Reuters suffers after share dealings gloom

THE slump in financial markets worldwide is starting to take a heavy toll on Reuters, down 371/2p, or almost 7%, at 6191/2p on turnover of more than seven million shares, making it by far the biggest faller among the top 100 companies today.

Broker ABN Amro did the damage after telling clients shares in the news and financial information supplier had further to fall. It has reduced its 12-month target price from 597p to 565p, blaming the downturn in business at its separately-quoted share dealing arm Instinet. Only last week Instinet reported a 30% drop in business during December which followed a 14% decline during November.

Instinet has been overhauled in terms of trading volume on Nasdaq by its nearest competitor Island.

The Instinet share price has also suffered. Floated back in May at $18, it is trading around $8. ABN says the outlook for revenue in 2002 "remains sluggish" putting pressure on margins. It continues to rate the shares no better than hold.

The Reuters price has collapsed from a peak of 1158p during the past year.

Another spate of bear closing enabled the rest of the market to seemingly shrug off the ill-effects of the 212-points setback for the Dow overnight in New York. Most traders had been braced for sharp opening falls but the move by the bears to close their open positions had the opposite effect. Supported by indications on the financial futures market of an opening 40-points rally on Wall Street this afternoon and absence of any real selling, the FTSE 100 index rose 12.2 to 5139.8.

Vodafone was up 21/2p to 165p. It remains the top pick of US securities house Lehman Brothers in the European telecoms market. The broker has raised its target price from 250p to 275p.

Punters appear to be giving the drugs sector a wide berth. GlaxoSmithKline fell 13p to 1687p after US securities house Morgan Stanley slashed its target price by 200p to 1950p.

It retains an outperformance rating for the shares in the belief they have been oversold because of the shadow cast by patent challenges. The drugs giant is seeking permission from the US Food and Drug Administration to market its new asthma treatments. Brokers say the group has its work cut out convincing the FDA to grant approval. Earlier this week, American house Goldman Sachs warned sentiment in GSK would remain dull short term. Rival drugs group AstraZeneca was off 9p at 3092p.

Celltech Group also lost an early lead to trade 1/2p down at 8171/ 2p despite talk of a takeover by Biogene of the US.

The biggest oil discovery in the North Sea for a decade lifted BG 2p to 2763/4p. It has a 19.9% stake in the Buzzard field, 100 miles off Aberdeen.

Edinburgh Oil & Gas, with a 5% stake, gushed 8p to 120p. Further exploratory drilling in Buzzard could lift reserves to one billion barrels making it one of the 10 largest fields in the North Sea.

Compass Group firmed 31/2p to 5151/2p as Goldman Sachs added the shares to its European Private Client Recommended Model Portfolio. Dairy Crest hardened 1/2p to 432p after broker UBS Warburg raised its target price from 400p to 485p and repeated its buy recommendation.

Budgens rose a penny to 1023/4p on news of first-half underlying sales increases of

Copyright 2002
Provided by ProQuest Information and Learning Company. All rights Reserved.