Market report: Tuesday close

JP MORGAN'S utilities team has just come back from a jolly to the US, meeting the North American heads of British power companies.

It returns bearish on International Power, down 3/4p at 133 1/4p, saying it is overpriced against a 100p valuation, especially given poor earnings visibility.

The bank remains neutral on Centrica, up 3 3/4p to 179 3/4p, targeting fair value of 200p but with reservations about plans to buy more US customers. The team is also neutral on Scottish Power, 2 3/4p better at 361p with a target of 390p. National Grid Transco is pick of the bunch, says Morgan.

Premium returns are expected from US transmission and distribution and it says the shares, 6 1/4p dearer at 391 3/4p, are at a 25% discount, given a 515p valuation. That was not lost on chief executive Roger Urwin who has bought an extra 25,000 shares at 385p stretching his holding to 1.09m. Chairman Sir John Parker has also bought an extra 12,800 shares at 390p and now holds 30,229.

Share prices generally edged forward after a slow start and in spite of further falls for the Dow in New York this afternoon. The FTSE 100 index ended up 35.4 at 4079.7.

BT firmed 3 3/4p to 203 3/4p as 230m shares changed hands. That included a late converted trade in 100m shares, at a smidgen more than 201p, thought to be a conversion into sterling from dollar-denominated currency, or a transfer from American Depository Receipts into ordinary shares.

Legal & General added 1/2p at 89p with brokers appearing confident the life assurer will not cut its dividend. There has been much speculation that rival Prudential, down 3 1/4p at 413p, will slice its divi next week. L&G raised almost £800m from shareholders last year by way of a rights issue and they would not be pleased to see the divi cut. E*Trade Securities has repeated its sell recommendation on the Pru ahead of interim results next week and says it expects the payout to be chopped 40% to 15p, putting the shares on a prospective priceearnings ratio of 3.6.

US securities house Smith Barney has had a look at the mining sector and raised BHP Billiton, 2 3/4p dearer at 347 3/4p, from in-line to outperform. But it has downgraded Rio Tinto, up 5p at 1245p, from outperform to inline because it thinks the shares appear fully valued. Mining stocks have underperformed the rest of the market this year, hit by the outbreak of the Sars virus and a weak US dollar.

DFS Furniture retreated 11p to 413 1/2p as broker Merrill Lynch downgraded it from buy to neutral. Merrill had hoped the retailer could improve gross margins this year and next, but the competitive environment is likely to make that difficult. Colt Telecom added 1/2p to 71 3/4p despite ING raising its 12-month target price from 70p to 90p on the back of improving prospects for revenue growth.

Securicor slipped 1p to 70p. Four directors, Nicholas Buckles, Irene Cowden, Trevor Dighton and Nigel Griffiths have between them bought 125,912 shares at 71p.

Futura Medical made its debut on AIM, following a placing at 70p. It opened at 72 1/2p before settling at 71 1/2p. The company has developed a cream for the treatment of male erectile dysfunction - a rival to Pfizer's Viagra - which is also suitable for patients suffering from angina.