Market report: Tuesday close

A SUCCESSFUL bidder for stores group

So says broker Seymour Pierce, which has lifted its recommendation from hold to outperform. The shares responded with a rise of ¼p to 48p on turnover of more than 9m. Only last week, it emerged Woolies had received a bid approach from venture capitalist Apax Partners. But the broker reckons other VCs may be waiting in the wings which would drive up the price.

Woolies rejected Apax's offer, in the range of 50-55p, after the market closed, stating it 'concluded that the range indicated does not provide acceptable value or certainty to justify entering into detailed discussions with Apax.'

Seymour is confident a bid for the retailer will succeed despite borrowings and the need to step up capital spending to achieve improved returns. The main sticking point to any offer from Apax is the amount of access needed for due diligence to be carried out.

Woolies disappointed the City last month by reporting flat Christmas and New Year sales and profits. Kingfisher, from which Woolies was spun off, fell 4¼p to 307¼p. Brokers are becoming concerned about increased competition, highlighted by the latest British Retail Consortium survey.

Tony Shiret at Credit Suisse First Boston points to rising promotional spending at Kingfisher's DIY subsidiary B&Q and the impact on gross margins. Rival broker Numis says it is also becoming 'increasingly nervous' about Kingfisher but still rates it a hold.

Elsewhere on the High Street, Laura Ashley retreated 1p to 12½p after denying it had had been put up for sale, with its controlling Malaysian shareholders looking for a buyer. Meanwhile, members of the founding Cecil Gee family have sold shares in Moss Bros, down 6p at 124½p. Non-executive directors Rowland and Michael Gee have sold 500,000 shares each, leaving them with 2.96m shares, or 3.2%, and 3.25m shares respectively.

The FTSE 100 index closed up 15.7 at 4995.5: Wall Street's performance this evening may give a clue as to whether the Footsie will breach the 5000 benchmark in the morning. The Dow Jones was up 9 points to 10,724 at midday in cautious trading as Wall St waits on a Cisco Systems outlook on the prospects for the technology sector.

The City liked full-year numbers from BP, 3p up at 547p, which were accompanied by a pledge to return up to $23bn (£12.4bn) to shareholders over the next two years. That is more than four times the size of British Airways' stock market value and the entire worth of life assurer Prudential, 2p down at 478½p.

Aim-listed Monstermob rose 4½p to 275½p despite the breakdown of bid talks with iTouch, 2¾p off at 33p.

Deutsche Bank has lifted its target on British Airways, up 5p at 275¾p, from 295p to 315p in the wake of last week's profit numbers. It follows similar moves yesterday by ABN Amro and Smith Barney.

It was the first day of dealings for Teesland Advantage Property Income, a close-ended property investment company based in Guernsey. It follows a placing at 100p by broker KBC Peel Hunt. The shares started life at 107½p.

On Aim, Zenith Hygiene, which supplies commercial kitchens, made an encouraging start following a placing by broker Oriel Securities at 100p. The shares touched 123½p.

Housebuilders were marked higher after broker Beeson Gregory talked of scope for a rise in asset values, even if profits stall. Bovis Homes rose 15p to 685p and Persimmon, 25p better at 790p, from hold to buy.

Other movers in the sector included McCarthy & Stone, up 26p at 661p, and Barratt Developments, 13½p better at 671½p.