Market report: Wednesday close

KINGSTON Communications fell 6½p to 64¾p today after US venture capital giant Kohlberg Kravis Roberts (KKR) sold the bulk of its stake in the Hull-based alternative telecoms group.

KKR sold 114m shares to investment bank UBS which, it is understood, then placed them at a sharp discount to last night's closing price of 71¼p.

The US group retains 7.6m shares in Kingston, or 1.5% of the company. The move took marketmakers by surprise as it effectively rules out the prospect of a bid for Kingston.

It also makes life difficult for major shareholder Kingston upon Hull City Council, which at the last count held 157m shares, or almost 31%. City speculators say the council had been looking to sell some of its stake.

KKR picked up its holding less than six months ago when it sold data communications management company Omnetica to Kingston for £169m for a mixture of shares and cash. Omnetica, which had been bought from Siemens, manages high-level data telecoms for a range of blue-chip clients, including British Airways, Deutsche Bank and Credit Suisse First Boston.

Kingston's chief executive Malcolm Fallen said that he expected further improvement in the group's performance this year. It seems like an opportune moment, with share prices at a three-year high, for a stockbroker to make its public debut. That is what Canada-based broker and investment banker Cannacord Capital has done. Already quoted in Toronto, it has joined AIM following an introduction of shares. The price settled at 432½p.

Share prices generally continued to be squeezed higher underpinned by opening gains on Wall Street this afternoon. London's FTSE 100 index rose 17.2 points to 5099.3, after reaching its highest level since May 2002.

Retailers and housebuilders were marked higher on hopes that the next move in interest rates will be down.

B&Q owner Kingfisher rose 6¾p to 251½p, Next 49p to 1512p, Dixons 4¼p to 159¼p, after its latest trading update, Boots 15½p to 613p and Marks & Spencer 7¼p to 356¾p.

UBS has repeated its buy rating on housebuilder Berkeley, up 43p at 917½p, and raised its target from 989p to 1072p. Rival Morgan Stanley has downgraded it from overweight to equalweight. It says the shares have run far enough for the time being.

UBS has downgraded Bovis Homes, 19p higher at 707p, from buy to neutral with a 769p target.

Alliance UniChem dipped 6p to 847p despite an upbeat trading statement from the drugs distributor and 1100-strong chemist chain. The group said it expects to deliver a strong financial performance despite a bigger-than-expected hit to wholesale prices. Broker Collins Stewart still rates it a buy.

Oil and gas explorer First Calgary fell 36½p to an 18-month low of 340p. Only last week, the group broke off joint-venture talks with Spanish oil giant Repsol. The price touched 1062p earlier this year amid hopes that Repsol would bid for the company.

Mortgage lender Alliance & Leicester firmed 6½p to 873p after yesterday's trading update, which warned of a rising tide of bad debt. US broker Lehman Brothers says profits are expected to be flat, at best, over the next two years with revenue margins already in decline.

Deutsche Bank lowered its target from 875p to 850p and its 2005 earnings forecast by 8%.