Market Report: Restaurant Group shines in slow market

“The sun is shining, the public schools are finishing for the summer and the hedge funds are not moving in and out of stocks as quickly as they used to, largely because they have no money. In short, summers are getting back to how they used to be.” That was one trader’s assessment of the markets yesterday as a distinct lack of appetite among buyers and sellers saw the FTSE 100 rise by just 53 points.

There were glimmers of activity.

Shares in FTSE 250-listed Restaurant Group, the operator of Frankie & Benny’s, provided most interest, finishing the day up 6.3 per cent at 151.75p after starting innegative territory and following a steady decline in recent days.

Some in the market put the move down tothere being a “sweet-spot” in demand for the shares between 148p and 150p.

Lloyds Banking Group was the biggest gainer on the FTSE 100, climbing by nearly 5 per cent by mid morning and closing the day up 6.1 per cent at 70.56p after the sages at Goldman Sachs upgraded the 43.4 per cent taxpayer- owned bank to a “buy” from “neutral”. They said bank is expected to deliver among the highest long-term returns in the sector: “Lloyds has historically delivered among the highest return on equity and asset margins of all the large European banks and we believe it should be able to do so again.”

The news will no doubt be welcomed by Lloyds’ investors who have seen the shares fall more than 70 per cent in the last 12 months and remain immoveable in the past month, despite news that bank will be the first to repay some of the £17bn bailout money handed over by the Government, after raising £3.5bn in a cash call earlier this month.

Among the other gainers were the insurance groups, which made gains after privately held Pearl Group said that it intends to list and use the cash it raises from its IPO to fund acquisitions.

Old Mutual was up 3.45 per cent at 80.69p, despite the watches at KBW cutting the group from “market perform”

to “underperform”, while Prudential, Legal & General and Standard Life were all up.

BGGroup, the oil and gas producer, was also up as investors sought to take advantage of the company’s softening stockprice in recent weeks. The shares closed the day up 4.1 per cent at 1,037p after a disappointing few weeks for the group. Last week, the experts at the broker Collins Stewart became the latest to cut the target price for BG from 1,300p to 1,250p, following several other houses taking a more negative stance.

Clearly, for some the price had got too low at the end of last week, and on thin volumes the stockwas sent up yesterday despite the lack of new news.

There was little more excitement on the FTSE 250, with the market closing the day up 91 points at 7477.2.

National Express was the biggest gainer, up 9.8 per cent at 302.75p after the group confirmed FirstGroup’s allshare approach. Even this failed to excite most traders. “There was, frankly, not too much interest in FirstGroup’s look at National Express this morning.

After-all it is an all-paper approach from one highly indebted public transport operator for another highly indebted public transport operator. The view among most is that this probably won’t get off the ground,” one said.

It was another bad day for pub stocks withMarston’s and Punch Taverns amongthe biggest fallers on the index.

Traders said Marston’s unpopularity followed weekend reports that the group has been forced to defend its rights issue plans in the face of anger from investors and analysts. Despite the£176m cashcall being underwritten, the experts at Altium Securities have asell note outonthegroup, saying that that 11 shares for every 10 placing, and its 40 per cent discount, was “too high a price” for organic growth.

Onetrader said yesterday that there could well be a number of investors looking to sell Martson’s stock in the coming days, putting downward pressure on the shares, which fell 3.25p to 115.25p. Punch shares, which have fallenby more than 20 per cent in the past month, were also victims of the Marston’s news, dropping another 4.75p to 105.5p.

As ever, there was more fun to be had on the Alternative Investment Market. Despite the index barely moving, a number of groups made impressive gains. They were led by Airsprung Furniture,which saw its stock almost double after issuing its full-year results.

Announcing a return to profit anda dividend payment, the mattress and sofa maker climbed 90 per cent to 19p. Jubilee Platinum was another biggainer yesterday after the dual London and Johannesburg listed group issued a cryptic statement urging investors “to exercise caution when dealing in the company’s securities until a further announcement is made”. The advice followednews that the African focused mining group had “entered into negotiations, which if successfully concluded, may have a material effect on the price of the company’s securities”.

Aspokesman the announcement is in line with requirements of the Johannesburg stock exchange. However, it was advice the investors wholeheartedly ignored with the stock closing the day up 50 per cent at 53.75p.

Bringing up the rear on Aim yesterday was the media outfit MKMGroup, which fell 20 per cent to 1p after investors took profits on gains made after a recent upbeat trading statement.

Get midday market updates at independent.co.uk/sharewatch