Market Report: BT rings up gains after being open on pensions

Few investors would have picked BT Group to be among the top performers in the blue chip index in 2006, but the company's excellent year continued yesterday with shares closing 11.25p firmer at 316.5p, a price last seen in May 2001.

BT Group shares have risen more than 55 per cent since February. Yesterday's rise came as investors reacted positively to the group's clarification of its pension shortfall earlier in the week, despite the shortfall climbing to £3.4bn.

One trader said: "It's a big number but at least it is out in the open now, which means that BT can concentrate on delivering growth."

AstraZeneca's grim last quarter shows no sign of improving in the last few sessions before the end of the year. Tuesday's decision from the EU to end the patent on Nexium may not impact sales until 2010, but brokers Cazenove and UBS still downgraded the shares as the stock shed another 3p to 2,735p. The sole bullish voice came from Morgan Stanley, which reiterated "buy", with a 3,450p target.

Sticking with pharmaceutical stocks, Shire remains high on many investors' list of stocks most likely to face a takeover bid in 2007. With a market capitalisation of just over £5bn, Shire is small enough for any of the majors to snap up without breaking sweat, and its pipeline of new drugs appears, for the moment at least, to be in rude health. The shares ticked another 24p firmer to close the session at 1,080p, another all-time high.

London shares were strong in early deals after a decent close to trade in New York overnight. However, disappointing news from BP on the re-opening of its Prudhoe Bay pipeline in Alaska, which will now not be completed until August 2008, spooked oil investors and depressed the blue chip index. BP closed 3.5p worse at 569.5p while Shell, which has enough problems of its own, closed 20p weaker at 1,795p. The FTSE 100 ended down 5.3 at 6198.6 in thin trade.

If, as expected, a bid for Britvic does come in at 280p, some recent buyers will be out of luck. The shares added another 12.5p yesterday to close at 293.5p as broker Goldman Sachs upped its stance on the shares to "neutral" from "sell". The private equity group Permira is thought to be mulling an offer for the soft drinks group after near misses with HMV and EMI. Traders said that the buyout group will want to avoid paying over the odds for Britvic, after the company warned on profits twice in its first six months on the public markets.

Investors are still piling into Rightmove, the online estate agency, on the back of a $6.6bn bid for US group Realogy. The shares jumped another 14.5p to close at 398p, higher than the level the shares were trading at prior to ditching the Home Sellers Packs, a move that lead to the company warning on profits.

A profit warning from the music and movie retailer HMV Group will not have surprised many retail sector followers. Although the shares fell only 7.25p to 146.5p, the longer-term future looks far from certain. With digital downloading of music taking an ever-increasing chunk of the market, some traders believe that the company is in a rut. The broker Seymour Pierce even went as far as describing the company as in the "living dead" category.

Talk that the training group Carter & Carter may face a bid from a private equity group early next year had little impact on the stock, with the shares closing 5p worse at 1,059.5p. However, given the performance the stock has put in since listing in March 2005 - up more than 260 per cent - any bidder will have to be prepared to pay a significant premium. Allied Healthcare International was higher after strong demand for in New York on Tuesday. The company is listed on AIM and the Nasdaq, and closed at $2.80 in New York trading. The shares rose 25p to close at 132.5p.

There was some relief at last for investors in the online gaming sector as Playtech, the gaming software developer, signed a major deal with SSI, a leading Chinese gaming group. The deal will see Paytech provide software for a number of newly-developed gaming products for the next five years. Although financial details remained undisclosed, the shares ticked 10.5p better to 235p.

Investors will be on the lookout for Traction Technologies as it makes its AIM debut following the acquisition of the remaining assets of Eneco. It has raised £850,000 through a subscription at 28p per share, which will value the company at £9.3m. Traction designs and manufactures power packs to convert vehicles into hybrid fuel users.