Market report: Tuesday close

BRITISH Airways continues to feel the illeffects of its recent swipe-card industrial dispute that resulted in strikes at Heathrow and revenue losses of up to £40m.

The shares traded 2 1/4p better at 171 3/4p today after its own broker chose to slash its profit estimates for the national carrier. Merrill Lynch has cut its forecast operating profit for the current year from £302m to £151m and for next year from £435m to £390m. It has also reduced its 12-month target price from 253p to 242p.

But, as you would expect, Merrill has told clients BA remains one of the best plays in the sector because the management continues to deliver on its cost-reduction and restructuring targets. It retains its buy recommendation but warns that the risk of volatility remains high.

That is perhaps not the best scenario for the company in the run-up to next month's quarterly Footsie reshuffle, at which the company had been expected to catapult back into the top flight.

Share prices generally posted modest gains in thin trading, partly reflecting the rise for the Dow yesterday in New York. The FTSE 100 index ended up 20.9 to 4121.0.

Some 91m shares changed hands in Lloyds TSB, up 8p at 455p. A line of 40m shares went through at 454p as part of a late conversion trade. This may have involved a switch from American Depositary Receipts into ordinary shares.

Mining giant Anglo American is poised to become the world's biggest gold producer after its South African subsidiary Anglo-Gold announced details of an agreed £684m bid for Ashanti Goldfields of Ghana.

The deal already has the backing of rival Lonmin, down 16p at 829p, which owns 28% of Ashanti, but it will need the approval of the Ghanaian government. If it is completed, it means Anglo will have knocked rival Newmont off its perch as the world's biggest gold producer. Shares of Anglo rose 13p to 1097p, partly supported by Merrill Lynch, which rates Anglo a buy and has raised its target price from 1193p to 1317p.

Elsewhere in the mining sector, Rio Tinto rose 10p to 1289p despite further bearish comments on last week's results, which came in below expectations. Broker UBS has downgraded Rio from buy to neutral, but is sticking with its 1400p target price and says it remains a high-quality, long-term play in an improving mining sector.

AstraZeneca rose 28p to 2424p as broker Credit Suisse First Boston repeated its outperform rating and 2720p target price ahead of next week's decision by the US Food and Drug Administration on whether to approve its next blockbuster drug Crestor. ING has also reiterated its buy recommendation. Carphone Warehouse came under fresh selling pressure, sliding 4 3/4p to 107p. US securities house Morgan Stanley downgraded the shares to underperform, with a 72p target.

Ebookers jumped a further 20p to 582 1/2p as investors continued to reflect upon yesterday's news of smaller losses. The price has more than trebled since hitting a low of 185p in April.

Plasmon dropped 11p to 135p after the data storage devices outfit warned first-half revenue in the current year will be lower than a year earlier. It blamed a weak dollar and a shift to a new product line, adding the tough market conditions of last year are still in evidence.

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.

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.