Market Report: Oil explorers hit by Mauritania coup jitters

Reports of political turmoil in Mauritania did no favours for Premier Oil, Hardman Resources and Dana Petroleum shares yesterday. Investors in the three oil explorers, which have heavy exposure to the West African country, were unsettled to hear reports of an attempt to overthrow the nation's pro-American government.

Reports of political turmoil in Mauritania did no favours for Premier Oil, Hardman Resources and Dana Petroleum shares yesterday. Investors in the three oil explorers, which have heavy exposure to the West African country, were unsettled to hear reports of an attempt to overthrow the nation's pro-American government.

A security clampdown is said to have followed and the political turbulence was enough for Hardman to rush out a statement to the Stock Exchange, in which it said that it was monitoring the situation. According to Hardman, Mauritania's capital, Nouakchott, was calm. But over the past year or so, tensions seem to have risen in the country.

Last June, Maaouya Ould Sid'Ahmed Taya, Mauritania's president, crushed an attempt to oust him after two days of fighting in the capital. The attempted coup came after a dozens of Islamists were rounded up in the previous month. In the short term, drilling by Hardman, Dana and Premier should continue unaffected by the uncertainty, as it is offshore. However, analysts warned that in the long term, stability in the country will be required if the discoveries are to be developed as planned. Hence, Hardman Resources closed 8.75p lower at 81.25p, Dana Petroleum retreated 15.5p to 324p and Premier Oil lost 4p to 595p.

Elsewhere, Reg Vardy experienced yet another day of falls, losing 8.5p to 420p. Dealers noted that shares in the car distributor have closed lower in seven of the past eight days and blamed this on worries of weak trading at the group. Reg Vardy has lost nearly one-third of its value since the stock's March high. However, Numis Securities was unperturbed by this. The broker urged investors to buy into the group and set a 600p price target. "We believe the company remains on track to achieve its growth targets," Numis said.

Lastminute.com jumped 12p to 106.5p as hedge funds rushed to close short positions in the stock. Since the start of the month, they have successfully bet against the online travel group and yesterday they locked in profits. It also emerged that Capital Group, the giant US fund manager, has used the resulting weakness in lastminute shares to add to its holding.

Weir Group put on 18p to 292p thanks to an upgrade from UBS ahead of interim results from the pumps group later this month. The Swiss broker raised its rating to "buy" from "neutral" and told its clients to expect in-line first-half numbers from Weir and, more importantly, a bullish outlook statement about the second half of the year.

UBS noted that Rotork, which operates in the same end markets as Weir, recently boasted of a strong uplift in demand and a big increase in its order book. All this bodes well for Weir, according to the broker.

Meanwhile, Barclays rose 12.5p to 516p amid continued speculation of a bid from Citigroup. Some even suggested that an offer was imminent. But given that Barclays continues with its share buy-back programme, analysts believe a bid is unlikely at present, unless it is hostile. According to the listing rules, a company is not allowed to buy back shares if it is in offer talks.

Meanwhile, some dealers offered an alternative reason for the strength in Barclays' share price since the end of last week. They believe that the a number of hedge funds recently realised that there was a large short position in shares of the banking giant and looked to profit from it. The practice is called "gunning for shorts" and sees bulls of a stock spread positive rumours about a company, for example that it is about to be bid for. As the stock price rises on the rumours, those hedge funds that are short - and usually they have borrowed money to go short so their prospective losses are magnified - start feeling the pain.

If the raid is successful, as the one on Barclays seems to have been, all those short will rush to close their positions. This drives the stock even higher and plays into the hands of the bulls, who then start to cash in on their gains.

Among blue chips, a strong start to trading on Wall Street helped the FTSE 100 index close 36.5 points higher at 4,350.9. BT Group rose 3.75p to 181.25p but was held back from further gains by a negative investment note from Lehman Brothers.

Lower down the pecking order, trading in Supporta, down 11p to 43.5p, was restored as the group unveiled a £6.2m equity fund raising at 38p a share. Supporta, chaired by Bob Holt, who has had a great success running the AIM-listed Mears, will use the cash to acquire two private businesses which provide support services to the NHS.

Helphire dropped 1p to 218.5p as brokers struggled to clear a large seller from the market. Ashtenne Holdings was unchanged at 347.5p despite talk that the property group is mulling a return of yet more cash to shareholders.

Market movers

Old Mutual 103.75p (up 5p, 5.1 per cent). Posts top of the range first-half results.

Xstrata 762p (up 26.5p, 3.6 per cent). Investors pile into the stock ahead of results from the mining giant later this week.

Cairn Energy 1,400p (up 82p, 6.2 per cent). Announces yet another significant oil find at one of its exploration wells in northern Rajasthan, India.

Warner Chilcott 575p (up 25p, 4.6 per cent). Unveils forecast-beating third-quarter results.

Amco Corp 65p (up 10p, 18.2 per cent). Posts interim pre-tax profits of £1.1m, compared with a loss of £600,000 a year earlier.

Chieftain 41.5p (up 5.5p, 15.3 per cent). Returns to the black at the interim stage to the tune of £300,000; also boasts of a strong order book.

Adventis 29.5p (up 3.5p, 13.5 per cent). Indicates that its interim results will beat expectations.

ARM Holdings 98.25p (up 3.75p, 3.9 per cent). Merrill Lynch upgrades its rating to "neutral" from "sell" on valuation.

Angus & Ross 11.25p (up 0.25p, 2.3 per cent). Signs China gold mining deal.

Torex Retail 56p (up 1.5p, 2.7 per cent). Acquires KPOS Computer Systems in a deal worth £8.7m.

Blooms of Bressingham 37.5p (down 3.5p, 8.5 per cent). Warns that its full year results are likely to be "modestly below forecasts", hurt by subdued trading this year.

Character Group 47.5p (down 4p, 7.8 per cent). News of a share purchase by Richard King, the group's chairman, fails to excite.

Manchester United 252p (down 8p, 3.1 per cent). The latest reports suggest Malcolm Glazer has no plans to hold talks with Cubic Expression, aimed at the purchase of its 28 per cent stake in the club.

Benfield Group 227.5p (down 6.25p, 2.7 per cent). Bid speculation wanes.

Carpetright 1,045p (down 15p, 1.4 per cent). Profit taking after a robust first-quarter trading statement from the retailer.