Market Report: Yell Group starts the week with a whisper

There was a lot less noise from Yell Group yesterday. Investors were shouting from the rooftops last week as the directories business's share price increased by a whopping 51 per cent. Speculation raged that the heavily indebted group would launch a rights issue to overcome some of its refinancing and balance-sheet problems.

The cat is somewhat out of the bag now that press reports over the weekend suggested what most had hoped for – that leading investors would support a £500m placing – is on the cards. The shares took a well earned rest, falling back by 6.4 per cent to 68.35p.

According to the watchers at Deutsche Bank, yesterday's drop was down to Yell being a volatile share, and that more gains are on the way, possibly up as far as 126p. The stock is, "still volatile and very high risk, but [the] 'investibility' increases as price goes up... The shares have moved up significantly [last week]. But all that has actually happened is that the price no longer discounts default. It is not really discounting the possibility of a successful re-fi, and it is certainly not assuming any recovery."

The FTSE 100 hardly moved from Friday's close as it limped to end the day up 0.15 per cent at 5018.85. However, the index did mange to stay on the right side of the 5,000 mark, which it passed last week for the first time since October.

Natural resources companies, whose share prices have yo-yoed in recent weeks as commodity prices oscillated, were chiefly responsible for the indifferent trading on the leading index. Richard Hunter, head of equities at Hargreaves Lansdown, said: "There's weakness in metal prices and oils, and miners are down. Certainly there are some jitters and investors are going back to safe havens."

With the cyclical stocks suffering, it was up to the defensive outfits to head the FTSE 100 leaderboard. Defence companies BAE Systems, up 2.1 per cent to 339.5p, and Cobham, climbing 2.1 per cent to 212.2p, were top of the index of leading shares. Both, but especially BAE, have struggled to keep up with the surge in stock market climbs over the last few months as investors have preferred to back those in racier industries, and as speculation that budgets will be slashed to plug the gaps in the public spending figures has increased.

Unilever was also a beneficiary of the flight to safety, with its shares closing up 1.5 per cent to 1,645p, while Scottish and Southern Energy, up 0.5per cent to 1,159p, benefited from HSBC's price target of 1,350p, after the analysts began coverage of the group with an "overweight" stance.

Marks & Spencer was also up after Morgan Stanley predicted the retailers share price would jump as high as 380p, after previous suggesting it would stick at £1 less than that level.

The group's stock increased by 1 per cent to 373.5p, despite the ongoing uncertainty over who will replace Sir Stuart Rose of the helm, and perhaps more importantly, when.

The oil and gas groups took the collective pain for the 1 per cent fall in the price of the black stuff, which fell towards $68 a barrel in early trading on fears that oil prices may have run ahead of market fundamentals. A rebound in the recently weak US dollar also helped to push down the oil price.

Cairn Energy fell off by 2.9 per cent to 2,691p, while Tullow Oil dropped 2 per cent to 1074p. The later was also damaged by news of political unrest in Uganda, a rarity as an African state known for its stability, upset investors. Tullow, which has risen 45 per cent in the last six months, mirroring the generally improving oil price, operates three licences in the East African country.

The miners were also in the doldrums. Eurasian Natural Resources Corporation was bottom of the FTSE 100, falling 3.1 per cent to 843.5p. The group, which has been linked to former England cricketer Phil Edmonds' Central Africa Mining and Exploration, down 1.3 per cent to 19p, was off with fellow Kazakh group Kazakhmys, 0.8 per cent to 1,087p, as metal prices slipped.

The equity markets' second division was no less well off as the FTSE 250 dropped 84.8 points to 9,123.13.

Pub group Enterprise Inns, which is due to publish results later this month as competitors have recently indicated a gradual return to health, fell after a high court judge said that tenants at one of its pubs should pay a lower proportion of their pub's shared profits in rent. Enterprise rushed out a statement saying the outcome of the case does not bind the outcome of any other rent review, but this did not stop the stock falling 5.2 per cent to 193.1p.

Most of the FTSE 250 was red in colour, but among the few winners yesterday was James Fisher & Sons, which grew 1.1 per cent to 450p, despite learning on Friday that it is set to fall out of the FTSE 250 at the next reshuffle.

In the small cap world, generics biotechnology group Goldshield jumped 5.3 per cent to 400p after Ajit Patel, the former chief executive, and the owners of Neopharm, an Israeli biotechnology company, said they had joined forces to form a specialist investment company AIT, to pursue a possible bid for Goldshield. Any bid would follow Mr Patel's unsuccessful interest in July. Reports at the time suggested that he was eyeing a 375p-a-share offer.