Market Report: Analysts predict FirstGroup will have been hit by bad weather

FirstGroup was last among peers yesterday. The bus and train provider updates on fourth-quarter performance today and Bank of America Merrill Lynch fears it won't make pretty reading. Analysts at the bank predict FirstGroup will have been hit by the bad weather and volatile currency movements over the last three months. They also warn that if it loses its bid for the Thameslink franchise, it may have to tap investors for cash.

The bank remains optimistic on long-term prospects but downgraded it to neutral and cut its target price to 150p. FirstGroup shed 6.9p to 139p.

Meanwhile a positive note from Nomura helped rival Go-Ahead Group. The broker upped its target price for the bus and rail operator, which added 80p to 1,943p.

Positive manufacturing data from China, the US and Europe helped the FTSE 100 to a three-week high of 6,652.61 yesterday, with the mining sector rallying on hopes of Chinese stimulus.

The index was also helped higher by deal news from Babcock, up 40p to 1,387p, a trading update from Aberdeen Asset Management, 26.2p better off at 416.5p, and spin-off speculation around BHP Billiton, up 38p at 1,882p.

Sports Direct also steamed ahead after a positive note from Liberum speculating on potential European takeover targets for Mike Ashley's retail behemoth, which closed up 40.5p at 892.5p.

Life insurers continued their recovery from Friday's sell-off yesterday, adding 9.26 points to the FTSE 100. And investors returned to bashing the supermarkets, a popular play at the moment, with food retailers knocking 1.21 points off the index.

On the FTSE 250, Dubai health provider Al Noor Hospitals Group leapt 91p to 1,164p after a successful AGM at which all resolutions passed.

Heritage Oil, which operates in Russia, advanced 16.5p to 252.23p as Moscow promised partial withdrawal of troops from Ukraine.

The struggling Finnish miner Talvivaara was boosted by a €20m loan agreement with Nyrstar, the world's largest zinc smelting company. The company, which added 1.26p to 4.95p, said it is still seeking potential investors.