BT in fast lane with broadband

INSTITUTIONAL buyers plugged into

Turnover swelled to almost 380m as fund managers committed billions of pounds of trustees' cash after BT management, led by finance director Ian Livingston, made several upbeat presentations in the City.

The message relayed to dealing desks is that debts are down, costs are well under control, cash flow is strong and customer satisfaction has improved tenfold.

BT has repositioned itself in the market and its emphasis on broadband is paying dividends. Booming demand for high-speed broadband internet access last year helped BT to ring up a 10% rise in pretax profits.

One bullish fund manager said: 'Switch out of Vodafone [ 1/4p off at 127 1/2p] into BT. It's a much better play.

'At a stroke, BT could save up to £1bn by saying cheerio to thousands of its army of overpaid and under-worked engineers. The 4% yield is attractive and you can never rule out the possibility of private equity groups taking a predatory interest.'

Takeover speculation gripped the retail sector yet again. Marks & Spencer advanced 6 1/2p to 363 1/2p ahead of Philip Green's conditional offer of 370p cash last night.

MFI Furniture jumped 8 3/4p to 161p on heavy turnover of more than 40m on revived rumours of an imminent £2-ashare offer.

Rumours have been rife that chief executive John Hancock was lining up a management buyout at 190p to 220p a share, valuing the company at £1.25bn. Yesterday, dealers heard that private equity firm Cinven is looking to buy MFI's retail operations and then float off its Howden joinery business.

Fed chairman Alan Greenspan's soothing comments that rises in US interest rates were likely to be gradual and that inflation is not likely to be a serious concern helped the Footsie breach 4500 at one stage before it closed 32.5 points higher at 4491.1.

Wall Street lost 24 in early trading. Sterling eased to $1.8281, while the euro dropped to 65.7p and $1.2007.

Supermarket group Wm Morrison rose 7p to 237p as broker UBS waxed lyrical about its successful integration of the Safeway business. Tesco firmed 1 1/4p to 260 1/2p in anticipation of an upbeat trading statement tomorrow.

Vague takeover gossip lifted broadcaster ITV 2 3/4p to 112 1/2p. Joint house broker UBS cut its price target by 9% to 146p and lowered its 2005 revenue growth forecast to 1.8% from 2.6% on fears of increased competition.

Chemicals company Yule Catto jumped 19 1/2p to 254p on hearing that Santarus Inc has won US Food & Drug Administration approval for its heartburn drug Rapinex. Yule supplies a key ingredient for the drug.

There's no stopping Cairn Energy. It gushed 40 1/4p more to an all-time high of £12 in continuing celebration of its five-star oil discovery in the onshore northern Rajasthan basin in India.

IT management consultant Charteris rose 3p to 23 1/2p on news that the company and BACS Ltd have set up an initiative developed to help BACS users for the migration to a new system.

Centurion Electronics, the in-car audio-visual entertainment systems group, gained 10p to 88 1/2p. It has signed a deal to supply portable DVD systems to Peugeot cars in the UK.

Flat speaker company NXT slumped 13p to 99p. Broker Evolution says it is still haemorrhaging cash and significant revenues remain several years away. The company had £12m cash at the end of December 2003 and is consuming about £750,000 per month. A fundraising must be on the cards, but at what price?

Phytopharm gained 4 1/2p to 148 1/2p. Nomura advised clients to buy after the biotech company announced that it has started the UK launch of its plant extract Zanthofen for canine joint mobility. Analyst Dr Erling Refsum believes Zanthofen is worth some 67p per share.

Aminex, the oil exploration minnow, shed 2 3/4p to 8 3/4p on hearing that its Ndovu Resources unit is suing Petrom SA for $3.5m it claims it is owed.