Market Report: Amvescap investors make a dash for the exit

Investors scrambled to exit Amvescap yesterday amid growing worry that next week's third-quarter results from the fund management giant are set to disappoint. The latest anxiety to surround the company was caused by a note from Merrill Lynch in which the broker slashed its earnings forecasts for Amvescap. Merrill cut its estimates by 4 per cent for the current year and 9 per cent for 2005, sending shares in the fund manager tumbling 11p to 280.5p.

Investors scrambled to exit Amvescap yesterday amid growing worry that next week's third-quarter results from the fund management giant are set to disappoint. The latest anxiety to surround the company was caused by a note from Merrill Lynch in which the broker slashed its earnings forecasts for Amvescap. Merrill cut its estimates by 4 per cent for the current year and 9 per cent for 2005, sending shares in the fund manager tumbling 11p to 280.5p.

Merrill said its downgrade was in response to the recent poor performance of the US dollar and American equities. Amvescap at present is fighting to rescue its reputation in the wake of the market timing scandal. The affair cost the company $140m in civil penalties and $235m in restitution.

Next week's third-quarter figures will also see Amvescap take a hit of about £80m relating to the legal costs of the scandal and the expense of closing its Denver-based Invesco operations. Hence, for the quarter just gone, the group is expected to register a loss, probably in the region of £10m. This compares with a profit of £77m for the same period last year.

Meanwhile, ITV, down 1.5p to 104.75p, also suffered at the hands of Merrill Lynch. Moving back its rating on the broadcaster to "neutral" from "buy", the US broker warned that ITV could be hit by the rise of personal video recorders. These will allow viewers to fast-forward adverts and has prompted concern that broadcasters like ITV, who make money from advertising, will eventually suffer.

Hanson fell 7.25p to 404p after Credit Suisse First Boston returned from an update with the group's management team and noted that the company continues to face significant cost pressures which it is struggling to pass on to customers. As a result, Hanson profit margins are being squeezed and CSFB believes this is likely to continue into 2005. The Swiss broker also worries that the building materials group is very vulnerable to any further US dollar weakness. It predicts that Hanson shares will under-perform going forward.

Dealers reported strong demand for Prudential, up 5.75p to 392p, amid rumours that the insurer is being stalked by a predator. HBOS, down 6p to 728p, was mentioned by some as possibly interested in Prudential, prompting the banking giant to rush out a statement denying the speculation. InterContinental Hotels added 12.5p to 676p after Morgan Stanley raised its price target to 710p from 600p. The US broker was heard telling its clients to expect good news on asset sales from the group over the next few months.

The wider FTSE 100 fell 2 points to close at 4,615.4 after an uninspiring start to trading on Wall Street. Both the Dow Jones Industrial Average and the Nasdaq Composite lost ground in early exchanges. Croda International improved 4.25p to 294p after the chemicals maker boasted of strong trading for the past nine months. Sportingbet added 10p to 120.5p as gossips suggested that business is booming at the online gaming group.

Icap ticked 1.5p higher to 240p on whispers that the money broker has managed to poach a number of key professionals from one of its rivals. Reliance Security held steady at 472.5p despite suggestions by Numis Securities that the group has lost an important contract. "We are downgrading our forecasts for 2006 following the loss of an electronic monitoring contract in the south of England," said the broker. Numis believes the loss could prove to be material and so cut back its recommendation on Reliance to "hold" from "add".

As talk of a bid once again surrounded JJB Sports, up 0.75p to 211.75p, analysts did some in-depth research into the financials at the retailer and concluded that a private equity bidder could easily afford to pay 250p a share for the company. Iain McDonald, retail sector specialist at Numis Securities, believes that David Whelan, JJB's chairman and 40 per cent shareholder, would be willing to sell up at 270p a share.

Lower down the pecking order, Torotrak rose 4.5p to 47.5p as those old rumours about the company finally securing a licensing deal for its revolutionary gearbox returned. Gooch & Housego soared 13p to 166p. Despite the excitement of some investors, the AIM listed electronic components maker put out a statement saying that it knew of no reason for the share price jump.

Punters piled into Regent Inns, up 4.5p to 35.5p, on hopes that next week's full-year figures may prove to be not as disastrous as widely expected. The pubs group has had a series of profit warnings over the past year. Eleco ticked 0.5p higher to 31.5p after its chairman, John Ketteley, picked up 50,000 shares at 31p. He now holds 5.1 million shares, or 10.5 per cent of the company.