Market update - 30 June

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The FTSE 100 was up 40.7 points at 5570.6, while the FTSE 250 was down 14.4 points at 9090.4 at 11.56am today.







Moving up



Firm metals prices gave strength to the mining sector, where Rio Tinto rose by 137p to 5980p. The stock was also buoyed by reports that ArcelorMittal, the steel giant headed by Lakshmi Mittal, may enter the takeover battle for the mining group, which is being courted by rival BHP Billiton. Mittal is reportedly seeking to secure lucrative iron ore supplies and may attempt to acquire a stake in the target company.



A report from Merrill Lynch aided Anglo American, the Anglo-South African miner which gained 67p to 3463p.



"Anglo shares have lagged those of its peer group for much of the past six years and continue to trade at a 20% discount. We believe this is not justified…" the broker said, adding:

"In our view the progress being made at Anglo American and its growth outlook are under appreciated by the market. Over the next 12 months we expect the company to address perceived shortcomings by demonstrating a commitment to achieve its target at Anglo Platinum, increase visibility of management and operations through divisional days/site visits as well as announce targets for margin expansion."



Vodafone was strong and gained 4.5p to 146.2p after announcing the launch of a web music platform with MySpace, the Beverly Hills, California-based social networking website.



Moving down



Trinity Mirror warned on full year operating profit in a surprise trading update this morning and fell by 40.75p to 110.75p. Reacting to the news, Landsbanki said the "the tone of this unscheduled update and uncertainty over the dividend suggests the share will grow weaker, notwithstanding the fall in recent days".



In the wider media sector, ITV was down 2.8p at 44.7p thanks to a new note from Deutsche Bank. The broker reduced its 2008 earnings per share forecast by 8 per cent and cut its target price for the stock to 48p from 55p.

"We expect that the broadband break-even won't arrive until 2009, due to slower revenue growth and the switch of Friends Reunited to a free model," said Deutsche.



Also on the downside, Taylor Wimpey was down 2.75p at 59.25p after confirming that it had "instigated discussions with shareholders and other institutions regarding raising additional financing, which would most likely be via a placing and open offer". The house builder also said that it anticipates writing down the value of its land bank and work-in-progress in the UK by approximately £550m.

Reacting to the company's statement, Merrill Lynch said it would maintain an "underperform" rating and a 70p target price on the stock.

"In truth, we have previously indicated our view that Taylor Wimpey was as likely as [Barratt Developments] to be the first to make provisions," the broker said, adding:

"…the industry and the group are NOT out of the woods. This will likely be the first of a series of write downs from TW, and probably the first of any capital raising exercises. Remember that in the previous cycle the UK housing sector wrote off a total of about 30 per cent of its [net asset value] over a period of 3 years- this is just the start."



Panmure Gordon, which maintains a "buy" rating with a 104p target price on the stock", was more positive.

"We believe that, should this fundraise be successful, the significant uncertainty which has surrounded the group's financial position in recent months should recede", the broker said, "Trading on a 58 per cent discount to our adjusted asset number (adjusted for equity raise and write downs), the shares remain very undervalued."

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