Market report: Tuesday close

THE threat of cheap generic drugs flooding the world's most lucrative market today cast a shadow over the performance of Britain's two biggest pharmaceuticals outfits.

The US Food and Drug Administration is thinking of ways to adopt a fast-track system of approval that might shave years off the process that allows copycat drugs into the marketplace.

Big drug companies in the US such as Pfizer, which face losing millions of dollars in profits, have already expressed their opposition to this 'back-door'; policy but the FDA is expected to brush aside their objections.

Under the proposals, the chemical make-up of the copycat products will not have to be identical to those of established drugs. Heavyweight AstraZeneca managed to cling to a rise of 8p at 27004p and GlaxoSmithKline was unchanged at 1298p. Brokers said the FDA's move could have long-term repercussions.

The rest of the market ran out of steam after an early mark-up, unable to extend yesterday's lead that took prices to their best levels since August last year. The FTSE 100 index fell 28.2 at 4334.1, undermined by a nervous start on Wall Street.

The world's biggest advertising agency, WPP, went into reverse, losing 3 1/2p to 563 1/2p despite bullish comments from several leading City players. US house Lehman Brothers has raised it from equal weight to overweight and lifted its target from 520p to 665p. The price has soared from a low of 300p in March and Lehman insists there is some momentum left.

The outlook for advertising is improving and should be boosted by next year's Olympics and US presidential election. Rival Goldman Sachs is also telling clients it rates the shares overweight.

Among banks, Standard Chartered fell 5 1/2p to 935p after broker WestLB Panmure cut it from outperform to neutral. HBOS slipped 1p to 748 1/2p despite WestLB raising it from neutral to buy. Insurer Royal & SunAlliance eased 3/4p to 94 1/4p after going fully paid following a recent £960 million rights issue. It was one of the most heavily traded stocks yesterday and a further 76 million changed hands today.

Morgan Crucible was among the top performers as speculation about a possible bid from French-owned Saint-Gobain continued. The shares added 10 1/2p at 136 1/2p.

Deutsche Bank has upgraded the property sector from underweight to neutral. It has raised Hammerson, up 8 3/4p at 586p, from hold to buy while moving Great Portland Estates, 3 1/2p firmer at 232 1/2p, and Canary Wharf, 4 1/4p dearer at 258 1/4p, from sell to hold.

Woolworths slid 2p to 46 3/4p. UBS has downgraded from buy to neutral but raised its target from 48p to 54p. The broker says it trades at a 10% premium to the rest of the sector but there is not enough scope for improvement to maintain a buy stance.

AIM-listed CRC jumped 20p to 129 1/2p after the IT market service provider clinched three major contracts worth £55m.

Russian gold producer Highland Gold rose 5p to 257 1/2p after 32% of its shares were sold. The stake belonged to Harmony Gold of South Africa. Canada's Barrick Gold Corporation has picked up 10%.

Highland plans to raise almost £70m by way of a placing of 29.57m shares at 235p. Barrick intends to acquire some of these too, lifting its holding to 29%.