Market report: Thursday close

LLOYDS TSB has set about repairing some of the recent damage done to its share price by claims that the High Street bank is poised to cut its dividend. The shares rose 19p to 560 1/2p, having struck a low of 456 1/2p last month amid fears about the payout.

The bank has spent the past week reassuring brokers that it has no such intention and that it intends to pursue its existing dividend policy, which has made the shares attractive to the big income funds.

Last week, house broker Cazenove was reckoned to be priming clients about the prospect of a reduced payout when full-year figures are published in February. Broker Williams de Broe had also been worried that the generous dividend policy would stretch the balance sheet, and moved from 'hold' to an outright 'sell' on the shares with a target price of 450p. JP Morgan expressed concern about Lloyds' Scottish Widows subsidiary, where it has invested more than £2.5bn. It warned that Lloyds would be unable to claw back a cash dividend until 2007.

The bank is believed to have met nine selected brokers at a dinner hosted by ABN Amro earlier this week and told them that recent speculation was off-beam. Other banks to go better included Abbey National , up 18 1/2p to 653p, and HBOS , 30 1/2p ahead at 735p.

Share prices generally traded higher, drawing strength from opening gains on Wall Street this afternoon. The FTSE 100 index responded with a rise of 97.1 points to 4190.

BG Group slipped 2p to 241p. UBS Warburg has downgraded the shares from 'hold' to 'reduce', cutting its price target from 280p to 214p. It says market obsession with production growth has been replaced with desire for return on capital and cashflow. The shares should no longer trade on a significant premium.

Brambles Industries was the biggest loser among the top 100 companies with a fall of 69 3/4p to 129 3/4p after issuing its third profits warning in a year. Its stock market value has now dipped below £1bn and the shares face the drop from the FTSE 100 in the next quarterly review. At the last count, it was 108th on the list. Credit Suisse First Boston says management credibility has been undermined.

Retailer GUS cheered the market with better-than-expected first-half profits and news of its proposed £900m acquisition of DIY stores chain Homebase. GUS, which owns Argos and floated off Burberry earlier this year, rose 35p to 622p.

Elsewhere on the High Street, Allders jumped 23 1/2p to 144p on news of a bid approach believed to have come from property developer Minerva, which already owns a 25% stake.

Property entrepreneur Jack Petchey has bought an extra 478,427 shares in Jarvis Hotels, up 3p at 117 1/2p, stretching his total holding to 23%. He also owns 20% of Queens Moat, up 1/2p at 16 1/2p, and 14% of Hanover International, unchanged on 109 1/2p.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.