Market report: Monday Close

BRITISH Airways came down to earth today as investors worried about its ability to pass on soaring energy costs to travellers via an increased fuel surcharge. As the price of barrel of crude oil hit new highs, BA fell 15p to 260¾p, making it the weakest blue-chip performer.

Broker WestLB downgraded the flag-carrier to neutral after promoting it to outperform last month. It blamed the 'ongoing high oil price' for the abrupt change, saying it was overshadowing a healthy growth in passenger numbers.

Some companies will bear the burden of higher oil prices more lightly than others. The trick is identifying them. Household cleaning products group Reckitt Benckiser is a heavy user of oil-related raw products but analysts at Lehman Brothers reckon it has taken sensible precautions against future oil price rises, having hedged more than 75% of the oil-derived materials needed for 2005.

The Anglo-Dutch manufacturer jumped 19p to 1637p after Lehman said recent weakness in the shares made the group look cheap compared with its peers.

Reckitt was among a handful of blue-chips to post gains today as the main index surrendered to general worries over spiralling oil costs and corporate profitability.

The FTSE 100 dipped 35.5 points to 5043.5. On Wall Street, the Dow was 62.4 points lower at 10,297.84, with the Nasdaq down 1.92 points to 2051.35.

With franchise renewals due later this week, the spotlight was on media companies. ITV, down 2p at 115p, was one of the most heavily traded stocks today as broker Deutsche Bank upgraded the company to buy from hold and set a new target price of 140p. Deutsche thinks the ITV franchise is more robust than is currently believed by the market and says: 'The upside from removing public service broadcasting opportunity costs is real but is not reflected in the way ITV is valued.'

Rival broker Numis predicts that ITV will make a saving of about £107m in 2005 in terms of licence fees, and rates it a buy at 116p. Numis thinks ITV will benefit from broadcasting more commercial programmes and will gain greater programming flexibility.