Clouds gather at lastminute

THE SUN is not going to shine on the travel industry this summer. Despite reports of a rush of late bookings for overseas holidays by punters desperate to leave the grey clouds behind for warmer climes, the pips are squeaking for travel companies.

Margins have come under increasing pressure during the crucial thirdquarter trading period because prices on millions of holidays to Greece, Turkey, Spain and the Algarve have been slashed to their lowest in years.

Growing concern that online travel firm lastminute.com is trading below expectations and that third-quarter figures due in early August will not make pleasant reading prompted heavy selling. Sold down to 152p, the shares closed 4p off at a year's low of 157 1/2p.

Earlier this month, lastminute acquired its namesake in Germany, lastminute.de, in a £31.1m deal, making it the leading online travel brand in Germany. Unfortunately, German families are staying home in their thousands because of the strain of a limp domestic economy and belt-tightening reforms. Sun loungers are definitely up for grabs this year during the kids' holidays.

Exerting further downward pressure on lastminute was speculation that joint founder and former managing director Martha Lane Fox has asked broker Cazenove to place her remaining 2.51%. She sold £4.6m worth of shares at 230p in early March and is currently recuperating after a nearfatal car crash in Morocco earlier this year. The talk has been around before. Lastminute would not comment.

Former chairman Clive Jacobs sits on 3% and could decide to jump ship any time. However, Deutsche Bank appears totally relaxed and yesterday bought 6.4m shares, lifting its stake to 7.6%.

Rival Ebookers cheapened 6 3/4p to 223 1/4p. It is still looking for a new chairman after founder and chief executive Dinesh Dhamija decided to split his roles. Meanwhile, Jim Treacy, former boss of online careers website, www.monster.com, has joined as a non-executive director.

Dragged higher by healthier drug stocks, the Footsie retrieved an initial 23-point deficit to close 18.3 points better at 4,339.4. Wall Street, up 19 points in the early stages, put on a brave face ahead of Fed chairman Alan Greenspan's Humphrey Hawkins testimony to Congress.

Better than expected second-quarter earnings from Novartis and the Swiss giant's comments that margins were improving helped resuscitate the recently weak Astra Zeneca. Ahead of tomorrow's second-quarter results, the close was 63p higher at 2345p. Rival GlaxoSmithKline firmed 20p to 1062p ahead of Tuesday's figures.

Nervous selling following rival mortgage bank Northern Rock's disappointing interims left Abbey National - half-year figures due on 29 July - 11p off at 469p. Northern's figures and a leading RICS house survey showed that home price inflation in the UK is dramatically slowing.

A report that leading shareholders of AMEC have been approached by a predator, possibly American, to see whether they would support a £4-a-share offer for the specialist services and engineering group sparked a flurry of speculative buying. The shares rocketed 45p before closing 23p better at 293p on turnover of 7.9m.

Martin Hughes, a former top City banking analyst in the 1990s, should have a big say in AMEC's future. He is the sole owner of Toscafund, a hedge fund which sits on 9.52%.

A trio of Aim newcomers were given a warm reception when dealings got under way. Placed at 109p by broker Collins Stewart, shares of marine handling systems specialist for the oil industry Hamworthy raced away to finish at the day's best of 129 1/2p, a sparkling premium of 20 1/2p.

Convenience grocer Blueheath, placed at 121p by Evolution Group, closed with a mouthwatering premium of 16 1/2p at 137 1/2p. Oil and gas explorer Meridian Petroleum gushed to 35p. Broker WH Ireland had placed the stock at 30p.

Shares of semiconductor company ClearSpeed Technology should leave its placing price of 96p behind when dealings get under way today. Sponsor KBC Peel Hunt reports the £11.1m issue was heavily oversubscribed.