Market report: Monday close

CITY experts are banking on a positive outcome for the chemicals sector in 2004 on the back of an accelerating global economic recovery.

That was the message from broker Merrill Lynch to clients today as it upgraded the sector to overweight. 'We are positive on the chemical sector moving into 2004, given the improving macro outlook,' the broker says.

It favours some big Continental players such as Holland's Akzo Nobel and Germany's BASF, but also has buy notes out on UK companies ICI, 4 1/4p better at 197 1/4p, Croda International, down 3 1/4p at 261 3/4p, and Yule Catto, 4 1/2p better at 257 1/2p.

Share prices rose sharply higher, encouraged by strong gains overnight in the Far East. The FTSE 100 index closed up 67.4 at 4410 points.

GlaxoSmithKline rose 17p to 1328p. The shares were dull last week on patent worries but on Wednesday the group will try to convince the City that all is well when it gives its long-awaited research and development presentation for brokers and institutional investors.

The company plans to concentrate on cancer and heart disease treatments. US securities house Morgan Stanley has repeated its equal-weight rating and 1350p target price.

Celltech, Britain's biggest biotech company, jumped 23 1/2p to 375p after saying it would regain the full rights to CDP 870, its treatment for rheumatoid arthritis, next year. The move follows the break-up of its partnership with US drugs giant Pfizer over the level of royalties.

Industrial gases producer BOC Group rose 12p to 822 1/2p after reaching a $69m (£40.1m) settlement with US employees over retirement benefits. Liabilities had been pitched as high as $116m.

Cable & Wireless was up 2p at 134 1/2p. Broker Dresdner Kleinwort Wasserstein has raised the stock from add to buy but is sticking with its 155p price target. It justifies the move by claiming the group's restructuring is showing results ahead of schedule.

The cost of pulling out of the US will be a lot lower than was thought, and cost-cutting still has to be reflected in trading results.

Publisher Reed Elsevier rose 10 1/2p to 489 1/2p ahead of Thursday's trading update. Deutsche Bank is said to be bullish about the outcome and has already raised its rating on the Anglo-Dutch group to a buy with a 600p target price. Rival SG Securities rates the shares a buy.

Debt-laden Leeds United touched 4.25p before its lead was cut to 1.63p at 4p after the Premier League side said it had not received a bid approach. Word is Sheikh Abdul bin Mubarak al-Khalifa of the Bahrainian royal family is in talks about a rescue in which he would take over debts of £80m.

Music publisher EMI was static at 169 3/4p despite bullish comments from US securities house Goldman Sachs, which has repeated its in-line recommendation. It says trading conditions within the music industry are showing signs of improving after a difficult few years. There are also whispers that the proposed merger between Sony and Bertelsmann may be scuppered by regulatory problems, leaving the way open for EMI to link up with Bertelsmann.

Headlam fell 3/4p to 326 3/4p as broker UBS began coverage of the shares with a buy rating and 400p price target.

UBS has raised Anite, 1p firmer at 50 1/4p, from neutral to buy and lifted its target from 47p to 62p.