsing into administration.

UBS did not help by slashing its forecasts, although the troubled tour operator did say that a number of its largest shareholders – together holding nearly 24 per cent of the small-cap firm – have backed the plans.

FTSE 100 Risers

l Intertek 2,478p (up 6p, 0.24 per cent) Testing company manages to climb for the fourth consecutive session, although its share price is still close to 5 per cent lower than April's all-time high.

l International Power 419.4p (up 0.4p, 0.1 per cent) Having already agreed last month to GDF Suez's 418p-a-share offer to take full control, energy company is one of just four blue-chip risers.

FTSE 100 Fallers

l Aviva 290.7p (down 10.9p, 3.61 per cent) Insurer drops ahead of Thursday's first-quarter figures, as scribblers from Panmure Gordon decide to cut their target price to 425p from 528p.

l Serco 539.5p (down 11p, 2 per cent) Outsoucer retreats despite saying it remains on course to meet its expectations for the financial year after winning almost £4bn-worth of contracts over the first six months.

FTSE 250 Risers

l Rank 123.5p (up 6.8p, 5.83 per cent) Shareholders in the Mecca Bingo-owner hit the jackpot as its share price shoots higher after announcing it has agreed to buy the casino business of Gala Coral.

l Bumi 423.5p (up 2.3p, 0.55 per cent) Indonesia-focused digger finally manages to rise, bringing to a close a run of five trading sessions of falls during which time it has lost more than a fifth of its value.

FTSE 250 Fallers

l Aquarius Platinum 101.5p (down 6.9p, 6.37 per cent) Miner plummets after its chief executive, Stuart Murray, warns that, thanks largely to work stoppages, it was unlikely to meet its full-year production target.

l Logica 69.75p (down 4.2p, 5.68 per cent) Software company slumps despite both Société Générale and Deutsche Bank raising their recommendations, to "hold" and "buy" respectively.