Market Report: Morgan Stanley puts power into Punch

Punch Taverns jumped yesterday after it emerged that Morgan Stanley had hiked its stake in the troubled UK pub owner to 12 per cent. Against a backdrop of discussions with investors about restructuring the business, shares in Punch rose as much as 8.6 per cent in the morning as Morgan Stanley revealed it had increased its stake by 10 per cent to 76.5 million shares. They declined later but still ended up 1.9p, or 2.5 per cent, at 7.6p.

RusPetro, the London-listed Russian oil and gas developer, also soared yesterday after announcing that it has been granted a licence extension for its Palyanovsky block in western Siberia by the Ministry of Natural Resources and Ecology of the Russian Federation. It added 6p, or 8.1 per cent, to close at 80p.

Meanwhile, AIM-listed Greka Drilling saw its shares shoot up by 1.13p, or 12.68 per cent, to 10p after announcing a contract with China National Petroleum Corporation to work on an oil well in Shizhuang, Shanxi.

But these risers were in the minority yesterday, as uncertainty over US budget talks ahead of a key meeting last night ensured that most UK shares declined on the last full trading day of the year.

The FTSE 100 fell by 28.93 points, or 0.49 per cent, to end the day at 5,925.37 points, ensuring that it remained below the psychologically important 6,000 mark which technical traders regard as key to propelling further moves higher.

Investors have been focused this month on talks in the US to avoid a "fiscal cliff" – a combination of government spending cuts and tax rises due to take effect early next year which would hit the US economy hard and hurt business worldwide.

President Barack Obama summoned congressional leaders to an emergency meeting last night, three days before a year-end deadline to avoid $600bn (£370bn) in spending cuts and tax increases, with the jury very much still out on whether a deal can be agreed.

Elsewhere, Pearson, the owner of the Financial Times, announced that it had invested $89.5m for a 5 per cent stake in Nook Media, a new company consisting of the digital business of Barnes & Noble, the US bookstore chain. News of the investment in Nook, whose business includes the Nook e-reader and tablets, failed to lift Pearson on a lacklustre day in the markets: the publisher ended the day 3p lower at 1,193p.

Pearson has also been given warrants to buy an additional 5 per cent of Nook at a pre-investment valuation of $1.79bn (£1.12bn).

Shareholders in ENRC voted through a $550m deal in which the miner will sever its ties with the controversial Israeli diamond billionaire Dan Gertler. The deal will see ENRC buying Mr Gertler's 49.5 per cent stake in their copper and cobalt joint venture in the Democratic Republic of Congo.

Shares in ENRC none the less dipped by 3.3p to 286.1p, amid more general concerns about the outlook for the company, which has a poor reputation for corporate governance – a point underlined yesterday by the pattern of voting on the deal. Some 99.24 per cent of the votes cast backed the deal, helped by the combined 35 per cent stake of its three Central Asian founders – Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov, as well as fellow Kazakh miner Kazakhmys, with 26 per cent, and the Kazakh state's 12 per cent holding. However, when "votes withheld" are included, just under a third of shareholders failed to back the deal.

Weir Group, the oil and gas services company, struck a positive note yesterday, saying that the UK's recent decision to approve the controversial practice of hydraulic fracturing, or fracking, could turn the country into a European hub.

A surge in fracking, a technique which releases gas from shale by blasting a mixture of sand, chemicals and water into the rock at high speed, would, in turn, benefit Weir, the 141-year-old oilfield pump supplier which has become one of the chief beneficiaries of the shale gas revolution in the US. The chief executive, Keith Cochrane, said: "The UK is in a fantastic position to take advantage of the changes, given the infrastructure that already exists off the back of our North Sea, to take a leading role in the development of this industry across Europe."

None the less, the shares still dipped by 16p to 1,876p as investors concluded that plenty of obstacles need to be cleared before a shale gas revolution can happen in the UK, such as establishing the volume of hydrocarbons that can be commercially extracted.

Hold

Randgold Resources

A fire at Randgold's Tongon gold mine in Ivory Coast has damaged the infrastructure of the processing plant, meaning production is likely to be halted for up to 10 days. Although analysts at Liberum Capital have downgraded its production estimate for 2012 from 819,000 ounces to 790,000 ounces as a result, they have retained their "hold" recommendation because they "continue to envisage a more attractive entry point to Randgold Resources during 2013".

Buy

Circle Oil

Although Circle Oil's Bou Argoub exploration well in Tunisia encountered non-commercial amounts of oil and gas, analysts at Liberum Capital believe the presence of hydrocarbons is encouraging for future exploration. Their target price of 50p is about three times its current level, because the company's "track record in Egypt and Morocco demonstrates management creates value".

Buy

Computacenter

Investors should head for the provider of computer services to public and private sector companies, says Panmure Gordon's George O'Connor. He gives the stock a 422p target price and a "buy" rating, arguing that, due to "sales phasing" Computacenter does more business after 25 December than before it. As a result, he estimates there is some £1m to £2m pre-tax profit due to be unlocked from deals waiting to close.