GWR pumps up the volume on a radio advertising revival

There was one optimistic message being broadcast crystal clear and in stereo yesterday: the radio advertising market is starting to pick up.

There was one optimistic message being broadcast crystal clear and in stereo yesterday: the radio advertising market is starting to pick up.

GWR, the owner of Classic FM, had been spinning some very uptempo tunes at an evening with analysts and they reported back to their clients yesterday that the company is on track to meet, maybe to beat, financial forecasts this year. GWR shares shot up the charts, climbing 21p to 233.5p, amid hopes that the autumn months will deliver a decent improvement in advertising sales.

Its local radio stations are also said to be performing well, perhaps less surprisingly. Positive results earlier in the week from Johnston Press, the local newspaper group, had already attested to the robust health of local advertising. Johnston Press shares were up 6.5p at 464p.

GWR was not the only smash hit radio stock. Chrysalis, which owns stations as well as publishing music, continued its round of calls with analysts yesterday, saying it was happy with the market's forecasts, too. Its shares rose a further 5.5p to 205.5p.

It all meant that few investors wanted to part with their radio company shareholdings, and most stocks in the sector were chased significantly higher by those who wanted to tune in. Capital Radio was 27.5p better at 557.5p and Scottish Radio was up 45p to 820p while SMG ­ which also owns the cinema advertising company Pearl & Dean ­ rose 9.5p to 107p. Emap, the FTSE 100 media empire which owns Kiss 100FM, was up 2.5p to 854.5p.

The stock market drifted lower, with the FTSE 100 off 36.9 at 4,161.1. Persistent rumours of an impending rights issue at Royal & SunAlliance sent the insurer's shares down 5.75p to 138.5p, one of the worst performers. One suggestion is that Andy Haste, the new chief executive, has already approved a £1bn two-for-three share issue that will be announced with interim results next Thursday. Certainly, Mr Haste will be setting out his long-term plans for returning the business to growth, and most investors believe that will require raising extra capital.

National Grid Transco suffered what one analyst called a "sentimental" move downward as a result of the power cut that brought chaos to London on Thursday evening. Although the incident is unlikely to have a measurable financial impact on the company, it is now facing brickbats from politicians who claim it has under-invested in the electricity grid since privatisation. The stock was 6.75p lower at 387.25p.

The sudden share price fall by AstraZeneca in the last few minutes of trading caused a bit of a flap, particularly since some new trial data on its blood-thinning drug Exanta is due soon. But traders put the drugs giant's 106p drop to 2,430p down to a reweighting of MSCI's European indices, which are tracked by many overseas fund managers. GlaxoSmithKline was also weaker, by 17p at 1,207p, despite getting US approval for a once-a-day version of its Wellbutrin anti-depressant.

A thought-provoking piece of analysis from Goldman Sachs did the rounds. The broker has a downer on the retail sector because of what it calls "differential deflation", the difference between falling product prices as a result of manufacturing in low-cost Asian countries and rising costs in the UK, including wages and rents. Retailers must run harder and harder to stand still, Goldman Sachs argues, although the broker had praise for two heavyweights, Tesco and Kingfisher, owner of B&Q. Kingfisher shares fell a penny to 272p yesterday, with a giant trade of 48 million shares going through the market. Tesco rose 3p to 216p as it kickstarted a price war which is expected to boost its share of the grocery market. J Sainsbury, which looks to have most to lose in the new skirmish, fell 6.25p to 275.75p.

Dimension Data, the South African software company, was the best performer of second tier companies, up 2.75p to 28p. The company's exposure to the recovering markets of Asia and the US put it in the spotlight, and JP Morgan issued a "buy" recommendation yesterday.

Northern Recruitment jumped 10.5p to 79p, having been tipped by Investors Chronicle as "an attractive business in a recovering market". And Albemarle & Bond, the pawnbrokers, was 4.5p dearer at 84p after positive comment on its modest expansion plans and the benefit it gets from the strong gold price.

Shares in BTG, the intellectual property group, rose 45.5p to 311.5p on the success of trials of its revolutionary non-surgical varicose veins treatment. It is on course for launch in Europe in 2005, although US trials are lagging behind.

The most heavily traded share was Host Europe, the AIM-listed web hosting group where two ousted directors dumped 242 million shares, over a third of the company. The stocks was down 0.14p to 1.3p.

And watch out on Monday for Downtex, the textiles wholesaler being propped up by loans from its finance director. It posted dismal interim results after the market had closed. Its shares are 9.5p.