Market report: Thursday close

Spitzer has filed a lawsuit accusing the drugs giant of putting children's lives at risk by withholding vital information showing that its anti-depressant Paxil increased the risk of suicide among teenagers. He also alleges that Paxil is ineffective as a treatment for depression in children.

Paxil has been approved for the use of adults in the US by the Food and Drug Administration after extensive testing. Under US law, it can also be subscribed for children at doctors' discretion, providing suitable information is supplied about the treatment. Brokers on Wall Street say GSK's potential liability could run to $400m (£218m). Paxil trades under the name Seroxat in the UK and generated $55m of profits for GSK in the US last year.

GSK strenuously denies the allegations. Today the shares rallied 27p to 1138p following last night's sell-off as brokers played down the impact of the charges.

Broker Merrill Lynch thinks the issue has been overblown and does not justify the fall in Glaxo's share price. Merrill has repeated its buy rating and 1300p target price. US securities-house Goldman Sachs retains its in-line rating and reckons this lawsuit adds to growing list of setbacks that have hit the group, including cheap generic competition and a fall-out with the US Internal Revenue Service.

A sharp drop in US factory orders resulted in opening falls on Wall Street this afternoon. In early trading, the Dow Jones industrial average fell 42.22 to 10,220.75 and the Nasdaq composite index slid 16.58 to 1,972.40. London rallied late in the day and the FTSE 100 index closed 12.6 points higher at 4435.4.

Shares of Marks & Spencer fell 10p to 356p as institutional investors gave the thumbs-down to Philip Green's proposed terms, which include a combination of cash and a stake in his own vehicle Revival Acquisitions. M&S chief executive Stuart Rose was also unimpressed and rejected the offer.

British Airways rallied from an opening fall that stemmed from the breakdown in the air traffic computer system to trade 4 1/2p higher at 253 1/2p. This afternoon it reported an 11% increase in May passenger numbers.

Vodafone dipped 1 1/4p to 125p. Deutsche Bank still rates the shares a buy but has removed the stock from its Pan European Focus List, unnerved by its poor performance in Japan.

Shares of sportswear supplier Umbro began trading after being offered at 100p - the bottom end of estimates. They opened at 109 1/2p, a small premium to the ruling price, before settling at 108 1/2p. It was initially thought that Umbro would be offered at between 150p and 200p but a lack of enthusiasm for the issue by institutional investors because of market conditions meant expectations had to be pared back.

Car maintenance retailer Halfords began trading on a when-issued basis after being priced at 260p, 10p above the lowest end of the expected range, and valuing the company at £593m. The price traded at 266p.

The firm's largest shareholder, private equity investor CVC, takes the largest chunk of the £267m raised from the sale but retains a 40% stake in the business.

Bradford & Bingley fell 3 1/2p to 275 1/2p after broker UBS dropped its recommendation from neutral to reduce and cut its target price from 310p to 250p.