Britain's top share index bounces back by batch of robust results

19 May, 2004

Britain's top shares bounced back from a two-day fall on Tuesday with investors encouraged by a batch of robust results, a 1.5 billion pound bid for biotech firm Celltech and some easing in rampant oil prices.
Mid-cap Celltech leapt 26 percent to 542 pence after Belgian drug-maker UCB agreed to buy it for 550 pence per share in cash. UCB also snapped up the rights for Celltech's key arthritis drug, making a counter-bid unlikely.
The deal helped drive the FTSE-250 mid-cap index one percent higher. The FTSE-100 blue-chip index closed up 11.4 points, or 0.3 percent, at 4,414.4, offering some relief after a 3.6 percent fall since May 5.
A bright start on Wall Street helped the advance. Dealers said gains were underpinned by an easing in oil prices, soothing concerns that high fuel costs coupled with rising interest rates would choke economic growth.
"We're seeing some respite in the oil price and that's feeding through to some sort of relief rally," said Stephen Ford, investment manager at private client stockbroker Brewin Dolphin, adding that US rate rise fears had been overdone.
"People were probably getting a bit carried away by inflation, the China commodity story, it all came to a head at the same time and there was a slight overreaction."
Drugs and telecoms stocks led the advance, outweighing the drag from the heavyweight oil sector, which knocked 12 points off the FTSE as BP and the oil majors slipped.
Telephone directories company Yell topped the FTSE leader-board with a five percent jump after it swung to a full-year profit before its flotation costs, while mobile operator mmO2 was actively traded but ended flat after posting a 59 percent rise in core earnings.
BT Group, which used to own both Yell and mmO2, helped the mood among telecoms as it teamed up with former arch-rival Vodafone to boost its mobile business.
BT shares rose 0.9 percent to 170-3/4p, bouncing back from a one-year low of 166-1/4p on Monday, helped by news US investor Brandes had bought a four percent stake.
Sage and most technology stocks were lifted by a bounce by their US counterparts, while pubs group Enterprise Inns added 3.2 percent after saying a strong first-half performance had continued into the second half.
But drinks firm Diageo lost 2.3 percent after analysts at Merrill Lynch cut earnings forecasts for the company and said there were few upside catalysts on the horizon.
Water and sewerage firm Pennon slipped 2.5 percent to trim Monday's rally - fuelled by a take-over approach - as dealers said stockbroker Cazenove had cut its rating on the stock to "hold". Cazenove declined to comment.
Leisure chain Rank Group shed 4.5 percent after losing a contract to make and distribute DVDs in Europe, but flooring retailer Topps Tiles and steel firm Corus both bounced strongly as dealers said recent sell-offs had been excessive.

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