Market Report: Sky heads to earth after news of email hacking

It has been a rocky week for BSkyB. On Tuesday the satellite broadcaster announced the resignation of James Murdoch as chairman, and yesterday its share price was knocked back to a seven-month low after admitting two counts of email hacking, heightening fears over the likelihood of Rupert Murdoch making another takeover attempt.

Although Sky News claimed both occasions of hacking were in the public interest, punters chose to switch off BSkyB, leaving it at the bottom of the Footsie as it crashed down 22.5p to 635.5p.

After News Corp was forced to abandon plans to take full control of the group last July in the wake of the phone-hacking scandal that resulted in the demise of the News of the World, many still believe Mr Murdoch's media empire will try again at some point in the future.

However, Bernstein's Claudio Aspesi warned that the latest revelation "makes this scenario even less likely, with News Corp suitability as the part owner already in question".

Claiming in "the near term the company could come under increased legal scrutiny and face increased legal costs", the analyst added that the fall-out could "distract management from... key structural threats" such as the roll-out of high-speed fibre broadband and increased competition for premium content.

Although it looked unlikely for most of the session, the FTSE 100 did manage a tiny bounce ahead of the long Easter weekend. Having fallen more than 130 points on Wednesday, its worst session of the year, the top-tier index crept up 19.9 points to 5,723.67 despite a surprise drop in manufacturing output.

Still there was definitely a feeling of caution ahead of the release today of closely watched non-farm payroll figures from the US.

The commodity stocks ended up providing much of the rebound following encouraging services sector data from China, while speculation was once again doing the rounds that the country could be about to cut its reserve ratio for banks. Trading giant Glencore closed 22.4p stronger at 411.8p as Xstrata and Antofagasta ticked up 38p to 1,112p and 26p to 1,129p respectively.

However, a number of the banks – including Lloyds (down 0.51p to 31.38p) and Royal Bank of Scotland (down 0.28p to 25.82p) – followed their European peers lower after a drop in Spanish and Italian bonds.

Shire's takeover potential continued to dominate the conversation around the drugs maker, with Nomura's Bhanu Singhal arguing that – after a fall of nearly 10 per cent in less than a month – its "share price does not appear to include a bid premium".

The scribbler went to suggest blue-chip rival AstraZeneca (down 15.5p to 2765.75p) was one of the companies which would benefit the most from making a play for Shire, while also arguing Johnson & Johnson and Lilly would be good matches.

Ashmore climbed 18.9p to 385.6p after UBS added the fund manager to the broker's "most preferred" list, claiming there were "significant structural opportunities for growth" in its emerging market assets.

Talvivaara has not had many fans recently, with the Finnish miner shedding over 9 per cent in just five sessions. Yet last night it topped the FTSE 250 after its plant in the east of the country was given the all-clear by regulators to restart following the death of a worker. Also helping the group jump 16.5p to 239.6p was Goldman Sachs' decision to remove its "sell" rating following the slump in Talvivaara's share price.

The wider market may be downbeat over events in Spain, but Morgan Stanley's Jaime Rowbotham said he was increasingly confident over National Express' business in the country.

Saying the dire economic situation meant buses were becoming more popular, the analyst added that upcoming cuts to rail subsidies would help this trend as he raised his advice to "outperform", prompting the transport group up 8p to 236.5p.

At the other end, Petra Diamonds was knocked back 11p to 166.9p. Goldman Sach's analysts decided to call time on the precious stones producer's recent rally, in which it has advanced more than 80 per cent since November, as they downgraded their rating from "buy" to "hold".

Madagascar Oil spurted up 11 per cent to 27.75p after revealing it had resolved its dispute with the government of Madagascar, meaning the AIM-listed driller is able to start work on three exploration blocks in the country.

Elsewhere, Proteome Sciences announcement that it had granted a non-exclusive licence for its stroke biomarkers to Randok saw the pharma firm power up 5p to 40.25p, as Singer Capital Markets hoped the deal would be "the first of many".