Market report: Monday close

THE prospect of James Murdoch becoming chief executive of

James, son of media magnate Rupert Murdoch, 34% shareholder in the broadcaster, has reached a shortlist of two for the job and is seen by many as favourite. But he is not without critics.

US securities house Lehman Brothers claims his appointment would raise the group's long-term risk profile and hit investors where it hurts most - in their pockets.

The broker continues to have an overweight recommendation on the shares but has slashed its 12-month target from 870p to 740p against the current price of 629p, up 4p today. It arrived at its new target by applying a 15% discount to account for the corporate governance risk.

A Lehman spokesman said: 'In our view, James Murdoch as chief executive would raise the long-term risk profile and he needs to say and do the right things to stop the underperformance.'

Quality of leadership is important for the group over the next few years as BSkyB faces up to strategic issues such as the advent of free digital TV channels, personal video recorders and the huge cost of screening live Premier League football. On the positive side, Lehman expects excess cashflow to be invested in acquisitions rather than share buybacks.

The market in general posted modest gains, supported by opening gains for the Dow on Wall Street this afternoon. The FTSE 100 index rose 12.3 points to 4251.3 in thin trading.

Jeweller Signet fell 3 1/2p to 103 1/2p after a line of shares worth an estimated £21.2m went through. Deutsche Bank is reckoned to have placed the 20.61m shares on behalf of the seller at 103p.

Randgold surged 72 1/2p to 1402 1/2p after the board of Ghanaian gold miner Ashanti rejected its approach and instead agreed terms of a lower $1.4bn (£828m) all-share offer from Anglo American, unchanged on 1151p.

The all-paper offer from Randgold was worth £895m. Lonmin, 1/2p lighter at 987p, with 28% of Ashanti, is also backing the offer from Anglo.

Internet bank Egg was seemingly the best performer among second-liners, at one point touching 157p before reverting to 143 1/2p, down 2 3/4p. They were briefly suspended - after moving by their 10% limit - as a line of just 1469 shares went through at 157p.

The fallout from the Yukos scandal in Russia was being felt by its UK partner BP, which dipped 1p to 412 1/2p. BP is due to unveil third-quarter numbers and analysts are looking for a leap of about a third in pre-tax profits to £1.8bn. The results are likely to be in sharp contrast to those from Shell, 1 3/4p cheaper at 370 1/2p, which failed to impress the City.

Healthcare group Smith & Nephew rose 2 1/2p to 456 1/4p after Deutsche Bank raised its target from 450p to 510p. This follows the re-rating offered to Smith's US orthopaedic competitors following a strong third quarter.

Builder Taylor Woodrow advanced 3 1/2p to 230p after broker UBS took a closer look. It has repeated its buy recommendation and raised its 12-month target from 255p to 325p. UBS has also upgraded computer software group Sage from reduce to neutral and lifted its target from 165p to 170p. Sage was up 7p at 176 3/4p.