Market report: Friday close

CITY investors were tuning in to independent radio broadcaster

The group played host to brokers at a dinner last night and was surprisingly upbeat about prospects. Guests were told the worst of the advertising slump appears to be over and that there has been a marked improvement in advertising revenue.

Broker UBS is forecasting a pick-up for the group in the third quarter. That will come as a welcome relief to the City, and the prospect boosted other radio broadcasters. Capital Radio rose 27 1/2p to 557 1/2p after broker Merrill Lynch upgraded the shares from sell to neutral despite increased competition and fears that DJ Chris Tarrant will not renew his breakfast show contract.

Other broadcasters to benefit included Scottish Radio, 45p better at 820p, Chrysalis, 5 1/2p up at 205 1/2p, and Wireless Group, 5p dearer at 74 1/2p. Brokers point out that media companies such as GWR and Capital are possible bid targets once the rules governing cross-ownership in the sector are relaxed.

Share prices soon lost an early lead, with the FTSE 100 index drifting down 36.9 points at 4161.1 by the close.

A massive 109 million shares changed hands in Kingfisher, 1p down at 272p. This included a trade in 48 million shares at 274p and a further mark in 48.12 million at 273 1/2p.

Royal & SunAlliance was a big faller in the top 100 companies, with a loss of 5 3/4p to 138 1/2p amid whispers that next week's interim results may be accompanied by a two-for-three rights issue at 100p.

US securities house Lehman Brothers has repeated its overweight stance on Prudential, up 2 1/2p at 436 1/2p, and raised its target price to 460p. It also moved to an overweight recommendation on Aviva, down 5 1/2p at 501 1/2p, and lifted its target price from 483p to 515p.

Lehman has repeated its underweight view on Legal & General, down 1/2p at 99 1/2p, but raised its target price from 80p to 91p to take into account a strong showing in first-half results.

Friends Provident, 1/2p higher at 136 3/4p, is also seen as underweight, although the target price is lifted from 105p to 115p.

Phase Three trials for Varisolve, a varicose veins treatment from BTG, up 45 1/2p to 311 1/2p, have been encouraging. The company said the treatment provided the same efficacy as other drugs on the market, but enjoyed other advantages. Patients who took Varisolve suffered less pain than those treated by surgery and only a small percentage needed to be treated again.

AIM-listed Lawrence rose 7p to 269 1/2p after chairman Peter Lawrence sold 600,000 shares, worth £1.57m. The sell-off, with the shares placed by broker Charles Stanley at 255p, reduces his holding to 9.59m shares, or 36.4%.

Takeover target Ifte, the firefighting training specialist, fell 3p to 40p after a potential bidder was forced to withdraw because of a lack of cash to help finance an offer.

That leaves the way clear for rival fire and security systems operator Kidde, 4p better at 97p, to press ahead with its own offer.

Recovery investor Hanover Investments has increased its stake in business support outfit 4imprint Group, unchanged on 65p, by 1.2% to 26.6%.

Hanover has the backing of the management, which earlier this week assured the City it was confident of meeting this year's targets.