Market update - 4 July

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One story dominated the markets yesterday, with Bradford & Bingley shares falling 9 per cent to 55.5p on news that private equity house TPG had pulled its offer of a £179m investment late last night. The news saw the banking sector retreat, which in turn weighed on the FTSE 100, which had no other significant economic or company news to prop it up. It was down 42.7 points at 5433.3 at lunch time.

Moving up

WM Morrison was top of the FTSE 100 leaderboard around midday, on what was proving a good day for the supermarkets – except, of course, for Marks & Spencer. Morrison looked strongest oafter a note from Shore Capital which said: “WM Morrison stock is defensive in that people have to eat and so visit the supermarket. Hence a particularly virtuous defensive feature at this time.” It was up 3.13 per cent to 255.25p.

UBS upgraded Amec, the engineer, following a strong trading update yesterday. The stock rose 1.09 per cent to 883.5p as the broker said: “Management now see 2008 operating margin of 6.5%, up from 6.0% previously, and are showing increasing confidence that they can beat the 8.0% target for 2010E. We remain Buyers on margin delivery and likely revenue growth ahead of expectations.”

Tullow was up as Exane BNP Paribas initiated Tullow Oil with an “outperform” rating and set a target price of 1100p as it released a note in general support of the oil and gas sector. It said exploration and production continues to be strong on the back of the oil price – yesterday around $146 a barrel – and the pipeline. It was up 0.28 per cent to 907.5p

On the FTSE 250, haulage group Wincanton rose after it confirmed it would not challenge Laxey Partner’s bid for rival TDG. It was up 1.97 per cent to 297.75p.

In the wider market Sepura, the digital radio maker, was the highest riser on news it had signed a contract with Tyco Electronics. The stock was up 35.45 per cent to 74.5p

Moving down

Marks & Spencer was down further after its shock profits warning earlier this week, falling 4.13 per cent to226.25p. Citigroup downgraded the stock to a “sell”, saying the move came “to reflect our view that the current sharply deteriorating UK macro environment should drive a Sell stance on the UK general retailers in the absence of extreme valuation parameters (which usually requires the prospect of EPS upgrades). We now have 10 Sell and 3 Buy ratings in UK general retail.”

Another Citi report dragged down Anglo American, saying it was cautious over the UK mining sector because of the potential for a global slowdown. Anglo fell 3.03 per cent to 3165p.

Wolseley was down as Deutsche Bank released a report reducing its price target from 650p to 468p, although it did maintain its “buy” rating. The German broker noted the company’s ongoing struggles with the problems besetting the US housing market, as well as worsening conditions facing its markets in the UK and Europe.

The worst performer on AIM was 1st Dental Laboratories after it announced a profit warning for its first half results, citing business disruptions. This prompted broker to cut its rating from “buy” to “outperform”. The shares were 23.94 per cent at 6.75p at Midday.