Market report: Wednesday close

A CARROT of fatter dividends at

Cynics might suggest the inducement was possibly being used to take the heat out of the debate over fat-cat salaries. BT increased its final dividend to 4.25p, from 2p, taking its total payout for the year to 6.5p. That equates to about 45% of earnings.

'Next year, and in subsequent years, we believe it will be possible to pay a greater proportion of earnings, moving further towards 50%,' said Bland. BT shares fell 1p to 203p.

Platinum-plated Johnson Matthey rose 19p to 905p, as chairman Michael Miles told shareholders at its AGM that first-quarter earnings were ahead of the same three months last year and that the group 'will achieve continued growth in earnings'. Chief executive Chris Clark will be succeeded by executive director Neil Carson in a year.

A series of placings kept the market on its toes, swelling volumes. Advent Venture Capital, a founder shareholder in HMV, realised its 7.8% investment in the music and books group, taken when it went public in May 2002.

Its brokers, UBS and Citigroup, placed 30m shares at 153p, a tasty 8p discount to last night's close. Institutions rushed to buy, leaving the placing oversubscribed. HMV tumbled 8p to 153p.

Merrill Lynch was placing 24m shares in Punch Taverns through an accelerated book-build that left the pubs group 8p weaker at 277p.

Top stocks surrendered their gains, as investors took profits on Marks & Spencer, down more than 7% at 311 1/4p. The market drove deeper into the red after Wall Street retreated in the face of grim news from Lucent and Ford. The FTSE 100 fell 25.4 points to 4077.1.

Mortgage bank Northern Rock is preferred by CSFB but it fell 12 1/2p to 697p ahead of Thursday's figures.

Merrill Lynch likes Prudential, down 6 3/4p to 430 3/4p on hopes it will partly dispose of online bank Egg, enabling any dividend cut to be less than feared. The broker also admires Royal & SunAlliance, up 1/2p to 159 1/4p ahead of first-half results which should benefit from premium increases and good weather.

Renewed bid speculation lifted troubled EMI 4p to 128p, with the latest focus being that its catalogue business is worth more than the overall market capitalisation, at just under £1bn.

Interest in Durex condoms maker SSL, 8 1/2p firmer at 338 1/2p, was fired once again by gossip that Boots, down 8p to 646p, wants to expand its healthcare division. But Boots may have to fight off Anglo-Dutch household cleaning products maker Reckitt Benckiser, down 17p to 1104p, which is still believed to be in talks with SSL.

Private equity group Permira plans to make that long-awaited offer for Debenhams next week, valuing its shares at 425p. The only stumbling block could be if the independent directors refuse to recommend the £1.54bn deal. Debenhams rose 1p to 418p.

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