Footsie high ahead of US rate rise

DEALERS pushed the

Footsie

Earlier in the week, traders were counselling caution while waiting for yesterday's decision on US monetary policy. Most expected a modest rate rise. The central bank increased its key rate by 0.25% to 1.75%.

Supermarket groups were in the spotlight. J Sainsbury was panned by its former cheerleader, Panmure Gordon's influential retail analyst Philip Dorgan, who issued one of the most negative assessments in recent history.

'Our recent visits to Sainsbury stores have been among the most depressing of 20 years as retail analysts,' wrote Dorgan, noting that 'whole sections of the store are barren'. He predicts 'appalling' second- quarter sales and has halved his profit forecast to £205m this year. Just four months ago, Dorgan was an enthusiastic buyer of Sainsbury. The shares slipped 2 1/4 p to 272 1/2p.

Boots was also under the cosh as the supermarkets continue to erode its health and beauty sales. Investec removed its buy recommendation, sending the shares sliding 16 1/2p to 663p, the worst performance among blue chips.

Consumer products group Unilever survived a roasting by analysts and clawed back 8p of Monday's 22 1/2p loss to end at 467 1/2p. House broker UBS sliced its price target by 60p to 500p but retained its neutral rating, while Morgan Stanley reduced its target by 30p to 490p.

Fellow household products maker Reckitt Benckiser continued to suffer in the wake of earlier gloom over Unilever and the shock profit warning from US rival Colgate-Palmolive. The markets seemed unimpressed by Reckitt's reassurance on earnings growth earlier in the week and marked the shares down 33p to 1378p.

Among second liners, LogicaCMG, down 7 3/4p to 184p, also suffered after CSFB shaved 30p from its target price to 160p. The broker does not believe Logica's Wireless Networks business is likely to generate significant cash flow.

Investors were disappointed by the trading update from Electrocomponents, down 8p to 318 1/2p. The maker of computer cables and transistors voiced caution over its prospects. Analysts were concerned about sales in the UK and Europe, which grew only 2% in the past six months. Still, group sales grew about 6% - after a 1% expansion a year ago - helped by strength in Japan and North America.

Further down, car dealer HR Owen, down 27 1/2p to 201p, ran out of gas, after warning that rising interest rates will hit second-half sales. The bad news overwhelmed a respectable set of results - interim profits rose 29% to £2.2m.

Football kit maker Umbro will be dropped by Scottish champions Celtic at the end of next season in favour of Nike. The ubiquitous US sportswear maker will pay a minimum £5m in royalties for exclusive rights to the Celtic brand. Umbro appeared to take the news well, saying it does not expect the loss to significantly 'impact on the business for 2005 and beyond'. Umbro fell 5p to 110p, matching its flotation price. Celtic gained 1/2p to 63 1/2p.

Construction consultancy James R Knowles, down 15p to 37 1/2p, turned in one of the worst performances of listed shares, losing more than a third of its value after warning that full-year profits are likely to take a 'significant' hit after weak trading this year.

The leprechauns at Conroy Diamonds have found their pot of gold at the end of the rainbow. The miner says an independent consultant has verified its estimates of a gold deposit in Ireland that could stretch to a million ounces. Investors bought the story and the shares. Conroy jumped 3/4p to 3 3/4 - a 25% gain.

Advertising and media firm Thomson Intermedia, up 10 1/2p to 87 1/2p, pleased investors, moving into the black over the past six months. Pre-tax profits hit £248,000, following a £463,000 loss a year ago.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in