Matalan battered by discount gossip

Bears nibbled away again amid rag trade gossip that trading has deteriorated since its Christmas trading statement. The fact that Matalan did not give a further update in February, as it did last year, has made dealers extremely nervous.

Word is that sales have been particularly poor and Matalan has been left with racks of excess stock. It has, therefore, had to clear the overhang by knocking even more off already discounted prices. Margins have taken a hammering. The recent departure of Lee Cooper's boss Paul Hick also increased speculation that Matalan has had trouble integrating the branded jeans business, which it bought for £45m in July 2001.

New group chief executive Paul Mason, who came from Asda Wal-Mart, has had his feet under the table since the end of January. He has yet to meet City investors. He will probably not do so until April, shortly before the annual results are announced on May 1.

Despite Wall Street's early fall of 101 points on the weaker-than-expected 0.3% rise in February's US retail sales, the Footsie kept its nose in front at the close. Down 54.8 at one stage, it recovered to finish 19.5 points better at 5272. Sterling rose slightly to $1.4130, while the euro firmed to 62p.

Buoyed by an upbeat trading statement from German rival Bayer, ICI led the field with a gain of 15 3/4p to 292 3/4p.

Biotech giant Amersham, at 735p, retrieved virtually all the previous day's decline of 31 1/2p after Hoare Govett and Morgan Stanley Dean Witter placed 50m shares at 700p with various institutional clients. The cash will help finance its £700m purchase of the 45% minority stake in its Bioscience arm from USowned Pharmacia.

Still basking in the glory of its £3.1bn acquisition of German cigarette maker Reemtsma, Imperial Tobacco was puffed 27p higher to a peak of 1039p.

Mining giants Rio Tinto fell 26p to 1424p and BHP Billiton 7p to 404 1/2p as fund managers raised cash for the imminent arrival of Xstrata, the mining company which floats on the London Stock Exchange on March 25.

The company, which has coal and zinc in Australia, South Africa and Spain, will have a market value of about £2bn.

Plans to pay its chief executive Mick Davis up to £2.1m, with a further £1.4m options, will be an early test for David Rough, the former Legal & General investment chief who is deputy chairman.

Alfred McAlpine erected a gain of 28p at 492 1/2p after winning a 10-year contract - worth potentially £300m - with Railtrack Great Western.

BPB advanced 21p to 375p after Cazenove and Hoare Govett placed 30m shares at 358p. The £107m raised helps to finance the £243m acquisition of US-owned James Hardie, which makes BPB a global leader in plasterboard products.

A bear squeeze helped Luton and Belfast airport owner TBI rise 3 3/4p to 63 3/4p. Vinci of France still sits on 14.9% following last year's abortive takeover attempt at 90p. Irish entrepreneur Dermot Desmond, who owns London City Airport, still has a small holding.

Reflecting disappointment that rival Smiths Aerospace won a Boeing order for hose and refuelling systems, defence group Cobham plummeted 104p to 1053 1/2p.

Media group Informa firmed 6 1/2p to 284p as Deutsche Bank recommended it after the results, putting its fair value at 315p.

Vague talk of a US bid helped Queens Moat Houses edge forward 3/4p to 10p.

Placed on Ofex at 38p, Flying Scotsman, formed by a group of enthusiasts to preserve the steam locomotive, chugged ahead to close at 43 1/2p.

SectorGuard, which supplies uniformed guards to Canary Wharf and Shell, opened and closed on Aim at 4p, 1p above the placing price.

Technology company Adval was sold down to 13 1/4p before rallying strongly on the appearance of a big buyer to finish only 1 1/2p off at 16 1/2p.