Market Report: Trial data worries weigh on AstraZeneca

AstraZeneca was chief among the boo-boys yesterday. The pharmaceuticals giant, which last week announced a dividend increase and a five-year restructuring plan, propped up the leaderboard of leading shares.

The group fell 104p to 2827p after the shares traded ex-dividend. But AZ was also hit by an analysts' note from Morgan Stanley, which expressed concerns that the group was likely to release poor trial data for its experimental bowel cancer drug, Recentin.

Apart from the Anglo-Swedish group's falls, the rest of the market reacted nervously after a tepid overnight performance in Asian markets, with most stocks trading within a narrow band. "The China effect is definitely a major force in the direction of global indices at the moment, and it seems that the shift is almost enough to say that if China sneezes, the rest of us will catch the cold," said analysts at spread betting group Capital Spreads. "The market is just in profit-taking mode so far, despite riskier stocks topping the leaderboard with miners and banks among them."

Despite the nervousness, it was the perceived riskier stocks in the financial and mining sectors that headed to the top of the FTSE 100 in early trading. Standard Life set the early pace climbing by nearly 4 per cent by lunchtime. The insurer impressed the market with a better-than-expected 7 per cent drop in full-year 2009 sales, helped by stronger market conditions. Investors were especially encouraged by the company's "good momentum" at the start of the year and its "good prospects" for the rest of 2010. The shares closed the day up 6.9p at 204.6p.

There was a little cheer for the taxpayer as Lloyds Banking Group, the bank which is 43 per cent owned by the state, made it into the FTSE 100 top 10 with a leap of 0.7p to 55p.

The move was supported by heavy hedge fund interest, according to sources, and a note published by JP Morgan saying that the worry and hoo-haa surrounding the European banking sector was somewhat overblown and that investors should feel safer than many commentators believe. Sadly, there was no significant jump from the other publicly-owned bank RBS, but Barclays made a surge up the leaderboard, putting on 5.7p to close at 295.35p.

Apart from Standard Life, there were no other great leaps forward. Advertising outfit WPP was up, reversing its momentum of the last couple of weeks when the shares dipped. The market is perhaps waking up to chief executive Sir Martin Sorrell's comments at last week's Davos summit, where he said conditions in the industry were softening. The stock climbed by 14.5p to 599.5p.

The miners made a strong start but tailed off towards the end with many slipping all the way down the list to join AstraZeneca among the laggards. London-listed Chilean group Antofagasta was the worst of a bad bunch after it told the market it had missed its 2009 copper production targets. With commodity prices on the up, investors will be miffed at the lack of digging. The group's shares dropped 28p to 901.5p.

The defence specialist BAE Systems, whose former agent, the Austrian Count Alfons Mensdorff-Pouilly was up before the beak last week on bribery charges, was in the doldrums again yesterday as its shares slipped by 6.8p to 340.3p. The group clearly has no heavenly support as Goldman Sachs, the bank that does God's work, put the group on its "conviction sell" list. The company was also shot down by the Government's intimation yesterday that Britain's defence spending is set to be cut.

There was barely little more movement on the FTSE 250. Nonetheless, the most impressive performer in the second division was the environmental out-sourcing group Eaga, which jumped 5.1p to 155.6p after watchers at KBC Peel Hunt jacked up their target price to 180p from 170p. The upgrade comes just a week after Eaga said it was expecting a strong 2010.

Mike Ashley's Sport Direct scored with a 2.1p jump to 102.1p after its was reported yesterday that Mr Ashley had hired a respected criminal barrister, John Kelsey-Fry QC, to defend him if the Serious Fraud Office investigation into price-fixing at the retail group ends in a trial.

Moneysupermarket.com was one of the laggards on the FTSE 250, falling by 3p to 74p. The fall was a surprise after the energy regulator Ofgem said that energy bills were set to soar, but this apparently did not convince the market that more people would be logging on in search of a different deal.

It was left to the tiddlers on AIM to make the really significant moves yesterday. One of the best performers was Anglo Asian Mining, which vaulted by more than 30 per cent, to 14p, after publishing a trading statement showing cashflow and gold production.

The update represents a remarkable turnaround for the company, which just last September warned that it was running out of cash to sustain day-to-day operations, and was desperately in need of new financing arrangements.

But there were losers on the AIM, too. JSJS Designs was one of the big fallers, dipping by just over 0.1p to 1.62p, a 7.1 per cent drop. The move was hardly a surprise: the stock has already fallen by 26.3 per cent this year.