Superbug alarm hits Bioquell

IT could be considered pragmatic or downright perverse, but the City does seem to have a knack of spotting firms that might profit from human tragedy.

With the MRSA superbug filling the front pages of newspapers this week, dealers were keen to pick winners from the government's new-found resolve to eradicate the virulent infection.

Top of the list was Bioquell, which sprays hydrogen peroxide vapours to kill bugs from anthrax to antibioticresistant bacteria. Bioquell leapt 16 1/2p to 180p after revealing the successful completion of its first decontamination contract at a French hospital.

Biotech experts were also touting the prospects of Aim-quoted Healthcare Enterprises (up 0.02p to 1.62p) which has recently received NHS approval for the use of its cleaning products. Laboratory tests have shown a range of its products are effective in battling MRSA.

Representatives of Deltex Medical (up 1/2p to 25p) say their new technology could also decrease the incidence of MRSA by cutting the length of the average hospital stay. Trials of Deltex's CardioQ monitor showed that patients using the apparatus left hospital two days earlier than those treated conventionally. Yesterday Deltex revealed an £83,000 contract to provide an initial 10 monitors to the Medway NHS Trust.

On the broader market, the Footsie started the day on a grim note, sliding 33 points at the outset, on fears that the US recovery is grinding to a halt. But the Americans were more sanguine with the US benchmark rising more than 20 after a weak opening. That pushed the FTSE 100 index 14.9 points higher at the close to 4372.6.

Sterling strengthened to $1.8580 and 66.7p. The euro was stronger against the dollar at $1.239.

Despite the recovery of markets on both sides of the Atlantic, many dealers fear that the US economic recovery may be stalling. Chip-maker Intel was the latest to disappoint, warning late on Tuesday of a fall in full-year margins. Chip designer ARM fell 3p in sympathy early on, before catching a ride on a broader market rebound to finish 3/4p better at 110 1/4p.

A healthy performance from heavyweight Vodafone (up 2 1/2p to 120p) helped the benchmark into the black. Many dealers believe upcoming quarterly customer numbers will justify their optimism.

Yell Group (up 7p to 351p) was also in demand with Goldman Sachs praising its strengthening reputation in America.

UBS lent its support to retailer Next (up 17p to 1470p), advising clients to buy and lifting its price target by 65p to 1700p. The broker believes sales were strong in May and June and expects good interim results in September.

The Footsie may have ended higher, but 44 blue chips finished weaker. William Morrison turned in the worst performance on the big board, slumping another 10 1/4p to 182 3/4p. The number three supermarket hovered near 240p before last month's profit warning. Dealers say the interest of one large buyer seems to have evaporated, leaving the shares with little support.

There was more bad news for ICI (down 4p to 211 1/2p) after broker downgrades earlier in the week. Yesterday it was Cazenove that advised clients to sell. The broker is concerned about ICI's high level of debt - nearly £3bn - which is significantly higher than its market capitalisation of £2.5bn. Cazenove describes trading at most of ICI's core units as 'problematic' and expects it to cut prices to maintain market share.

The brokers were also downbeat on Amvescap (off 6p to 328p). UBS shaved its price target by 30p to 370p, predicting lower investment returns in the second quarter.

Among second-liners, office washroom provider PHS (down 2 1/2p to 75p) suffered after chief executive Peter Cohen disposed of 800,000 shares at an average of 78p a share. He retains 4.3m shares, or 0.85% of listed capital. Cohen's transaction comes just weeks after finance director John Skidmore unloaded 132,500 shares.

Conspiracy theorists should not read too much into the sales. Cohen is aiming to buy a house, while Skidmore needed the cash for a divorce settlement. Both were barred from trading in the closed period ahead of annual results last month.