Market report: Friday close

Privately-held Peel Holdings, which owns Manchester Ship Canal and Liverpool's John Lennon airport, is reckoned to have topped up its holding by snapping up 10m shares from merchant bank Schroders.

That would stretch Peel's stake to almost 20% and provide the springboard for a takeover attempt. On Monday, Mersey said it was in talks with a private equity house which could lead to an offer of 925p a share. At these levels, Mersey Docks is valued at £780m.

Share prices generally clawed back earlier losses with the help of an opening rally for the Dow in New York this afternoon. Comments on the economy by Bank of England Governor Mervyn King put paid to any lingering hopes of a cut in interest rates in the short term. The FTSE 100 index was up 2.5 points at 4803.3.

Brokers are at odds over prospects for satellite broadcaster BSkyB. Morgan Stanley points out 2004 was a difficult year and that there is little sign of respite for shareholders in 2005.

BSkyB, 36% owned by Rupert Murdoch, has slumped from a peak of 776p last year, but rival broker Bear Stearns has repeated its outperform rating and says that, if first-quarter numbers due out next month come in ahead of expectations, it will provide a 'good base for a rally'. BSkyB was one of the best performers in the Footsie today with a rise of 12p to 552½p.

Last year's long slide came on the back of growing City disenchantment about management strategy and competition from Freeview which threatens to undermine new-subscriber numbers.

Morgan Stanley has begun coverage with an equal weight rating and 610p target. It warns that, because of uncertainties facing the group, the shares are likely to remain in limbo. It is advising clients to put off buying until at least 2006. It prefers Daily Mirror publisher Trinity Mirror, up ½p at 674p, in which it rates overweight.

Reuters could soon reap $1.8bn(£962m) from a sale of Instinet, the electronic broking system in which it holds a 62% stake. Archipelago Holdings, owner of US electronic stock market ArcaEx, is reportedly the frontrunner to buy the firm. Reuters rose 2½p to 390¾p.

The battle for control of the London Stock Exchange, up 5¼p at 580p, stepped up after it emerged Deutsche Bank had acquired an 8% stake. The LSE is the subject of a £1.3bn bidding war between Germany's Deutsche Borse and Euronext, a gathering of the Brussels, Amsterdam and Paris bourses.

After yesterday's bullish comments from CSFB about the forthcoming bank reporting season, US investment bank JP Morgan has turned more upbeat on Lloyds TSB, up 2p at 471p.

The long-term bear has moved from underweight to neutral to reflect a 'more buoyant operating environment'. It is confident the bank's lucrative dividend, which yields more than 7%, will be maintained despite fears it would have to be cut to retain cash. It has also raised its earnings per share forecast for 2005 by 13% to 45½p and for next year by 15% to 47.1p.

Photo-Me rose ½p to 91p. Chairman Dan David has bought 900,000 more shares, at 90¼p. He now owns 2.9m, or less than 1%.