Market report: Monday close

THE mining sector has become the subject of a tug-of-war between stock market bulls and bears. The bulls say the miners are a sure-fire bet for investors as they benefit from the booming Chinese economy and rocketing prices of metals such as copper, zinc and aluminium.

The bears are not so sure. They say share prices of the big mining companies have run their course and now have only one way to go - down.

It was the bears that had the upper hand today with BHP Billiton, the world's biggest mining company, down 13p at 716½p, copper miner Antofagasta off 17p at 1263p and Rio Tinto 14p cheaper at 1721p.

This latest sell-off comes on the back of a critical article in the influential US magazine Barron's that compared the recent strong run by the miners with that of the internet boom which came to an abrupt end five years ago. The report concluded that investors were refusing to factor in any sort of risk associated with China's booming economy coming to a grinding halt.

Share prices generally were on the slide although selling pressure was described as light. The FTSE 100 index reduced its deficit to 10.4 points at 4,973.2 with Wall Street posting modest gains in early trading.

Cadbury Schweppes, the world's biggest sweet-maker, has dashed speculation that it plans to sell its European beverages arm, which makes brands such as Oasis and Orangina.

The group was responding to reports that the business had been put up for sale. It insisted it was focusing on 'top-line growth and paying down debt' but stopped short of denying the business may be sold. It had been reported that a number of venture capital companies had contacted Cadbury, up 1p at 540½p, expressing an interest in acquiring the European drinks business, which also includes the Spanish drink La Casera and the Schweppes range of mixers. Broker Cazenove reckons the business could fetch about £1bn.

Broadcaster ITV rose 1¾p to 128¼p as more than 23m shares changed hands. A parcel of 2.95m shares went through at a tad over 125p, followed by 2.9m-at 127½p. There were also some lumpy lines of Geest, unchanged on 656p, going through on the ticker. Four lines totalling 500,000 shares went through at 656½p. The group, which makes prepared foods for supermarkets, recently said it had received a bid approach.

Steelmaker Corus was steady at 54¾p after US broker Goldman Sachs turned cautious of European steelmakers. Royal Bank of Scotland fell 22p to 1677p amid reports that it wants to spend £2.1bn on a 25% stake in Bank of China.

Bid target Allied Domecq rose 1½p to 645p as broker UBS lifted its 12-month target price from 500p to 670p. The drinks giant, which includes Beefeater Gin and Canadian Club, last week found itself on the receiving end of an approach from French rival Pernod Ricard, which has teamed up with Fortune Brands of the US to make an £8bn offer.

UBS has also upgraded FKI, ¼p higher at 107¼p, from neutral to buy although it has trimmed its target price from 134p to 130p. The price has come back from about 123p since the start of last month, hitting a low of 102½p last week.

In-car navigation and traffic information specialist Itis rose 2¾p to 37p. The company says full-year results will be 'somewhat ahead' of expectations.