Market report: Friday close

CITY investors shrugged off mediocre US retail sales today, pushing the market ahead with bank stocks taking the lead.

Royal Bank of Scotland led the pack with a gain of 114p to 1418p. Barclays was up 26 3/4p to 426 3/4p, HBOS rose 48p to 643p, and Lloyds TSB added 20 1/2p at 535p.

Banks were joined by pharmaceuticals, led by GlaxoSmithKline to give further impetus to markets. GSK enjoyed a 32p runup to 1303p as the US Food and Drug Administration approved its Avandamet treatment for diabetes. AstraZeneca was also influential with a 68p rise to 2068p.

Royal & SunAlliance ignored a cut in its credit rating by Moody's Investors Services, which also hinted it could be heading for another downgrade, and it rose 4p to 95p.

The FTSE 100 index was up 176.1 at 3953.4.

Support services group Hays was moved to underweight from overweight by Morgan Stanley after it lowered its earnings per share forecast by 20% in 2003. The shares failed to respond to the gloomy prognosis and added 6 1/2p to 99 1/2p.

More brokers joined Warburg in putting the boot into Reuters. The share price fell to an all-time low of 178 1/2p before recovering to show a 2p gain at 190p.

JP Morgan made the first move by placing Reuters on neutral status from overweight with a price target of 200p. Merrill Lynch said earnings per share would fall by 16% to 6.9p this year with 2003 earnings cut to 15.9p, a 9% reduction.

Investec joined the feeding frenzy with a 20% cut in EPS for 2002 and 9% for 2003. Lehman maintained its 370p price target, however. All will be revealed next week when third-quarter revenue figures are due plus a promised guidance on Reuters' future.

A strong overnight performance on Wall Street helped lift the Footsie into positive territory from the open with merger news from Carlton and Granada stimulating hopes of more corporate activity. Surprisingly good figures from J Sainsbury lifted its shares 29p to 282p and cheered the rest of the sector. Tesco rose 12 3/4p to 207p. Safeway gained 12p to 204p and Morrison Supermarkets rose 1/2p to 205p.

The traditional valuation of property shares came to the rescue of British Land where the net asset value is worth 833p a share yet the shares are trading at almost half that level. With a healthy property portfolio, including its massive Broadgate complex, the shares look set for a revival and they added 15p at 457p. In the summer they hit 628 1/2p.

Deutsche Bank reiterated its buy recommendation for Anglo American giving it a 45p boost to 831p. Billiton also enjoyed the brokers' favours with a 17p rise to 310p.

Jarvis Hotels added 16 1/2p at 120 1/2p as it announced a sale and leaseback arrangement for its hotels.