Market report: Friday close

THE whole banking sector was bolstered by news of the bid approach for

City speculators are talking of a bid of at least 600p a share, valuing Britain's second-biggest mortgage lender at almost £9bn. Spain's Banco Santander Central Hispano admitted it was the suitor.

Speculative buying spilled over into the rest of the sector with banks accounting for six of the 10 best movers among the top 100 companies. Alliance & Leicester surged 45 1/2p to 843p, Bradford & Bingley 7 1/2p to 267p, HBOS 9 1/2p to 683p and Lloyds TSB 4p to 404 1/2p.

Share prices generally were marked higher despite a volatile performance by Wall Street last night. At one stage, the market dipped below 10,000, which was the signal for hedge funds to buy. At midday today in New York, the Dow Jones was down 51.32 at 9,999.01 and the Nasdaq index dropped 24.83 to 1,864.23 in reaction to disappointing earnings from Microsoft and Amazon. In London, the FTSE 100 closed 20 points higher at 4326.30.

The slide continued apace today at former high-flier Autonomy on more adverse reaction to yesterday's news of a drop in interim profits.

The computer software specialist fell 6 1/2p to 173p - having touched a year low of 170p. That compares with the 4100p peak reached at the height of the dot com boom four years ago.

This time Autonomy has been dealt a blow by its own broker UBS, which has downgraded from buy to reduce and slashed its target from 290p to 150p. UBS expects the market to question the earnings ratio appropriate for the company given the 'modest growth' likely in the near term.

US investment bank JP Morgan has downgraded from overweight to neutral and cut its earnings forecast for this year by 38% and for 2005 by 42%. It says the group remains vulnerable to uncertainty over software spending. Yesterday's results were blighted by sales of $15.3m (£8.3m), at the bottom end of expectations.

AIM-listed Clarity Commerce pleased the market and was rewarded with a rise of 3p to 69 1/2p. Full-year numbers showed pre-tax profits up from £315,000 to £515,000 indicating that not everyone is suffering in the computer services and software market.

Oil shares were a touch better as the crude price topped $41 a barrel overnight. BP rose 4p to 491p.

Drugs giant AstraZeneca jumped 34p to 2411p after further reflection on yesterday's interim profits. Deutsche Bank liked them and lifted its price target from 3100p to 3500p.

AIM-listed Fundamental-e returned from suspension today but halved to 4p. It appears the Financial Services Authority is looking into secondary dealings in the shares shortly before last week's suspension. Simon Eagle resigned as chairman of the provider of multimedia entertainment and communications on the same day. He is owner of broker SP Bell, part of Forum Finance which was being bid for by corporate finance adviser Merchant House.

Last week, Merchant House abandoned plans to buy Forum Finance after discovering a 'substantial and material change' in its finances. Merchant House returned from suspension 6 3/4p lower at 7 1/2p.

AIM-listed Firestone Diamonds, up 9p at 74p, has almost finished development work at its Bonte Koe mine and expects to produce its first diamonds from it in August. It also plans to increase exploration in South Africa.