Market Report: US advertising rise is good news for UK companies

Toby Green

After yet another topsy-turvy day in the City, it would be hard to blame investors looking for slightly safer (some may even say boring) stocks. With the benchmark index swinging nearly 3 per cent between the session's high and low points yesterday, UBS chose a good moment to pick out the companies most likely to continue their dividend payments, however volatile the wider market remains.

Saying high-yielding investments were generally in short supply as "government bonds offer close to nothing", analysts from the broker chose 13 European groups for its "relatively safe" basket. The criteria included not having reduced its dividend for more than a decade and a strong yield, with Guinness-owner Diageo (30p higher at 1,316p) and Sir Martin Sorrell's media giant WPP (20.5p to 674p) among the companies recommended.

The latter was helped as well by general bullishness among dealers over the outlook for advertising following positive results from across the Atlantic, where the US billboard group Lamar surpassed analysts' expectations with its latest figures.

Support also came in the wake of News Corp's results issued late on Wednesday, with the Rupert Murdoch-controlled company revealing advertising revenues in the States ahead of forecasts. The Fox owner was among several US media groups to announce encouraging figures from their cable TV operations, providing a particular boost for BSkyB and ITV.

The two groups ended up climbing 4.5p to 733p and 3.65p to 65.1p respectively, with the X Factor broadcaster taking pole position on the blue-chip index. Extra help came from Credit Suisse reiterating its "outperform" rating in preparation for its upcoming third-quarter trading update, as the broker claimed ITV's net advertising revenue across its channels would stay steady instead of slightly dipping as the group had previously predicted.

As dealers spent the day glued to their screens trying to keep track of the latest developments in Greece, the FTSE 100 managed to finish 61.54 points stronger at 5,545.64. The news that the country's Prime Minister, George Papandreou, appeared prepared to drop proposals for a referendum on the eurozone rescue deal helped, as did comments emerging from the summit between G20 leaders in Cannes.

An interest rate cut from the European Central Bank also provided a positive surprise, while commodity prices rose following encouraging data from the United States.

A busy week for revived rumours continued, as Travis Perkins gained 19.5p to close at 854.5p on the FTSE 250 amid vague speculation the builders' merchant could become a takeover target, although details were in short supply.

With the gossips still not letting go of wild whispers of possible Chinese interest for Marks & Spencer, which was bumped up 4.2p to 319p, Logica was also the subject of reheated takeover rumours.

The vague chatter came in the wake of the IT outsourcer losing more than 7 per cent on Wednesday after cutting its full-year expectations, and – as has been seen before – France's CapGemini was being put forward as a potential bidder. Even though Singer Capital Markets, JP Morgan Cazenove and Natixis all cut their target price on the company, it managed to shift up 1.95p to 84.95p, although it has still lost more than 12 per cent over the past week

Investors in Homeserve searching for some reassurance failed to find any from Peel Hunt's Henry Carver. The repairs and insurance groups had fallen over 31 per cent since suspending its sales operations earlier in the week over fears of mis-selling, and yesterday it slipped a further 9.2p to 324.3p. It was knocked by Mr Carney's warning that the Financial Services Authority would not be able "to be seen to sit on the sidelines" and was therefore likely to launch an investigation.

Millwall plummeted 37.14 per cent to 275p after the Championship football club announced it wanted to leave the Alternative Investment Market. The London team, which also managed to reduce its losses last season to £600,000 from £3.4m the year before, claimed the costs of being listed were too high while its current share price left it undervalued.

ImmuPharma was fighting fit, spurting up 17p to 92p on good news regarding its major Lupus drug, Lupuzor. The biotech company revealed the product has been allowed to start the next phase of clinical trials by the US Food and Drug Administration while also being granted fast-track status.

A successful fund-raising of $106m in a stock placing left Coal of Africa 2.5p weaker at 54.5p, with the digger, which has hopes to move to the main market, saying it would use most of the cash towards starting production at its Vele project in South Africa.