FTSE ends week positively

Buyers padding out their portfolios with media and defence stocks today ensured the London market made strides during the first trading week of the new year.

ITV gained the most ground after investors took the view that its shares were not being fairly valued by the market and it could be a takeover target, while there were fresh backers for BAE Systems following its major deal with Saudi Arabia.

The FTSE 100 Index closed 40.6 points up at 5731.8 and the Dow Jones Industrial Average was also in positive territory after disappointing jobs data weakened the case for further rises in US interest rates.

Next week will see the Bank of England make its decision on UK borrowing costs, although economists are united in the view that this month is too soon for them to come down again.

Geoff Langham, a trader at CMC Markets, said: “So long as the economy remains under pressure the next move in rates will likely be lower so the steady start London equities have posted for 2006 may well be set to continue.”

In London, ITV advanced 4.75p to 119.25p and broker Killik & Co named it as a strong pick in the European media sector as the fortunes of a company created by the merger of Granada and Carlton improve.

BAE Systems advanced 4% or 15p to 408.5p as brokers raised their target prices for the stock following the recent contract deal to provide its Eurofighter Typhoon jets to the desert kingdom.

Poker giant PartyGaming was unchanged at 138p at the close, but more than 17.5 million of its shares changed hands today as investors speculated on its opportunities for growth and any potential acquisitions.

Analysts at broker Dresdner Kleinwort Wasserstein, who have a 165p target price for PartyGaming, said: “We disagree with the bearish notion of poker’s ‘faddish’ nature.”

However, mining stocks were restraining the top flight where Kazakhmys dipped 15p to 775p even though broker Credit Suisse First Boston upped its target price to 950p and believed copper prices would continue to rise. Among other stocks in the sector, Antofagasta retreated 15p to 1895p.

Most of the interest was outside the index of leading shares where JJB Sports lost 0.5p to 169.5p after warning that annual profits would fail to meet market hopes as tough competition in clothing and footwear led to heavy discounting.

Games Workshop was hit hard – down 15% or 56p to 319p – after pre-tax profits tumbled from £7.6 million to £119,000 (€174,000) in the six months to November 27 as sales of Lord of the Rings games waned.

A further profits warning came from Royal Mail rival DX Services – down 58p to 287p – and housebuilder George Wimpey fell 0.5p to 468.5p after it said profits would be at the lower end of expectations during a difficult year.

The highest Footsie risers today were ITV up 4.75p to 119.25p, BAE Systems rising 15p to 408.5p, Vodafone up 4.5p to 132.5p and Capita Group rising 13.25p to 434p.

The heaviest fallers were Kazakhmys down 15p to 775p, InterContinental Hotels losing 14.5p to 819p, Sage Group down 3.5p to 257.5p and Cairn Energy off 26p to 1975p.