Market update - 24 June

The FTSE 100 was down 56.9 points at 5610.3 points at 11.43am on Tuesday. The FTSE 250 was also down and lost 136.3 points to 9184.3.

Moving up

Antofagasta was up 8.5p at 653.5p after Credit Suisse upgraded the stock to "outperform" from "neutral", citing higher metals prices. The broker also increased its target price for the stock, to 760p from 600p.

"We expect Antofagasta to perform strongly this year…Even with modest growth across its existing copper, water and transport businesses, strong prices should result in higher revenues. The company also has two attractive longer-term growth projects, Esperanza and Reko Diq, which we believe have the potential to increase attributable copper production by 50% in the medium term," the broker said.

Among the banks, HBOS was up 0.25p to 270.5p, but remained below its 275p rights issue offer price despite some positive comment from Collins Stewart, which said the current price is "discounting some unrealistically negative scenarios".

"Our fundamental view is that the stock is undervalued currently, even with the short-run earnings risk within the business. Our target price of 375p shows material upside though is, in part, driven from 2009E earnings, which show low visibility. Further, we see the long rights issue process continuing to impact so only upgrade to HOLD, for now. When the rights issue closes on 18th July, we hope management will be better-able to improve earnings visibility which will give us greater confidence in our price target," the broker said.

On the FTSE 250, Bradford & Bingley was up more than 10 per cent or 7.25p at 73.25p after the bank rejected a £400m cash-injection proposal from Resolution, an investment vehicle backed by entrepreneur Clive Cowdery.

"Resolution has announced plans to consolidate the smaller banking and lending industry in the UK with a potential £2bn investment over the next two years and has started with an approach to B&B. Resolution wanted B&B to assess its plans but B&B has rejected the approach, stating it would mean a change in control for the group, and is continuing with its own capital-raising plans," said Barclays Wealth, adding:

"While a roll-up model in the UK could have long-term value for the industry, its potential success is a large uncertainty and the negative macro outlook for the UK over the next 12 to 18 months means we retain out Neutral recommendation on B&B. The shares are trading close to our 75p fair value."

Debenhams was up 1.5p at 43.75p after reassuring the market over trading – the company, which has been dogged by speculation about its financial health in recent days, rushed out the trading statement to quell the rumours.

"In the event the trading news is somewhat re-assuring. After 10 weeks of the second half to June 21st like-for-like sales are ahead by 1% (Landsbanki estimate -1.5%) taking the cumulative position to -0.6% 42 weeks into the year. This suggests that the brand has continued to win market share. The guidance on gross margins remains the same which is for a flat to 20 basis point advance – a significant turnaround from the first half trend (Landsbanki estimate +10 bips). The net debt at the year end is expected to be in-line with market expectations. The statement is a positive pointer on estimates and our £130m PBT forecast for this year looks too conservative," said Landsbanki, which kept a reduce rating on the stock.

Moving down

Punch Taverns continued to trade low, down 25p at 313p, as traders citied mounting concern that the company may breach its debt covenants.

Traders also cited an earlier Morgan Stanley note, in which the broker said that "Punch faces four debt-related obstacles to overcome in the next three years, which will likely continue to weigh on its shares price", and new commentary from Redburn, a small London based broker, as reasons for the share price weakness.

"If we are to assume that the UK enters recession (as seems likely), the stock that continues to cause us concern is Punch Taverns (Sell). Our analysis of Punch's three securitisation structures means that IF WE DO ENTER A RECESSION we think it is almost inevitable that it will trip all three restricted payment clauses, denying the group holding company (and thus shareholders) from accessing any of the cash in the group," Redburn said, adding:

"It is also possible (although not certain) that IF WE DO ENTER RECESSION it will trip the default [debt service coverage ratio or DSCR] covenant on its ‘B’ bond structure in late 2009 or early 2010 (after it has to start paying capital repayments on these bonds), even though the default covenant will fall at that time."

"As such, in these circumstances we think it very likely that Punch will require a recapitalising rights issue sometime before the middle of 2010 - our model assumes a 3 for 2 rights at £3.10 in early 2010."

Elsewhere, fresh housing market data from the British Bankers Association, which revealed that mortgage approvals hit a record low in May, dampened sentiment among house builders and Taylor Wimpey was down 5.79 per cent or 3.75p at 61p.

Howard Archer, chief UK & European economist at Global Insight said the new data heightened "concern that we are in for an extended, deep correction in the housing market".

He added: "This is something that the Bank of England will need to take into consideration when setting interest rates, although inflation development will clearly be the main determining factor of where interest rates are headed - especially pay developments."

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
ebooksNow available in paperback
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Life and Style
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Carlton Senior Appointments: Sr Wealth Manager - San Francisco - Inv AdvisoryFirm

$125 - $175 per annum: Carlton Senior Appointments: Senior Wealth Manager – In...

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum