Market Report: SABMiller looks for cheer from trading update

Investors in SABMiller, the Anglo-South African brewing group, will be hoping yesterday's chart breakout means the group's trading update, due this morning, will signal a re-rating for the shares.

The weak rand has put the stock under pressure since April, but the broker Credit Suisse thinks the company will report strong trading prior to first-half results, due on 9 November. The Swiss investment bank reiterated its "outperform" rating on the shares yesterday along with a price target of 1,200p, noting that the hot European summer should have helped beer sales and that the company is improving margins in Latin America. The only weak point is likely to be lower volumes in North America, but a 3.5 per cent drop in US volumes is already priced into the shares and if it is no worse than that the shares could attract strong buying interest today.

Disappointing results from the US aluminium maker Alcoa put the dampners on most of the mining sector, although the Indian copper producer Vedanta Resources rallied 46p to close at 1,321p on the back of Tuesday's production update. Rio Tinto dropped 16p to 2,575p and Anglo American shed 11p to close at 2,307p.

In the wider market, profit-taking after several sessions fuelled by bid speculation saw the FTSE 100 spend most of the day in the red, before late buying pushed it into positive territory, ending 0.8 firmer at 6,073.5.

Bid speculation at Prudential is nothing new, but at least yesterday's rumours introduced a new name into the frame - HSBC. Traders said the banking giant could be interested in expanding its position in the insurance market because its investment banking operations have failed to make a dent in the Wall Street "bulge bracket". Prudential climbed 7.5p to 635p; HSBC fell 2p to close at 1,008p.

Shares in CSR, the microchip group, have taken a drubbing in recent sessions after a poor trading update three weeks ago. It looks as if brokers now believe the shares have been oversold, and Deutsche Bank followed in Panmure Gordon's footsteps by urging its clients to buy the shares. The German broker has a price target of 1,100p on the stock, which closed 41p better at 845p.

Although the shares have been listed only since Monday, there are already a handful of takeover rumours doing the rounds at Biffa, the waste services group demerged from water utility Severn Trent. The shares surged 7.5p to 269.25p. The utility sector has been hot with takeover stories in recent weeks, although Northumbrian Water fell 12p to 303.25p yesterday on profit-taking.

Carphone Warehouse's £370m acquisition of AOL's UK operations offset earlier news that broadband start-up costs would be higher than previously indicated, sending the shares up 29.25p to 518.25p by the close. The broker Investec waxed lyrical on the deal, telling clients the company "remains an excellent long-term growth story" and upping its price target to 385p.

The smaller broadband operators Plusnet and Pipex Communications was also stronger on the news, as traders pointed out that Carphone has paid AOL a significantly higher multiple per customer than Pipex recently paid for Toucan. Pipex closed 1.5p firmer at 10.5p, while Plusnet, down more than 63 per cent from its high for the year at the start of the session, surged 26.5p to 178p.

Morgan Crucible remains under pressure, down 9.25p to 273.25p, as rumours that Credit Suisse is poised to pull out of takeover talks persisted. However, the broker Bridgewell Securities believes the recent share price fall is a good buying opportunity regardless, and that management "has not put a step wrong to date". With the company still to make an announcement, there could be red faces if the bid materialises.

In the small caps, trading was resumed in Micap, the AIM-listed biotechnology group, with the shares falling 44.4 per cent to 1.25p. The company will try to raise £525,000 in a placing at 1p, subject to approval at an EGM on 2 November. At least the company is still going - at the time of the suspension, the reason was given as the dreaded "pending clarification of its financial position", usually taken as a sign that the company is beyond saving.

Investors in Asia Energy are used to a roller-coaster ride; itis still to receive word from the Bangladeshi government on the future of its Phulbari mine, potentially one of the world's largest coal deposits. Short covering and speculative retail buying sent the shares 19.25p firmer to 106.25p.