Market report: Tuesday close

STOCK market bears were feeling the pressure today after getting it wrong in

Shares in the no-frills airline climbed 14½p, or almost 8%, to 213¾p, as they clawed back some of the losses of recent weeks which have seen them slump from a ninemonth high of 240¾p.

Dealers say there has been a lot of hedge-fund activity in the shares of late amid claims that the company would be forced to issue its third profit alert in less than a year. In the event, today's trading update made pleasant reading with passenger revenue up 2% during the past six months and passenger numbers 24% higher. It suggests a good outcome to the group's overall performance for the six months to 31 March.

British Airways rallied from an opening fall to trade 2¼p higher at 266½p. It is raising the surcharge on long-haul flights, oneway, from £10 to £16 to offset the cost of higher fuel bills. Short-haul fees go up from £4 to £6. Its fuel costs are hedged until the end of this year when they are expected to reach £1.1bn, growing to £1.4bn in 2006.

Meanwhile, Ryanair, up 10 cents at e5.87, reckons bookings over the Easter holiday will hit record levels. It says it will carry 740,000 passengers, an increase of 23%. Share prices generally lost ground. Wall Street traded nervously ahead of the Fed's decision on US interest rates tonight. The FTSE 100 index closed up 3.8 points at 4937.3.

The latest trading update from O2 saw more than 190m shares traded as the price fell 6p to 117p. A line of 10m went through at 120¼p.

Water utility Severn Trent was one of the best-performing bluechip with a rise of 19½p to 924½p. JP Morgan has raised it from neutral to overweight. It says the shares have been oversold because of concerns about rising bond yields.

Half-time profits at Manchester United more than halved to £12.4m on the back of shrinking revenue, down from £92.4m to £91.6m.

The football club blames lower returns from the European Champions League and the Premier League, where it finished third last season. Costs have also been rising in the shape of players' wages and the club has been forced to make write-offs on the values of some of its playing staff.

United's exit this year from the money- spinning Champions League means it now faces a tough second half that is likely to see a further decline in profits.

Last month, the board rejected a suggested offer of 300p a share from American businessman Malcolm Glazer.

He still owns 28.1% of the shares, but has failed to win the support of other big shareholders such as Irish pair JP McManus and John Magnier, who between them own a further 29%. The shares rose 1¾p lower to 270¾p.

Lord Saatchi has exercised an option on onem shares in Aim-listed Finsbury Foods, down 4p at 64½p. It means that he will pick up the shares at 20p each, less than a third of the ruling market price, and takes his stake to 4.79m shares, or 22.68% of the company.

Supermarkets chain Somerfield rose 5¾p to 197¾p amid fresh claims that Icelandic retailer Baugur, which has a 5% stake, wants to increase its offer to 210p a share.

Drugs distributor Alliance UniChem slid 6p to 774p, despite broker UBS raising its target from 715p to 810p.