Market Report: Victrex benefits from takeover spotlight

The prospect of Victrex becoming a bid target was highlighted yesterday as positive broker comments helped the high-tech plastics company to surge up the mid-tier index.

The Lancashire-based group was driven forwards 45p to 1,395p, with traders pointing to the decision by Goldman Sachs to name it as the broker's "top pick" in the mid-cap chemicals sector. Initiating coverage on Victrex with a "buy" recommendation and a target price of 1,830p, Goldman described it as an "attractive acquisition" target because of its "unique technology and customer relationships".

Recommending the group toinvestors, the broker's analysts said it "presents an excellent opportunity to buy a consistently high-returning company", and they also praised its peers Croda and AZ Electronics, saying that all three "produce specialised products and operate in niche, high-growth markets with barriers to entry". The former put on 16p to 1,694p after the analysts said it was another company likely "to be the subject of merger and acquisition speculation", but AZ edged back 0.3p to 275.6p despite keeping its "buy" rating.

Overall, the FTSE 100 managed to climb above the 6,000 point level for the first time in almost a month, closing 101.16 points better off at 6,009.92. As well as noting that the first day of the month often produces gains, market voices said the closely watched US non-farm payroll report, which managed to beat expectations, had boosted investors' confidence.

The UK banking stocks dominated the top-tier leaderboard thanks to the fall-out from the Irish bank stress tests results, released late on Thursday, with Lloyds Banking Group advancing 2.91p to 61p. Capital Spreads' Angus Campbell said that "original concerns over the ... tests amounted to nothing", adding that the "recapitalisation of Ireland's banks has prevented nationalisation for now at least.

The insurers were also left higher. Prudential and Old Mutual rose 24p to 730.5p and 4.1p to 140.1p, the latter announcing that the planned sale of its US life unit to Harbinger had reached the next stage after being approved by regulators in Maryland.

BP was another company that finished stronger, helped by comments from JP Morgan Cazenove which said the energy giant stands out "as seriously underpriced" among its peers. The broker gave it a price target of 575p, and the group – which announced it had signed four new contracts for coal-bed methane areas in Indonesia that it will operate with local companies – shot up 16p to 470p.

On the FTSE 250, Premier Foods closed near the top after Morgan Stanleyupgraded the Mr Kipling owner to "overweight". "Having spent four years integrating acquisitions and thenrestructuring the financial fall-out of those deals," said the broker, "we think Premier is finally in a position to focus on delivering profitable growth."

The group was given a price target of 40p, and it responded by climbing 1.76p to 29.69p.

A terrible week for the retailers was brought to an end by the release of yet more worrying news, as John Lewis announced its latest weekly figures. The department store's sales were nearly 3.8 per cent below the same period a year ago, or 5.7 per cent without VAT, and Howard Archer, of IHS Global Insight, said the data was "particularly significant as John Lewis has been very much an out-performer in the retail sector."

Nonetheless, many of the high street stores were enjoying small rebounds after their large falls recently, including Dixons, up 0.15p to 12.72p, Debenhams, up 2.5p to 61.7p, and Mothercare, up 5.3p to 405.3p. The baby products retailer issued a gloomy trading statement on Thursday, and yesterday Seymour Pierce downgraded its rating to sell, warning that it faces "real structural competitive pressures [which are]only likely to increase with Morrison buying Kiddicare."

The pubs group Mitchells & Butlers crept forward 0.9p to 302.6p on suggestions that it should make a play for Spirit, the unit which Punch Taverns – 0.15p ahead at 77.2p – is planning to spin off. Nigel Parson, of Evolution Securities, said the demerger offers an "opportunity" for M&B to "grow earnings via acquisition or merger, find a new chief executive in the form of [Punch's] Ian Dyson and lead to the stock being re-rated."

The small-cap online gaming company 888 Holdings soared 6.75p to 50p after reports emerged that Ladbrokes – down 1.1p to 131.4p – is considering increasing its offer to more than 70p a share. The two revealed preliminary discussions were taking place last December, but updates on the progress of the talks have been scarce.

Meanwhile on the AlternativeInvestment Market, Max Petroleum powered up 1p to 17p as the explorer revealed it had found high-quality oil in one of its wells in Kazakhstan. Releasing its operational update, the firm was bullish on its outlook and predicted "a substantial increase in production and revenues in the near term".

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