Market update - 22 September

The FTSE 100 was down 14.13 points at 5297.17 and the FTSE 250 was down 107.71 points at 8874.99at 12:12pm. Wolseley was the strongest on the benchmark index, up 10.93 per cent or 45.25p at 459.25p. The construction materials group, which has scrapped its final dividend in the face of diving profits, sent its shares rocketing after unveiling plans to restructure its business. “We have continued to take action to reduce costs and drive working capital improvement in response to challenging market conditions,” said Wolseley chief executive Chip Hornsby.

“Financial discipline in terms of cost reduction and cash flow remains our primary focus to ensure the group remains compliant with our banking covenants and is well positioned for any market recovery.”

Reacting to the news, Panmure Gordon said that while certain fundamental concerns remain unresolved, investors will be encouraged by the company’s comments on financing.

“The positive features from these results were the improved margin performance in the Nordic regions and flat [margins at the Ferguson business]. While margins declined in the UK, France and Canada, they were in-line with our expectations,” the broker said,

“On the negative side, the losses at Stock [the North American subsidiary] were bigger than expected with management saying a more fundamental review of the operation will occur.”

Moving up

Firmer commodity prices powered the mining sector this morning. Kazakhmys was the strongest, up 40.5p at 829p. The Eurasian Natural Resources Corporation gained 32.5p to 694.5p and Rio Tinto was up 122p at 4290p.

Parts of the banking sector, including Barclays, which was up 4.75p at 393.75p, Lloyds TSB, which was up 5.5p at 291.25p, were also firm as investors awaited the final details of the US bailout.

FTSE 250-listed Bradford & Bingley was strongest, up more than 8 per cent or 2.25p at 30p, following weekend reports that the Financial Services Authority, the UK market regulator, was sounding out potential buyers to takeover the mortgage lender in the event of further funding issues.

Moving down

Man, the London-based hedge fund group, was among the weakest on the FTSE 100, down 24.5p at 455.5p after Citigroup reduced its target price for the stock to 650p from 720p.

Citigroup also reduced its target to 3900p from 4000p for Anglo American, the mining group which was down 70p at 2311p.