Market report: Monday close

DEMERGED

After initially dipping to 78p, the price rallied to trade 5 1/2p better at 85 1/2p as more than 430m shares changed hands. The shares have not been made a constituent of the Morgan Stanley Capital Index but they have been included in the more important FTSE 100 companies.

That the shares have held up so well might be attributed to speculation in the Square Mile that mmO2 will become the target of a bid somewhere down the line from one of its Continental rivals. France Télécom and Deutsche Telekom are seen as potential suitors.

Brokers appear mixed about prospects for mmO2. Dresdner Kleinwort Wasserstein says the shares are a 'buy' and has set a 100p target price. HSBC is telling clients to add to their holdings with a target price of 90p, while Credit Lyonnais Securities rates the shares a 'hold' with a target of between 80p and 90p.

Parent company BT Group touched 295 1/2p before seeing its lead cut to 11 3/4p at 289 3/4p. BT remains saddled with high debt, £14bn at the last count.

Colt Telecom rose 11p to 186p after shareholders gave the go-ahead for its £400m refinancing. There had been fears that dissident shareholders would reject the deal which gives its biggest shareholder, Fidelity Investments, majority control.

The rest of the market got the week off to a solid start as sentiment continued to be bolstered by hopes of an early end to the conflict in Afghanistan. The FTSE 100 index ended ahead 47 at 5338, supported by opening gains in New York.

Dixons slipped 1p to 237p after UBS Warburg downgraded the shares from 'buy' to 'hold'. But the broker has raised its target price from 210p to 250p. Invensys rose 8p to 110 1/2p supported by Merrill Lynch, Goldman Sachs and WestLB Panmure on the back of last week's interim results.

Celsis International firmed 2p to 17p ahead of results on Tuesday. The big seller who has been depressing the price appears to have withdrawn. Several large lines of stock have been placed by broker WestLB Panmure, including 792,947 shares at 15p, and a further 1.4m at 14 1/2p.

Speculative buying was behind the rise of 7 1/2p to 107 1/2p in Biocompatibles. Word is it could find itself the target of a bid from a US biotech company. BSS Group jumped 22 1/2p to 387 1/2p supported by a bullish broker circular from Old Mutual Securities.

South African-based Dimension Data was a firm market ahead of results, adding 12 1/2p to 117 1/2p. US securities house Morgan Stanley has lowered its forecast of earnings a share for 2002 from 7.2 cents to seven cents but raised the figure for 2003 from 7.5 cents to 7.8 cents.

Goldman Sachs has awarded a 'market outperform' rating on Airtours, up 42 1/2p at 251 1/2p, and First Choice, 16p firmer at 136p. On Friday, rival Salomon Smith Barney raised its target price for Airtours, First Choice and P&O Princess, up 22p at 317p.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

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