Market Report: Pubs hope to call time on recent troubles

There was cause for cheer among pub groups yesterday, after investors were urged to make merry as analysts forecast a stable future for the troubled sector. Many of the major names saw their share prices rise in the wake of an extensive note from Execution Noble that encouraged the market to "get the pints in". In the research, the broker's analysts upgraded both Punch Taverns and Greene King to "buy", and they dutifully rose 1.05p to 68.1p and 3.6p to 446.8p, respectively.

As well as reporting that monthly spending appeared to be holding up "better than expected", Execution addressed the effect of pub closures, saying that companies would start to see a benefit in like-for-like sales . "The combination of flat sales growth across the industry with capacity exit should imply average like-for-like performance of 2.4 per cent," it predicted.

The broker also said that "food is the future for pubs" and praised Mitchells & Butlers as a result, keeping its "buy" rating; the company, which is in the middle of a sell-off programme worth more than £500m, added 6.2p to close at 343.5p.

Overall, forecast-beating retail sales figures from the States helped the FTSE 100 to recover from a slow start and finish 23.54 points up on 5820.41.

It was led throughout the day by Invensys, with conflicting reports about a potential takeover boosting its share price by 29.1p to 347.9p, a rise of nearly 10 per cent. Rumours over an approach for the engineering and industrial controls firm have surrounded it for a while, but this time it was its own CEO that provoked the chatter, after he – according to newspaper reports over the weekend – talked publicly about China Southern Rail as a potential buyer.

Invensys moved quickly to dampen expectations, releasing a statement early yesterday morning saying that there had been neither "an approach nor any discussions regarding a possible offer for the company or about a strategic partner taking a minority stake". However, this failed to put off traders, especially since the watchers at Collins Stewart said that the "deal makes intuitive sense".

Tullow Oil found itself 17p up on 1,253p in the wake of an oil discovery in Sierra Leone by the consortium in which it holds a 10 per cent stake. Anadarko Petroleum, one of Tullow's partners, said that about 135 net feet of oil pay had been found, which Citigroup analysts estimated could provide as much as 450 million barrels.

The saga of BHP Billiton and its attempted takeover of Potash Corp ground to a halt as the world's largest miner admitted defeat. Instead, investors will be given the shares buyback they have been clamouring for, although they will be wishing that there is more to come. The sum involved, $4.2bn, is the amount remaining from a $13bn buy-back suspended three years ago, but it was enough to lift BHP 43.5p to 2,406p.

At the opposite end, hopes that Rolls-Royce had put the failure of its engine in a Qantas aircraft behind it were dashed after reports emerged from Australia that a further 29 engines may need to be replaced. Last week, the engineering company said it had identified the faulty component and promised it would be fixed, resulting in a rise in its share price, but yesterday it slid 14p to 597p.

the prospect of upcoming takeovers was causing significant moves on the FTSE 250 yesterday, as Sportingbet confirmed that it was talking to various firms regarding "a variety of potential opportunities". The statement was in response to reports that the online gaming firm was in dialogue with the Swedish company Unibet over a merger.

It later clarified the comment by saying that none of the discussions "currently contemplate an offer", but all the excitement prompted the online gaming firm's shares to jump up 4.85p to 63.5p. Meanwhile, PartyGaming – its rival in the sector, which is expected to complete a merger of its own with Bwin in 2011 – booked gains of 11.9p to close at 225p.

Also up as a response to bid rumours was Premier Oil, as the market gossiped about the possibility of the Korean National Oil Corporation making a play for the explorer. At one point, its price reached 2,031p in initial trading but it was not to last as Premier told Reuters that if "any approach had been made, we would have had to make an announcement to the market". Yet, investors were not completely convinced that there was no chance of a takeover, and it finished 62p better off at 1,860p.

on the Alternative Invetsment Market, a half-year update produced a reason to celebrate for Majestic Wine, as the retailer enjoyed a 20 per cent pre-tax profits rise partly driven by its decision to let customers buy as few as six bottles in one purchase, halving the previous minimum requirement.

As well as an increase in customers, the wine chain outlined plans to add at least 90 more stores to its current roster of 160 properties, and its price was lifted 23p to 385p.