London close: Bid chat adds spice
London ended higher Wednesday as investors welcomed further bid speculation, signs that interest rates will not rise any time soon and mulled the detail in the Chancellor's eleventh Budget statement.
Gordon Brown revealed that corporation tax would be reduced from 30% to 28%, though tax has been raised for small companies to 22% from 19% previously.
There was also a 2p cut in the basic rate of income tax to 20p, but Brown scrapped the 10p lower rate of tax.
Meanwhile, interest rates look unlikely to rise next month after it emerged that the Bank of England's Monetary Policy Committee voted 8-1 in favour of keeping borrowing costs at 5.25% in March.
The City had forecast a 7-2 decision, the same as February, so many were surprised with David Blanchflower who called for an immediate 25 basis point cut in UK rates.
In company news, property shares led the rise, with Hammerson up on talk that General Electrics' real estate investment arm is a potential bidder.
British Airways rallied on speculation about consolidation in the sector, as rumours continue that Iberia is being eyed by Lufthansa. A bullish note from Collins Stewart also encouraged buyers. The broker has upped its target price to 630p.
Plumbing group Wolseley is up after UBS lifted its recommendation to 'buy', while BT Group closed higher as the possibility of a joint buyout of Pipex with Virgin Media is considered.
Barclays rose on news that it apparently agreed to shift its base to The Netherlands as part of any deal to buy ABN Amro. The pillar of the UK establishment will also have a chairman appointed by the Dutch according to reports.
Investors raised a glass to brewing giant SABMiller despite an earnings downgrade by JP Morgan and price target cut to 1,215p from 1,270p. The broker has maintained 'overweight' advice on the stock, which is its top pick in beer, and thinks the 15% share price fall since mid-January is unwarranted.
In other news, British Land has formed a joint venture with Tesco covering 21 of the supermarket group's stores. Tesco said the deal would generate net proceeds of £570m and is the second phase of a property sale and leaseback programme announced in April 2006.
Credit checking firm Experian confirmed that it is in exclusive preliminary talks with Serasa, the leading credit bureau in Brazil, over acquiring a controlling interest in the group.
Engineer Smiths posted a 7% rise in underlying earnings to £148m in its first half, while pre-tax profit rose slightly to £134m. Sales on a continuing basis were flat at £1.02bn. The figures exclude the aerospace division, which has been sold to GE.
Oil group Tullow's profit rose 47% in 2006 to £263m. Current production is 76,000 barrels daily and is expected to reach 85,000 by the current year-end. Its Ugandan fields could contain up to 250m barrels of recoverable reserves, it added.
Electrical goods retailer Kesa increased revenue by 9.8% to £4.5bn in the year to end January, up 7.8% on a like for like basis. Profit before tax was up by 15.4% to £165.4m, helped by good sales of flat screen televisions and the market for white goods returning to small growth. "For 2007 we expect the same sales trends to continue, but not at the same rate as last year," it added.
Punch Taverns, Britain's biggest pub company, is preparing to put as many as 1,000 of its 9,300 pubs up for sale ahead of the forthcoming smoking ban, according to reports this morning.
Among the minnows, AIM-listed Media Square was in focus after another disappointing trading statement. It bought a stack of businesses from Huntsworth but may have got the wrong end of that deal as Huntsworth today announced profits nearly doubled last year.
Stockbroker Jarvis Securities continued its recent strong run after it said it will provide outsourced trade capture, settlement and custody services to Park Caledonia Associates.
FTSE 100 - Risers
Hammerson (HMSO) 1,734.00p +4.77%
British Airways (BAY) 519.50p +3.28%
Yell Group (YELL) 588.00p +3.07%
Land Securities (LAND) 2,181.00p +2.68%
BSkyB (BSY) 568.00p +2.53%
Wolseley (WOS) 1,251.00p +2.46%
Vedanta Resources (VED) 1,334.00p +2.38%
Experian (EXPN) 603.50p +2.29%
SABMiller (SAB) 1,106.00p +2.22%
ICAP (IAP) 533.00p +2.01%
FTSE 100 - Fallers
Whitbread (WTB) 1,864.00p -3.62%
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Bradford & Bingley (BB.) 449.50p -2.55%
HSBC Holdings (HSBA) 881.00p -1.89%
Sainsbury (SBRY) 550.00p -1.08%
Alliance and Leicester (AL.) 1,143.00p -0.70%
Resolution (RSL) 655.50p -0.68%
Astrazeneca (AZN) 2,836.00p -0.67%
Home Retail Group (HOME) 441.50p -0.62%
Unilever (ULVR) 1,488.00p -0.47%
Reed Elsevier (REL) 601.00p -0.33%
FTSE 250 - Risers
Mitie Group (MTO) 261.75p +6.73%
UK Coal (UKC) 500.00p +5.04%
BSS Group (BTSM) 476.00p +4.90%
Daejan Holdings (DJAN) 5,747.00p +4.87%
Premier Oil (PMO) 1,252.00p +4.86%
Avis Europe (AVE) 70.25p +4.85%
PartyGaming (PRTY) 45.00p +4.65%
Galiform (GFRM) 155.25p +4.37%
SSL International (SSL) 404.75p +4.32%
British Energy Group (BGY) 481.50p +4.22%
FTSE 250 - Fallers
Abbot Group (ABG) 280.00p -5.33%
Rank Group (RNK) 225.00p -4.15%
Gyrus Group (GYG) 446.75p -1.97%
Kesa Electricals (KESA) 344.00p -1.78%
Helical Bar (HLCL) 450.00p -1.53%
First Choice (FCD) 295.00p -1.50%
Mitchells & Butlers (MAB) 779.00p -1.02%
Unite Group (UTG) 504.00p -0.98%
John Wood Group (WG.) 280.50p -0.88%
Woolworths Group (WLW) 32.75p -0.76%
