Market report: Wednesday close

WE MAY have seen the best of the oil sector for the time being despite sky-high crude prices.

That is the conclusion of US securities house Goldman Sachs, which has trimmed its 2005 forecast and fair value estimate for the European oil sector to reflect the impact of a weaker US dollar.

The big oil producers have been enjoying record profits this year with crude reaching a high of $55 a barrel in October. The dollar has slumped 6% against the euro this year and 8% against sterling.

Goldman reckons the fourth quarter will still turn out to be the best on record, but all the signs point to lower earnings forecasts in the months ahead. Of the UK companies, it continues to rate BPup 2½p at 508½p, outperform.

Cairn Energy, up 24p at 1101p, has slumped from around 1400p since last month. The recent price weakness has tempted three directors to top up their holdings. Chief executive Bill Gammell has bought 5000 shares at 1071p, stretching his holding to 1.09m, still less than 1% of the company. Todd Hunter also bought 5000, at 1082p, and now owns 35,000 while exploration director Mike Watts has picked up 1457 at 1068p, making 250,000. Fidelity Investments has also raised its stake, from 11% to 13%, in recent days.

Only last week Cairn rocked the City with news that some of its exploration wells in India were dry. It is also being threatened with a new exploration tax by the Indian government.

Share prices generally were squeezed higher in thin trade. The FTSE 100 index rose 44.1 to 4777.1. Wall Street opened nervously this afternoon after hitting a three-and-a-half-year high yesterday.

Broker UBS has looked at the pubcos after they were cleared yesterday by the Trade and Industry Select Committee of ripping off their tenants. It has repeated its buy rating on Enterprise Inns, Greene King, 8p lower at 1291p, (target 1365p to 1500p), and Wolverhampton & Dudley, 6p higher at 1101p, (1180p to 1250p).

Mitchells & Butlers, down 1¾p at 330½p, gets a neutral rating with the target raised from 285p to 320p.

George Wimpey fell 1¼p to 402¾p after giving a downbeat view of the housing market. It described the second half of the year as tough, although the order book remained at a satisfactory level.

By contrast, rival Persimmon, down 9p at 690p, yesterday blamed the downturn in the property market on media scaremongering.

Another big line of Unilever went through as the price rose 7p to 502p. This time it was for 17m at 498½p.

Biotech Pharmagene slumped 10p to 31p after it emerged its new cystic fibrosis treatment had flopped in Phase 2 trials.

The office recruitment boom looks set to slow according to leading jobfinder Hays. Fee growth in the half-year to 31 December will be 18%, but it added: 'After a period of sustained growth since January, prior-year comparatives will now be tougher to exceed.' Hays, now a dedicated recruitment group after getting rid of its logistics business, slid ¾p to 122p, still near a two-year high.

Holidaybreak, operator of camping breaks and other speciality trips, was up 14p at 615p. It has spent £23.1m buying a Dutch online hotel booking service. The deal is valued at 15 times its 2004 profits. It also marks a lucrative exit for Business Reservation Centre Holland's venture capitalist backer Antea and BRCH founder shareholders, the Ritsma family.