Tube contractors shunt into reverse

LONDON Underground contractors were thrown out of gear by the weekend's two derailments - and by Mayor Ken Livingstone's thinly-veiled threat to resume his campaign against private companies maintaining the tracks.

Jarvis, a one-third shareholder in the Tube Lines consortium responsible for the line through Camden Town, fell 11p to 290p. It is already under fire over last year's Potters Bar crash. The cause of the accident is still not known, but analysts fear the consortium could face fines of up to £1m.

Balfour Beatty fell 4p to 215p, WS Atkins 10p to 467 1/2p. Both are part of the MetroNet grouping, which is in the spotlight over the Hammersmith derailment. The financial implications there are thought to be considerably smaller.

The companies' defenders say they only took over recently - Tube Lines in January and MetroNet in April. Staff remain the same and inspections to date have been carried out by the book. But putting maintenance work out to private contractors has been controversial and this will hardly help.

The investment story of the year has been Asian markets - and they kicked off the week in confident style. When London opened, Tokyo's Nikkei had already closed up 1.2%, Hong Kong's Hang Seng 0.9%, and Singapore 0.5%.

London's two big Asian banks remain in fashion. HSBC rose 20b 1/2p to 868p, Standard Chartered 10p to 959p. Analysts at investment bank Bear Stearns cited the improving Asian outlook for buying HSBC. They admitted they downgraded the stock in April when it was below 700p on fears about the brief Sars epidemic.

Despite strong figures from Legal & General, Goldman Sachs prefers Prudential - arguing the shares are cheaper in relation to assets and its extensive sales network in the Far East offers greater growth potential. The Pru rose 1p to 459p.

The Footsie remained within a tight 40-point range, closing up just 3.5 at 4347.5. New US data questioned the strength of the economic recovery, and another disappointing trading statement from Unilever (487p, down 37p) did not help.

The US Conference Board's closely watched 'leading economic indicators' surprised analysts by falling last month after four months of growth. Its index fell 0.2%. Jobless claims rose while consumer expectations fell.

Wall Street stumbled but then rallied, and the Dow Jones was up four points as London closed.

British Airways and Ryanair, never the best of friends, won support from Wall Street's powerful weekly investment bible Barron's. It argued BA could rise as much as 20% over 18 months due to chief executive Rod Eddington's cost cutting and the recovery in world markets. It judged Ryanair much cheaper than America's own Southwest Airlines, the pioneer for budget carriers. BA nonetheless eased 2 3/4p to 186p, depressed by speculation that its pension fund deficit may be as high as £1.2bn, requiring heavy extra funding. Ryanair firmed 1/2p to 464 1/2p.

MyTravel, formerly Airtours, firmed 1 1/4p to 17 1/2p after agreeing the sale of its US cruise business and two tour operators to America's National Leisure for £66m to reduce debt.

Brewer SABMiller fell 1 1/4p to 496p but former bear Goldman Sachs turned buyer. It thinks the strength of the South African rand means sales there translate into higher profits here, and sees signs of rising sales of main US brand Miller Lite. Deutsche Bank demurs and remains a seller.

Broker Cantor Fitzgerald raised its stake in menswear retailer Moss Bros (62 3/4p, down 1/4p) another 1.4% to 28.4%. Some 23% is effectively held by Joe Bloggs jeans tycoon Shami Ahmed through contracts with Cantor. Moss Bros says it has not been told that the extra shares are also held by Ahmed.

Aim-listed OverNet Data was suspended as it negotiated a possible reverse takeover. The suspension came after the shares - 8p two weeks ago - soared another 12p to 50 1/2p. Chief executive Leo Knifton said ruefully: 'There seems to have been a leak somewhere.'

ANIMATION software minnow DA Group was the biggest gainer of the day, soaring 9p to 25 3/4p after signing a deal with the largest mobile phone network in the Philippines.

SMART, which has 11m customers, will market DA's animated characters for use with text messages and will pay royalties monthly. The agreement will last for at least a year. DA is valued at £4.4m. Last year it lost £2.6m pre-tax on £1.5m sales.