Market update

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The Independent Online

The FTSE 100 was up 17.9 points at 6087.5 at 12.04pm on Thursday. Reverting to trend, miners and oil companies provided the lift to the London benchmark as metals prices and the cost of crude recovered.

Man, the hedge fund group, was the notable exception on the leader board –the company gained 22.5p to 611p after reporting strong growth. Man also said that deputy chairman Stanley Fink, who led the group as chief executive from 2000 to 2007, will retire in July.

Moving up

Among oil companies, Cairn Energy was up 103p at 3418p, Tullow Oil gained 22.5p to 920p and BP added 10p to 615.5p. The Eurasian Natural Resources Corporation was the best performer among the miners, gaining 28p to 1438p.

Oil and natural gas group BG rose by 20p to 1310p as investors await news from Australia's Origin Energy. New reports suggest that BG has raised its all-cash proposal for Origin to over A$13bn, which the Australian group is expected to accept by the end of this week. Earlier in the week, Origin requested a halt in the trading of its Sydney-listed shares pending a statement on the bid.

On the FTSE 250, Carpetright was up 11.5p at 792.5p after news emerged that Bill Gates, the billionaire co-founder of Microsoft Corporation, had picked up a 3 per cent stake in the company.

Moving down

Housing-related stocks were weak after the latest Nationwide House Price Index revealed 2.5 per cent fall in house prices in May.

Panmure Gordon said that with no immediate relief in sight, prices are "likely to remain in negative territory in the coming months".

"We believe that house builders will continue to find market conditions very difficult throughout 2008 and 2009. Transaction levels continue to be depressed, mortgage approvals are significantly lower, and confidence is poor," the broker said.

The worries hit Persimmon, which was down 19.5p at 494p. Taylor Wimpey lost 6p to 87.5p, Bovis Homes was down 20.75p at 427.25p and Bellway lost 17.5p to 624.5p.

Construction materials firm Wolseley was also down, losing 19.5p to 537.5p.

Concern for the housing market also hit Bradford & Bingley, the FTSE 250-listed mortgage lender which was down 1p at 96.25p.

Land Securities, the UK's largest real estate investment trust, was down 28p at 1408p after Citigroup, whose analysts forecast a further 17 per cent fall in NAV this year, reduced its target price for the stock to 1600p from 1700p.

"Our valuation is based on long-term forecasts and we like the company on fundamentals, but real estate shares are trading on short-term sentiment. The shares are at risk of falling in the short term: a 20% discount to FY09e NAV would be 1300p," the broker said. Citi also expressed its scepticism about the Trillium de-merger.

"Even a near-term sale of Trillium seems sub-optimal, given the lack of capital available to a purchaser: we would not want to see a sub-prime price accepted," the broker said.

Yell came off the speculative rally path, losing 1p to 129p, after Exane BNP Paribas reduced its target price for the stock to 160p from 330p and highlighted debt issues at the directories group.

"Our analysis shows that Yell is likely to breach its loan covenants in 2009/10e and that it faces possible default in May 2011 (when it is required to repay a significant loan)", the broker said, adding:

"We believe asset sales are likely as part of possible covenant renegotiations with debt holders. In our view, floating YellowBook or selling Latam assets to Telmex would crystallise shareholder value."