Market report: Wednesday close

MUSIC-MAKER

A loss of appetite by investors means WMG shares have been priced at $17 each - way below the original $22-$24 range - and the company is now valued at less than former Vivendi chairman Edgar Bronfman Jr and other investors paid for it just over a year ago.

Bronfman and his partners paid Time Warner $2.6bn (£1.4bn) for the business, which had a market capitalisation of $2.4bn when it began trading on the New York Stock Exchange today. It includes Madonna and Linkin Park among its artists, and owns the rights to 60,000 songs including Happy Birthday to You.

If the shares had sold at $23, WMG would have had a value of $3.29bn, a figure that analysts and institutional investors deemed too rich, considering that sales of recorded music, especially CDs, are declining. Most of the money being raised will be used to reduce the debt Bronfman and his fellow investors raised to buy the company.

In its most recent quarter WMG - rumoured to be mulling a merger with EMI - reported an 8% revenue decline to $1.09bn. Cost-cutting by the new owners turned a $1.15bn loss a year ago into a $36m profit.

Share prices generally traded above their worst levels after investors on Wall Street steadied the ship in the wake of yesterday's sell-off amid fears that 'Harry Hedge Fund' had got himself into a pickle following last week's downgrading of General Motors (GM).

Harry and his pals have been busy buying GM bonds, which fell sharply after a profits warning was issued in March. They took the view that the bonds had been oversold but last week's downgrade came out of the blue and could mean Harry and his mates struggle to meet margin calls.

The FTSE 100 index fell 17.0 points to 4875.4, weighed down by ex-dividends in Antofagasta, down 53p at 1102p, BP, off 9½p at 537p, Shell, 6½p cheaper at 471p, and GlaxoSmithKline, 7p lower at 1328p. Housebuilder Bovis slumped 8p to 619½p after warning shareholders that first-half profits will be down on the £67.2m made last year.

In another busy day for the oil tiddlers on Aim, Afren, down 2p at 45½p, confirmed that International Finance Corporation was taking a 7.5% stake as it announced plans to drill off the tiny West African island state of S"o Tomé e Principe this winter.

Elsewhere, Gulfsands Petroleum, off 6½p at 95p, is mixing it with the big guns, buying out US partner Devon Energy in a Syrian oilfield and farming out a 50% interest to Russian giant Soyuz-NefteGas. Sterling Energy, ¾p

down at 15¾p, reported a 130% surge in profits to £4.2m with revenue doubling to £11.5m.

Paragon fell 23¼p to 358p on reports that the Government plans to clamp down on get-rich-quick property schemes that involve buy-to-let. It is going to the High Court to close down six companies that are selling such schemes to residential property investors.

Broker Numis says buy-to-let lenders like Paragon and Bradford & Bingley, ½p cheaper at 301p, will applaud the move, but may find it difficult to grow their loan books. Numis has repeated its 'add' recommendation on Paragon.