Market report: Wednesday close

SMOKING bans and counterfeit ciggies have failed to deter nicotine-stained investors from putting their money in tobacco companies. The sector has enjoyed a strong performance since the summer, with investors continuing to look on it as a cash generator in a growing, global market.

Today it was the turn of US broker Smith Barney to tell clients it had no intention of kicking the cigarette habit as it repeated its hold rating on British American Tobacco, 2p off at 888p, while raising its 12-month target from 840p to 920p. It also has a hold rating on Gallaher, 16p higher at 762p, while increasing the target from 655p to 750p. Imperial Tobacco, up 13p at 1403p, is rated a buy with its sights lifted from 1470p to 1580p.

Smith Barney says the trading outlook for the sector in 2005 was undoubtedly better than last year and reckons there will be more scope for manufacturers to raise their net prices in Europe.

Share prices generally were squeezed higher in thin trading, with the FTSE 100 index rising 5.4 points to 4728.2. Wall Street rallied from a nervous start to post useful gains.

Brokers gave their verdict on third-quarter numbers from B&Q retailer Kingfisher, which showed a slowdown in sales growth. They marked the shares 5½p lower to 33½p. Oil giant BP rose ½p to 509p after a single line of 65m shares went through at 510p.

Vodafone rallied ¾p to 140¼p after US telco Sprint struck an agreed $35bn (£18.1bn) bid for rival Nextel, putting paid to rumours that the UK company's 45%-owned associate Verizon Wireless wanted to bid for Sprint itself.

Telephone directories publisher Yell firmed 1¾p to 433½p after broker UBS repeated its neutral rating but raised its 12-month target from 360p to 435p.

Yesterday's impressive trading update from HBOS, up 23½p at 829½p, has left its mark on some brokers. US investment house Lehman Brothers says it now prefers HBOS over Lloyds TSB, 12p better at 455¾p. Rival Goldman Sachs has repeated its in-line rating and lifted its target from 896p to 964p.

What is going on at Newcastle United, unmoved on 38½p? Brewin Dolphin was appointed house broker on Monday and chairman Freddy Shepherd bought an extra 1.2m shares. Now he has bought a further 1.12m, taking his total holding to 26%.

Entrepreneur Algy Cluff has popped up again. This time it is with Cluff Gold, capitalised at £12m following a placing by broker Numis Securities of 11.8m shares at 55p. They opened at 62½p.

Soaraway oil explorer Cairn Energy has been trading in choppy waters over the past fortnight as dealers become increasingly nervous ahead of a trading update on Friday. The statement gives Cairn the perfect opportunity to end its best-ever year in style, coming almost 12 months to the day after the former minnow announced its major oil discovery in the Indian desert. But the City is becoming increasingly demanding and analysts believe that less-thanpunchy news from chief executive Bill Gammell could see it continue to lose ground. The shares rallied 3p to 1431p.

Broker Teather & Greenwood, down ½p at 46p, wants to resume dividend payments after a two-year break. Highmargin corporate fees fuelled a 50% rise in interim pre-tax profits to £900,000.