Market Report: Betfair on a winner with German licence award

Jackpot. Betfair was celebrating a big win yesterday after the betting firm was awarded one of the first licences for online gambling in Germany. With Europe increasingly regulating internet gambling, fears that it may struggle to win licences have weighed on the stock and, as a result, the sense of relief was palpable as Betfair jumped 45p to 839.5p.

Saying the licence for sports betting – with those for casino-style games such as poker set to be awarded soon – was a "a significant positive", analysts from BarCap added that it was "further evidence that Betfair can become the market leader in European sports betting".

Traders also claimed it was a bullish sign for the group's great American hopes, arguing that it could help support Betfair's case if and when online gambling is regulated in the US.

There were some in the City hedging their bets. Elections in the German state of Schleswig Holstein – which awarded the licences – take place this weekend and the fear is that a change in government could result in a change in policy.

However, Morgan Stanley's Vaughan Lewis was doing his best to calm nerves, arguing that "the award of these licences would make changing the regime after the elections much more complicated".

Meanwhile, although it was not one of the lucky companies to get a licence, Bwin.Party advanced 5.7p to 156.1p on hopes the Real Madrid-sponsor is among those next in line.

The FTSE 100 was strong for much of the day, but poor retail sales figures from the US pushed it into a late slide, although the benchmark index still managed to close 8.44 points stronger at 5,766.55. Events from across the Atlantic are likely to dominate today's session as well thanks to the release of the closely watched, non-farm payroll figures.

A busy week for results continued as Smith & Nephew was given a leg-up by forecast-beating, first-quarter figures, with the prosthetics manufacturer finishing 24p higher at 629.5p. Elsewhere, luxury brand Burberry was pushed up 21p to 1,536p by better-than-expected results from French rival Hermes.

The takeover spotlight was back on Sage as the business software firm announced it was working with US giant Microsoft. Merchant Securities' Roger Phillips said the deal could "ultimately reawaken the long-dormant Sage-Microsoft bid rumours", although he did concede there were "significant barriers to such a deal".

"Nevertheless, we continue to see Sage as a potential... M&A target, either for a trade vendor or for private equity," Mr Phillips added, as the group crept up 1.5p to 289.6p.

Sentiment around Weir was showing little sign of improving ahead of the engineer's first-quarter results next week. The group has plenty of fans among analysts – RBC Capital's scribes said it was "pricing-in downgrades that we consider unlikely" – but its shares were still knocked back by 64p to 1,616p, its lowest for nearly seven months.

Three months after completing the sale of its struggling Comet chain, Kesa Electricals was continuing to slim down as the retailer struck a deal to dispose of virtually all of its Darty Telecom unit. With Bank of America Merrill Lynch's Aurelie Caspar suggesting a run of further disposals could follow, the group initially spurted up as much as 10 per cent, although by the bell it was just 0.95p better off at 56.95p.

Talvivaara was left 9.6p weaker at 168.2p, a three-year low, after getting a ticking off from the Finnish government. Environment minister Ville Niinisto reportedly warned the nickel miner that unless pollution was reduced at its Sotkamo site by the end of year it could face a fine or even a possible shutdown of the mine.

Premier Oil fell 6p to 374.4p on the news the explorer is plugging and abandoning its Stingray exploration well in the North Sea. Broker FoxDavies was supportive, however, saying the "medium-term outlook remains intact" while suggesting that Premier "is also a potential target, especially as it bulks up its North Sea position".

Drax edged down 3.5p to 570.5p after having risen nearly 6 per cent over the past two sessions in response to revived takeover speculation. This was despite Liberum Capital's scribblers talking up its takeover bid potential, saying that once the power station operator was able to finalise its plans for biomass there was a "strong strategic rationale for Centrica making an approach".

Down on Aim, Empyrean climbed by 0.5p to 9p following the latest from the bid saga between two of its fellow stakeholders in the Sugarloaf shale project in Texas, with Eureka Energy rejecting Aurora Oil & Gas' offer as too low. The tiddler – which also released its final results yesterday – has now added more than a fifth over the past four sessions.