Market report: Tuesday close

OIL and mining shares have provided much of the impetus for a strong run of late by the stock market. But all good things come to an end, and it looks as if we have seen the best from the miners - for the time being, at least.

That is the view of broker Investec Securities, which is telling clients the mining sector has reached the top of the cycle.

It has downgraded the sector from neutral to underweight after a run fuelled by strong demand from a rapidly expanding Chinese economy. This has led to record iron ore prices and new highs for base metals which have, in turn, fuelled strong cashflows and earnings growth.

But, according to Investec, the risk is firmly on the downside for commodity prices and mining shares. As a result, it has downgraded BHP Billiton, 17½p off at 759p, from buy to hold, while cutting Anglo-Swiss group Xstrata, 20½p lower at 1073½p, from hold to sell. The broker also repeated its sell recommendation on Anglo American, unmoved on 7p higher at 1304p, with a 1300p target price. Only Rio Tinto, down 27p at 1808p, is worth holding on to, it says, with a 2090p target.

The wider market made a fresh assault on 5000 as prices were squeezed higher in thin trading. Spurred on by an opening rally on Wall Street this afternoon, the FTSE 100 index rose 32 points to 5005.5.

Shares in bid target the London Stock Exchange dipped briefly below the indicative 530p-a-share offer from Deutsche Borse before reducing the fall to 6p at 533p. Some say DB will come back with an offer to 580p. That is not what the share price is saying though.

The collapse in bid talk left diary products supplier Uniq 15p down at 157½p. Now shareholders must rely on the management to come up with the goods in plan for growth.

Durex condoms and rubber gloves maker SSL International dropped 13p to 287p as a big seller unloaded around 5% of the company. Broker Citibank quickly placed the 10m shares at 290p.

Chief executive Paul Thompson has desperately been steadying the ship at Britannic Assurance and annual results today suggested his tactics are beginning to pay off. The shares rose 23½p to 505p after it said full-year operating profits increased £3m to £88m.

Shareholders will see dividends rise 19% and Thompson has pledged to up the payout by at least 11% a year until 2009. He needs to keep them sweet as a rights issue to fund a potential acquisition is on the cards later this year.

Elsewhere in the sector, a new distribution agreement from Barclays will see six different providers sell life and pension products through the bank.

Legal & General, down ¾p at 117¼p, had an exclusive agreement for three years.

The profits warning from Boots, down 27½p at 636p, cast a shadow over other retailers.

Those feeling the strain on the High Street today included Next, down 10p at 1531p, Matalan, off 3½p to 231¼p, and Woolworths, ¼p cheaper at 47¾p.

Genetix, up 1p to 46½p, has sold three of its new ClonePix cell-imaging devices to big pharmaceuticals firms at £200,000 apiece to help speed up drug discovery research.

GlaxoSmithKline, up 22p at 1275p, and Astra-Zeneca, 24p better at 2074p, are among prospective buyers which should help Genetix shift 17 more units this year.

Full-year profits more than doubled to £900,000.