Market Report: Soaring Rexam profits lift spirits on FTSE 100

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The Independent Online

Three of the market's big guns fired the FTSE 100 forward yesterday by delivering top-of-the-range trading news. Underpinned by a strong opening on Wall Street, the gloom surrounding the credit crunch was lifted for the day.

The packaging group Rexam and the insurers Admiral and Aviva, owner of Norwich Union, all moved sharply higher.

Rexam, the world's leading maker of drinks cans, unveiled a thumping 61 per cent increase in first-half profits with every hope that the momentum will be carried through to the rest of the year. The shares topped the leaderboard with a 9.5 per cent rise to 380.5p as one broker predicted the price would touch 500p.

Admiral, the motor car insurer which owns the confused.com price comparison website, gained 89p at 914p after reporting a 16 per cent rise in first-half profits to just over £100m, about5 per cent more than analysts had predicted.

There was even more positive news for the market as Aviva weighed in with a 12 per cent rise in opening-half profits while finally thrashing out a deal to return around £1bn of its surplus assets worth about £1,000 each to policyholders. The shares, which the broker Cazenove believes will continue to outperform, advanced 40p to 507.5p.

But there was no way to completely avoid the drip feed of worrying news from the financial sector as Lloyds TSB nearly proved to be the party pooper, announcing a 70 per cent drop in first half-profits after a £585m writedown triggered by upheavals in the market. Goldman Sachs told its clients to sell the shares. The price dipped 15p to 306p but heavyweight advances elsewhere lifted the FTSE 100 101.5 points to 5,420.7.

The mood in London was helped by a strong opening on Wall Street, lifted by the latest moves by the Fed-eral Reserve to extend its emergency funding measures which will now become available to commercial as well as investment banks.

British Airways was in demand after its plans to merge with the Spanish airline Iberia, although a number of key issues need to be resolved, such as how the route networks can be combined, where the airline's base will be situated, and crucially the structure of the management team which will run the business. Some cynics believe there could be a number of hiccups along the way but that did not deter buyers. who pushed the shares 14.5p higher to 263p.

Thumping rises of 35 per cent in the price of gas and 9 per cent for electricity were announced by Centrica, which it blamed on soaring wholesale energy prices. The shares jumped 8.25p to 318p.

There seems little respite for the beleaguered construction industry. Goldman Sachs turned seller of the housebuilder Bellway, down 24p at 491.5p, as the gloom continued to spread through the sector. Taylor Wimpey was off 2p at 42p, while Barratt Developments fell 5p to 100p. Persimmon, more than 70 per cent lower this year, also lost further ground at 310.25p, down 1.25p. Fewer house sales mean less is being spent on DIY, which is starting to hurt leading DIY chains such as Wickes group Travis Perkins. First-half profits fell by 3.2 per cent but the shares held their ground gaining 6.5p at 581p.

Mining stocks continue to prosper. Ferrexpo, the Swiss-based resource company with assets in Ukraine, was pushed 31p higher to 295p with Vedanta Res-ources, up 151p to 2,040p, on its first-quarter results. Kazakhmys was up 44p at 1,420p after reporting a recovery in second-quarter copper cathode production. Evolution has a price target of 1,800p on the stock.

The microchip designer ARM Holdings, which used to be one of the country's top 50 companies, gained 3.5p at 95.5p after first-half profits advanced to £24.1m despite difficult market conditions. ARM, which earns revenue from selling lic-ences for technology used in gadgets such as DVD players and smart phones, said it signed fewer deals in the second quarter but the pipeline of new orders looks strong.

The data centre operator Telecity rose 6p at 270p after reporting a maiden first-half profit of £6.9m, reversing a loss of £3.5m last time. The firm is continuing to pick up new business from blue-chip customers such as AOL and Universal Pictures. The new UK police central e-crime unit has chosen to host its information portal in one of the group's data centres.

The Irish drug developer Elan Corporation slumped 33 per cent to 13p after disappointing clinical trial results for its new Alzheimer's drug. The shares have lost 50 per cent of their value in a year. An 18-month study in patients with mild to moderate signs of the disease showed that while it helped most patients, it also raised the risk of potentially serious side effects. The outcome was enough for broker Exane BNP Paribas to downgrade its recommendation on the stock, although it still believes there is a 60 per cent chance the drug will be successful.

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