Market report: Friday close

THE taking in-house of track maintenance by Network Rail derailed the companies responsible for keeping Britain's ailing system running.

Jarvis, which suffered a £67m stock-market setback yesterday after management admitted laying track incorrectly - but strongly denied allegations of falsifying maintenance documents - fell to an 11-month low of 216p, off 24 1/2p.

Carillion dipped 27p to 145p. Balfour Beatty, which has been through this all before with rail operator Wessex, retreated 5 1/2p to 201 1/2p. Serco, which lost the East Midlands maintenance contract, was 1/2p stronger at 170 1/2p.

Peterhouse, whose subsidiary First Engineering has a rail contract, fell 44 1/2p to 130p. Its management rushed out a statement saying that its rail contracts contributed £68m of turnover and approximately £2.3m of operating profit in the first six months, but this failed to save the share price from the 22% setback.

Despite the market's third day of decline, there were signs of speculative interest.

Dealers were talking of some bottom-fishing for cheap stocks, particularly among housebuilders whose shares were hard hit yesterday. Bid favourite McCarthy & Stone, which builds homes for the greys, moved ahead 6 1/2p to 477p with 500,000 shares changing hands. Redrow firmed 9p to 311p and Wilson Bowden rose 7 1/2p to 972 1/2p.

Strong retail sales and in-line economic figures seem likely to prompt an interest rate rise soon, and blue-chips remained nervous. The FTSE 100 index edged down 1.2 at 4239.0 points.

Morgan Stanley advised investors to be underweight in Shire Pharmaceuticals, the UK's third-largest drugs manufacturer. It recently received approval from the US Food and Drug Administration to treat American adults suffering from a hyperactivity disorder with its Adderall XR drug. Shire depends on it for about a third of sales.

But there are worries about competition from Eli Lilly's Strattera and the way in which Adderall XR will suffer from FDA strictures on labelling. Still Shire's shares defied the critics, adding 9 1/4p to 453 1/4p. Europe's second-biggest drugs company, AstraZeneca, reported yesterday a bumper 9% rise in sales in the first nine months of the year, and today several brokers turned positive about its shares. UBS upped its target price from 3000p to 3350p and Morgan Stanley moved its target ahead from 2900p to 3200p.

However, the shares were influenced by claims in the medical journal Lancet that it had used 'unprincipled' sales tactics to push its cholesterol-busting drug Crestor in the US, and fell 25p to 2824p.

WPP's grief caused yesterday by Morgan Stanley, which marked the advertising group down to underweight from equal weight, was not lessened despite UBS upgrading to neutral from reduce. That was deemed too insignificant a move to be positive and the shares dipped 5p before recvoering to end up 1p at 540p.

The departure of four 3i directors, none of them on the main board, left the venture capital group weaker by 8 3/4p at 620 1/2p. The quartet hope to raise £350m to spend on investing in European companies.

Investec recommends a buy for Exel on trading grounds and new contracts, but its shares unwound 6p to 760p as hopes of a Deutsche Post takeover declined.