Market report: Wednesday close

THE booming Chinese economy is continuing to help drive the price of raw materials sharply higher as the world's biggest miner,

The increase is similar to those already implemented by Rio Tinto, whose shares were 23p weaker at 1695p, and Brazil's Companhia Vale Do Rio Doce earlier this year. But it falls short of BHP's earlier aspiration, which was to double the price to reflect the increasing global demand for steel products.

Broker Seymour Pierce says BHP, 16p easier at 695½p, was holding out for a higher increase but the agreement indicates that steel producers have persuaded the company they cannot pay more as steel markets in some areas seem to be squeezed.

Share prices rallied from yesterday's losses though initial bullishness over a weaker oil price and soothing comments about US interestrate policy by Federal Reserve chairman Alan Greenspan, later dissipated as the Dow Jones Average opened down 16.6 points at 10,491.4. In London, the FTSE 100 index closed 14.6 points higher at 4,960.8.

There was heavy turnover again in BP as the shares fell 9p to 546½p. Traders saw the other side of a single trade in 62m shares at 548p.

The City gave short shrift to Bio-Progress, down 18p, or 36%, to 31¼p after it warned that profits at its BioTec Films subsidiary in Tampa, Florida, were not as strong as previously expected. The group, which makes delivery mechanisms for the pharmaceuticals industry, is conducting a full financial review.

Shares in accounting software group Sage advanced by 8½p to 212¼p after it said turnover and profits in the last six months had jumped as acquisitions fuelled growth and business picked up in America. Sage said group sales were up 17% to £381m in the six months to 31 March, with pretax profits leaping 16% to £101m.

Rail and road engineer Jarvis rose 3¼p to 18¼p despite losing chief operating officer Andrew Lezala to London Underground consortium Metronet.

Scottish & Newcastle slipped 1p to 486p as the brewer gave a rundown of its marketing policy to fund managers and brokers and said that current trading is in line with forecasts.

Bid hopes lifted fashion retailer French Connection 3¼p to 292p. Icelandic retailer Baugur has a 1.5% stake but brokers say it is unlikely that founder Stephen Marks, with 42% of the shares, would sell at this level.

Royal & SunAlliance, ¼p dearer at 82¼p, has settled the first of a series of claims against US banks relating to a long-running dispute over credit risk fraud. The insurance giant said PNC Bank had agreed to end its part of the legal action, reducing the amount subject to the summary judgment by $129m (£68.2m).

US broker Morgan Stanley has revised some of its findings among housebuilders. It remains overweight in Wilson Bowden, up 1p at 1155p, and has lifted its target from 1295p to 1363p. It is also overweight in Redrow, up 6p at 400p.

It has Barratt Developments, 9½p better at 669½p, as underweight despite increasing its target from 502p to 585p. The broker moved up its target for George Wimpey, ahead 7p at 436p, from 320p to 368p.