Market report: Thursday close

CELLTECH saw £231m wiped off its £1.26bn market value after it emerged development of its treatment for rheumatoid arthritis had suffered a severe setback.

The shares tumbled 88p to 364 1/2p, having been as low as 300p, making them one of the day's biggest fallers. Development of CDP 870, a joint project with US drugs giant Pfizer and which is also being touted as a treatment for Crohn's disease, will be delayed for at least a year. No reason was given by Pfizer.

Celltech warned it could lose the product rights to CDP 870 altogether and will certainly have to renegotiate terms with Pfizer. US securities house Lehman cut its rating from overweight to equal weight while slashing its target from 500p to 330p.

Blue-chip shares had earlier reached their highest for 15 months as City investors pinned their hopes on economic and corporate recovery. Gains in London followed strong performances overnight on Wall Street and in the Far East. But the US Dow fell in early trading this afternoon.

Back home, the FTSE 100 index breached 4400 at one stage with a gain of 35 points to set a new intraday high for the year of 4406.8, before running out of steam to trade 1.8 points up at 4373. Positive trading news from a clutch of blue-chips bolstered sentiment.

GlaxoSmithKline rose 29p to 1357p on further reflection of prospects for the group's new drugs portfolio. ICI, one of the best performers among the top 100 of late, rose 4 1/4p to 210p as rival BASF suggested the chemicals market downturn had not bottomed out.

Offices rental group Regus rose 8 1/2p, or 24.8%, to 42 3/4p on turnover of 95m shares after signalling the first signs of revival since its shares slumped to 4p last year.

The company, headed by Mark Dixon, has received New York State court approval to withdraw its US subsidiary from Chapter 11 bankruptcy protection. It has also persuaded institutional investors to back a £55m share placing.

Regus is making a one-for-three rights issue at 28p, fully underwritten by Peel Hunt. Brokers and lawyers will snap up £3m in fees. A further £28m goes to settle Regus's American creditors with the balance for 'some cautious future expansion'.

But it is not good news for everyone. Long-time stalker Indigo Capital has decided against bidding for Regus and the sharp rise in its shares will hurt bears who are reckoned to have been selling the stock short, hoping to buy it back cheaper later. Dixon's share in the business he founded falls from 63% to 47% after the rights issue.

There was further heavy turnover in steelmaker Corus with more than 340m shares changing hands and the price firming 2 1/2p to 34 1/2p as brokers began the task of upgrading their recommendations. This follows the success of yesterday's placing and open offer at 23 1/2p to raise £307m.

Institutions see Corus as a recovery play, despite trade sanctions by the US against European steel and the fact that supply continues to outpace demand.

US securities house Goldman Sachs has an outperform rating on the shares and lifted its 12-month target from 32p to 50p. ING Barings rates Corus a buy with a 42p target, while Deutsche Bank has upgraded from sell to hold and raised its target from 24p to 31p.