Sugar fears leave bitter taste

SOME lumpy selling of

The European Commission wants to cut EU sugar prices by more than 40%. Broker Credit Suisse First Boston believes that sugar processors should be braced for price cuts of up to 25% and quota reductions of up to 15%. Profits will suffer.

Deutsche Bank downgraded Tates to hold from buy and cited another ongoing problem. The group is trying to settle a US lawsuit alleging that its AE Staley subsidiary was involved in fixing the price of high fructose corn syrup, an ingredient in carbonated soft drinks.

Both co-defendants in the case have settled - Cargill, the US group, for £13m without admitting liability, while Archer Daniels Midland settled last Friday for £220m. Deutsche fears Tates' liability could be even bigger.

Associated British Foods, which owns the Silver Spoon brand, fell 15 1/2p to 627p despite CSFB saying it is one of the lowest cost producers in the EU and should emerge relatively unscathed from any shake-up of the sugar regime. Irish sugar owner Greencore lost 1 1/2p to 208p.

The Footsie closed 16.5 points up at 4503.2. Wall Street lost 23 points following a surprise drop in May US durable goods orders. Interest was at a low ebb with fund managers keeping their powder dry ahead of next Wednesday's decision on US interest rates. A 0.25% rise to 1.25% looks nailed on.

Sterling improved to $1.8227, while the euro firmed to 66.8p and $1.2175.

Mining stocks marched forward with Rio Tinto leading the way at 1325p, up 45p. Rio, the world's second-largest iron ore exporter, has agreed to supply an extra 40m metric tons a year to Chinese steelmakers. BHP Billiton rose 12 1/2p to 472 1/4p and Anglo American 31p to 1138p.

Nervous selling ahead of today's trading update left Bradford & Bingley 4 3/4p easier at 270 3/4p. B&B has put its estate agencies, property services and mortgage broker Charcol up for sale. Goldman Sachs has the job of finding buyers. Rumours are rife that Charcol's management led by Ray Boulger is planning a buy-out.

Internet bank egg softened 1p to 158p despite growing speculation that Prudential (9p better at 467p) will accompany its interim results on Monday with the long-awaited sale of its 79.3% stake in egg to US credit card giant MBNA.

Bars and discos group Luminar fell 33p to 417p amid rumours it is lining up a counter-bid for wine bars group Yates, 1 1/2p dearer at 147 1/2p. Yates is in receipt of a management-backed £93m offer by US investor GI Partners.

Problems Down Under left construction company Mowlem 37 1/4p down at 173 3/4p. Investors ran for the exit on hearing that overheating in its markets and delayed contracts at Barclay Mowlem, its Australian business, will lead to an exceptional charge of £12m on its interim results.

With a return to profit expected in the current year after the £7.6m loss incurred last year, Avesco edged up 1/2p to 52 1/2p. Evolution rates the leading player in the corporate presentation services industry a buy and forecasts pre-tax profits of £0.4m. Chairman Ian Martin bought 100,000 shares yesterday at 52 3/4p and chief executive David Nicholas 30,000 at 52 1/2p.

Global Energy gushed 62p to 164 1/2p after revealing plans to drill up to four new wells plus two recompletions in the Palo Blanco field in Colombia over the next 12 months.

Talk of an imminent bullish drilling report on its Greek and Romanian interests lifted Regal Petroleum 27p to 438 1/2p.

Medal Entertainment & Media rose 7 1/2p to 85 1/2p on impressive results.

Biotech company Vernalis gained 7 1/2p to 55 1/2p following a collaboration deal with Biogen for its experimental compound, VR2006, to be used in development of treatments for Parkinson's disease.