Market Report: Weather threatens to rain on Kingfisher's update

It is always easy to blame the weather. While most stocks on the Footsie were heating up yesterday, Kingfisher ended up looking rather soggy amid warnings that the recent downpours may result in the retailer's trading update at the end of the month turning out to be a bit of a damp squib.

The DIY retailer missed out on the top-tier index's rally, edging down 0.9p to 289.6p, after Deutsche Bank's Rod Whitehead predicted first-quarter sales at its B&Q chain would be 10 per cent lower than the same period the previous year.

The reason, claimed the scribbler, is that green-fingered shoppers will have been put off by the rain, especially since it has ruined many a weekend, knocking gardening sales as a result.

"The shares may weaken further as the market realises just how bad the first-quarter could be," added Mr Whitehead, although he still kept his "buy" advice, recommending any fall in the stock in response to short-term weather as "a buying opportunity".

For others, the rain was being seen as a blessing. Numis Securities' Douglas Jack argued The Restaurant Group should have seen a boost because many of its sites are based in retail parks and near cinemas – a popular rainy day treat.

Nonetheless the scribe reiterated his "reduce" rating on the firm, whose stable of eateries include Frankie & Benny's and Garfunkel's, although this did not stop it being lifted 9.1p to 290p.

It was a quiet start to May, with most of the European markets enjoying a holiday. Still, the FTSE 100 powered up 74.45 points to 5,812.23 – breaking the 5,800 point level for the first time in nearly a month – after manufacturing data from the States beat expectations.

The major moves on the top-tier index were prompted by results, with Lloyds taking the top spot by advancing 2.59p to 33.6p after the bank released its first-quarter numbers.

At the other end, Man Group's figures for the same period saw it crash down 5.7p to 97.8p, as the hedge fund giant's boss Peter Clarke took the opportunity to respond to recent bid speculation by saying a takeover was not needed.

While MPs attacked Rupert Murdoch as being "not a fit person" to run a major international company, this did not stop satellite broadcaster BSkyB – which News Corp owns nearly two-fifths of – ticking up 13p to 691p.

Those hoping Severn Trent could be the next utility to be snapped up were dealt a blow. Saying it would be "a very large transaction given the size of recent deals", Morgan Stanley's Nicholas Ashworth argued that a takeover would be "a (very) tough ask for European debt markets to undertake at present".

He also removed his "overweight" advice on Severn Trent after the stock's recent spurt up, claiming hopes of a capital return were now priced in, as the firm slipped 7p to 1,683p.

Elsewhere in the sector, vague takeover rumours were once again being reheated around Drax, with Germany's RWE one of the potential bidders suggested by market gossips. However, with dealers quick to talk down the speculation – which mentioned a possible price of up to 800p a share – the power station operator only pushed up 8.5p to 551.5p on the FTSE 250.

Those who have got rid of their Chemring shares recently were cursing their impatience after the defence company – whose share price has been under severe pressure – revealed two contract wins. Importantly, these included a deal worth up to $579m (£357m) to provide spares and replacements for its "Husky" mine detection system to the US Army, showing recent fears over talks to be unfounded.

With Chemring saying it had agreed all the contracts needed to keep it on track to meet forecasts, the group was fired up by a fifth to 391.9p, although it has still lost nearly 13 per cent since January's full-year results.

Elsewhere on the mid-tier index, Home Retail prepared for today's full-year results by retreating 5.6p to 101p, with traders highlighting the large numbers of recent bearish comments from City scribblers. Meanwhile, the news it had been granted a $227m oil rig contract saw oil services firm Lamprell jump 14p to 362p.

Shares in Cosalt were suspended at 0.82p on the fledgling index after the floundering life jacket maker – which is currently trying to find a long-term financing solution – admitted it was not yet able to publish its annual results.

Travelzest perked up 16.67 per cent to 5.25p on AIM following the travel firm's announcement that it was putting itself up for sale after an approach from its chief executive and chief financial officer.

On its first day of trading after floating on Monday at 40p a pop, portable accommodation group Snoozebox ended up 5p better off at 45p.

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