Market Report: S'no ball for the City as traders frozen out

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The Independent Online

It was snow joke for traders in the City yesterday, as many took one look at the weather conditions and stayed at home. They were not the only things grounded by the bad weather, as the snow scuppered British Airways' share price as well as its planes.

There was some good news for the UK flagship airline, despite it cancelling all flights from Heathrow, on talk that its merger with Iberia was close. Yet Caja Madrid, the biggest shareholder in Iberia, suggested that the share split would now be 55-45 in favour of BA rather than the previously expected 60-40. BA's shares had melted 4 per cent to 116.1p at the end of the day.

Over the weekend Spanish scientists came close to cloning an extinct mountain goat, but they might be called in to London to resurrect an altogether different animal. "The market's as dead as a dodo out there," one trader said. The FTSE 100 fell at the opening bell, and wasn't helped in the afternoon by the release of manufacturing data in the US, to end the day down 1.73 per cent at 4,077.78 points.

The top tier was led down by Barclays Bank, which fell through the already thin ice of last week's financials rally. It slipped over after Moody's Investor Service cut its long-term rating by two notches to Aa3. The credit rating agency said it expected further problems with credit-related writedowns and impairments, while it also cut its financial strength rating from B to C. Barclays ended 10.56 per cent down to close at 94.9p. Its peers tumbled accordingly, with Royal Bank of Scotland the next worst, losing 7.27 per cent to 20.40p.

The market wasn't too keen on stories that the interdealer broker ICAP, run by Tory party treasurer, Michael Spencer, was considering an £800m bid for LCH Clearnet, the clearing and settlement house. It retreated 6.99 per cent at 219.5p.

Investors saw a rich seam in one of the miners yesterday, as Rio Tinto proved the soaraway winner of the day. The mining giant stormed up 6.64 per cent in the morning to close at 1606p. This followed news that it was in talks with 11 per cent shareholder Chinalco over a potential £10bn investment.

GlaxoSmithKline was another of the big boys to survive the sell-off, as investors backed talk of its cost-cutting plans. The pharma giant strengthened 0.86 per cent to 1230p after reports that its full-year results on Thursday would include a plan to axe thousands of jobs across its worldwide operation.

As the world gears up for an increase in regulation and litigation, one of the safest bets seems to be Autonomy Group. The blue-chip software company makes technology that tracks so-called "unstructured" data, which includes emails, word documents, instant messaging and voicemails, crucial as evidence in litigation. Investors saw the stock as a safe haven yesterday, and it rose a solid 2 per cent to 1116p after announcing its most advanced e-discovery programme for audio recordings.

On the second line, Telecity Group stormed up 12.35 per cent to 191p after a strong set of results. The data centre group more than doubled its earnings in 2008 to £40.4m. This prompted Deutsche Bank to up its target price from 260p to 280p and reaffirm its "buy" rating, impressed by the "strong average revenue per user".

The downside saw a lack of sparkle in Gem Diamonds, on a downbeat broker note from Ambrian. Analyst Brock Salier said he would "strongly recommend investors sell before [we think] things get worse". He recommended a switch into gold as a safer commodity. The group said cost-cutting should lead to a better-than-expected performance this year, but the shares ended down 13.61 per cent at 192p.

Out in the wider market, the media stocks were struggling. As the markets disintegrate further, investors were stopping the press. Trinity Mirror was the worst, losing 10 per cent to close at 42.75p, with Johnston Press, the worst stock on the main market in the past 12 months, not far behind, down 7.6 per cent at 8.02p.

The market was appreciative of Mapeley's decision to pay back a loan early. It prepaid a £60m loan facility to Deutsche Bank, among others, which had been due for repayment in two months, rising 14.29 per cent to 80p as a result.

On the growth market, Vane Minerals was looking good following positive news from uranium projects in Arizona and Utah, closing up 16.67 per cent at 2.625p.

Ceramic Fuel Cells was also on the rise after it extended a deal with E.On. The groups will extend their collaboration to commercialise fuel cell micro combined head and power units in the UK; the shares jumped a fifth to 2.875p.

Another AIM-listed group to benefit from a tie-up was Ceres Power. It rose 12 per cent to 118.5p as it signed a deal for residential head and power products with Calor Gas. Management said the deal could be worth tens of millions of pounds, and added it was talking to more overseas firms over similar deals.

There were headaches for investors in Minster Pharma, however, as tests of its Tempus migraine drug didn't go well. It said in a statement that it "did not meet its primary endpoint of reducing the number of migraine attacks suffered by patients". The shares more than halved to 9.5p as a result.

Platinum Australia was also down as it raised A$14.6m (£6.5m) from the private placement of 27 million new shares. The group had requested suspension on the Australian Stock Exchange when announcing the capital raising, and it fell 15.87 per cent to 26.5p.

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