Markets update

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The FTSE 100 was down 88.5 points at 6288 at noon after mining companies, hit by profit-taking following Monday’s record run, fell by the wayside. The Eurasian Natural Resources Corporation was the worst off, losing 6.51 per cent or 100p to 1435p. BHP Billiton was down 138p at 2059p, Antofagasta was down 38p at 759p, and Rio Tinto lost 352p to 6726p.

A positive broker report failed to help Anglo American , which was down 184p at 3496p. Credit Suisse, whose analysts increased their target price for the stock to 4500p from 3300p, said: “The shares have significantly underperformed its peers over the last 12 months, and with such strong earnings momentum we are making this our top pick for the sector. “

Moving up…

AstraZeneca was up 23p to 2312p at noon. A U.S. court hearing over patents for the company’s Seroquel schizophrenia drug has been brought forward to today, sparking hopes that the Anglo-Swedish group may prevail in the case. Renewed bid speculation suggesting interest from Pfizer or Schering-Plough is also driving investors into the stock.

The banks are mounting a recovery – Alliance & Leicester , up 19.75p at 450p, was leading the FTSE 100. HBOS , up 16p at 478.5p, claimed second place while the Royal Bank of Scotland , up 4p at 260p, was lodged at third place.

IG Group , up 21p at 391p, was leading the FTSE 250 after Merrill Lynch upgraded the stock to ‘buy’ from ‘neutral’.

“IG has been a net beneficiary of the prolonged market volatility and has also made an encouraging start to its new European operations. We think the company is now looking a lot cheaper whilst the supportive market backdrop continues to drive strong growth in client recruitment and trading activity,” the broker said.

Moving down…

Marks & Spencer was down 17p at 400p. Investors and analysts remain concerned about the outlook for the company, which published its full year results earlier in the day.

“M&S has once more managed to cross the £1bn [pre-tax profits] threshold, although as with last time, it is unlikely to be a springboard to greater things in the current difficult consumer environment,” said Investec.

Collins Stewart also expressed caution.

“Whilst headline numbers will no doubt be taken positively, this set of results is delaying the inevitable. Second half margins are down in the UK retail business by 80bp excluding the benefit of M&S Money, which made £28m this year vs £19m the year before. That is the key issue here – margins are on the slide and it is not just a function of greater contribution from food. Cost inflation is heavy and gross margins are under increasing pressure,” the broker said.

Yell was down 23.8 per cent or 50p at 159p after the directories group halved its final dividend.

“Like Informa, Yell has rallied in recent weeks. However, there are few positive catalysts in the statement beyond cost cutting. Therefore, near term we would expect some profit taking again. Yell remains highly indebted, c.5.1x net debt/EBITDA,” said Panmure Gordon, adding: “To date, there are no signs of any fund raising.”

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