Market report: Monday close

SUMMER is here and City investors wasted little time grieving over England's defeat by France in Lisbon last night.

Their attention, it seems, is already focused on the start of Royal Ascot tomorrow. So off come the replica football shirts and on go the top hats and tails. Wimbledon starts next week and the summer season is now in full swing, reflected in turnover levels as business slowed to a trickle.

Shares are trading just above their lows of the day with the FTSE 100 index down 50.8 at 4433.2. Opening falls on Wall Street did not help. The US trade deficit has hit $48.3bn (£26.7bn), leading to claims US rates may go up half a point.

Meanwhile, a weak dollar is continuing to make a real dent in the profits of some of Britain's big overseas earners. French broker Societe Generale has warned clients that companies such as Financial Times owner Pearson, down 8 1/2p at 656 1/2p, may have to downgrade pre-tax profit expectations by as much as 10% owing to the weak currency when converting those profits back into sterling.

SocGen says that in the case of Pearson this could stall its expected recovery. Pearson's education division is highly exposed to the US textbooks market and accounts for around 60% of group revenue, already in decline for a number of years.

Brokers had been looking for the group to start recovering from the advertising slump and the consensus estimate of pretax profits for 2004 is £424m, up from £152m achieved in 2003 after several years of losses.

Sir Martin Sorrell's advertising giant WPP, 7 1/2p cheaper at 551p, is also seen as vulnerable to an ailing dollar, with much of its revenue also accrued in the US.

But it is not just the media world that is exposed. Today, Aggregate Industries was up 1/2p to 86p after forecasting a modest increase in first-half profits. US broker Smith Barney says the group will have to produce a robust second-half performance to match consensus pretax profits of £155m for the year. It repeated its buy rating and 100p target.

But one company likely to benefit from dollar weakness is Rupert Murdoch's satellite broadcaster BSkyB, down 10p at 615 1/2p. According to SocGen, BSkyB has $300m (£165m) of dollar-denominated programming costs.

Egg firmed 4 1/4p to 159 1/4p in a thin market that saw nearly a million shares change hands. Dealers are wondering if 79% shareholder Prudential, down 5p at 451p, is finally close to finding a buyer for the online bank. Palladin Resources slipped 4 1/2p to 119p after a line of 11.56m shares went through at 120p.

Arena Leisure sported a rise of 3/4p to 48 3/4p after chairman Roger Withers confirmed it was on target to make a first profit this century. He even hinted at the possibility of a dividend.

Aim-listed Advanced Technology was suspended at 15 1/4p pending clarification of its financial position. Floated four years ago, it raised £750,000 just last month via a placing of 4.4m shares at 18p. Computer services outfit Nettec was also suspended at 7 3/4p pending an announcement.

Royal ratcatcher Rentokil Initial slipped nearer its year's low, off 2p to 147p. Broker UBS has repeated its reduce rating on the shares and clipped its 12-month target from 140p to 135p.

UBS also remains a buyer of HBOS, 5p lower at 714p, but has cut its target for the High Street bank from 920p to 860p.