Market report: Weds close

HOW could they get it so wrong? That was the question City brokers were asking today about the flotation earlier this year of Australian insurer Promina.

The biggest loser is Royal & SunAlliance, down 3/4p at 85p, which raised A$1.2bn (£423m) following the spin-off of Promina as part of a worldwide sale of non-core assets. But Promina shares have since almost doubled in value on hopes of booming profits.

The company is now valued at A$1.1bn more than its original flotation price. Brokers are asking themselves how RSA's advisers, US securities house Goldman Sachs and Macquarie Bank, could have undervalued it so badly.

Promina, now Australia's third-biggest general insurer, is expected to beat its original profits forecast of A$188m with about A$293m. The shares are trading at around A$3.10, against the A$1.70 at which they were floated for private investors and A$1.80 for institutions.

Share prices generally traded in a narrow range with Wall Street unable to maintain its best levels in early trading this afternoon. The FTSE 100 index rose 13.1 points to 4392.0.

GlaxoSmithKline fell 19p to 1311p. The City was seemingly unimpressed with the company's claim that it had doubled the number of new drugs involved in late-stage testing. Rival AstraZeneca jumped 48p to 2674p.

Airports operator TBI gained 2 1/4p at 61 1/2p on turnover of 8m shares. Ten million changed hands yesterday, leading to revived talk of a bid. The price fell from 61p to 57p last week after reasonable, if unspectacular, profit numbers. French conglomerate Vinci continues to hold almost 15% of TBI, which operates Luton, Belfast and Cardiff airports among others.

Vinci wanted to bid some time ago but held off. City speculators say that with all this talk of expanding Heathrow and Stansted, it may decide the time is right for another move.

Brewer Scottish & Newcastle firmed 4 1/4p to 374 1/2p in the wake of yesterday's profits news. But US securities house Smith Barney was unimpressed with the decline in margins at the John Smith's bitter and Foster's lager outfit. It has downgraded the shares from hold to sell and cut its 12-month target price from 340p to 325p.

It says earnings lived up to expectations but price competition and trouble in restructuring its supply chain put pressure on margins.

Rival broker UBS has repeated its neutral stance on the shares and is poised to cut its profit forecast. Merrill Lynch keeps a sell rating and has downgraded its earnings per share forecast for the current year by almost 7% to 28.9p and for 2005 by 6.7% to 30.8p.

Intec Telecom Systems fell 2p to 62 1/2p after a seller dumped 11.9m shares at a heavily discounted 55p as part of a delayed trade. The stock was later being dribbled back into the market at about 62 1/4p. South African-owned Trematon bought 8.6m shares (4.15%) from Intec's biggest shareholder Mican earlier this week.

UBS has resumed coverage of medical supplies group Whatman with a buy rating and a 200p target price. The shares rose 5 1/2p to 159p.

Revived talk of a rescue bid for debt-laden Leeds United by Sheikh Abdul bin Mubarak al-Khalifa, a member of the Bahrainian royal family, continues to be booted around. Leeds said on Monday that it had not received a bid approach, but the shares rose 0.63p to 4.625p anyway.