Market Report: Hopeful signs on high street hearten investors

It is a crunch week for the retailers who are preparing to unveil the extent of the Christmas carnage. On Friday, the mutterings were of an "abysmal" season of sales, but what a difference a weekend makes.

Rumours that Marks & Spencer would move its update forward gave investors heart that it would not, as feared, warn on profits on Wednesday. The stock stormed 4 per cent higher to 230p.

Panmure Gordon added that the troubling environment for retail companies has now been priced into many of the stocks. As John Lewis and Liberty put out solid results yesterday, hopes rose that Christmas trading had been saved by a last-minute rush.

The world markets were back trading in earnest yesterday, and the rises from Friday held in the morning as the top tier gained 50 points. This followed a solid performance in the Far East.

"It's strange," one market maker said: "But people are worried how far the new year rally can continue without news or direction." It didn't hold. The FTSE 100 fell at lunchtime as the Dow Jones Futures eased, but rallied into the black, closing up 17.85 points at 4579.64, a two-month high.

Amlin was an early pace-setter. The insurance group has enjoyed a great streak in the run-up to promotion to the top tier in December, although has come off since. It has faced no Katrina-sized claims in the past 12 months, and premiums in the sector have been on the rise. It couldn't hold its position at the top, closing 2.71 per cent higher at 360.25p.

The winner on the day was International Power, as power groups helped to pull up the blue chips. One sales trader said the company was "the most interesting in the FTSE". He said the valuation looked good, the sector remains hot, and yesterday it could have hit breakout levels with some serious upside now for investors. It closed up 7.37 per cent at 265.75p.

Rio Tinto looked good early on following reports from Oz that it was running the slide rule over various assets it could sell. The shares rose over 2 per cent to 1734p, despite Goldman Sachs trimming its price target from 1990p to 1833p.

Standard Chartered took bronze on the podium yesterday, benefiting from the strong performance in the Far East markets in the morning. The Asian-focused bank was also being linked with a move for American International Group's securities unit in Taiwan, and it closed up 6.15 per cent to 923p.

The other banks weren't so lucky after a bearish note published by Deutsche Bank, which cut targets across the sector as it forecast further losses from the loan books. Analyst Jason Napier said: "It's not all bad news, but it's still more bad than good." The broker is a seller of Lloyds and cautious on Royal Bank of Scotland, saying they would "roughly break even" this year. RBS fell 5 per cent but rallied to finish flat, while Lloyds TSB gave up 3.31 per cent to 125.7p.

Randgold Resources failed to glitter yesterday as it slipped near to the foot of the leaderboard. One trader said: "In these markets everyone is selling gold and getting into oil." It closed down 9.3 per cent at 2778p.

The FTSE 250 performed better than the 100, rising 1.78 per cent to 6745.17. Top was the finance house Cattles, which has endured a nosedive from grace since peaking at 401.9p in February, bottoming out last month at 10.5p. Last week, speculation emerged that it was to secure a banking licence from the Financial Services Authority in the middle of the year, which would be great news for the group. The investors were still feeling giddy enough yesterday to send it up 23.75 per cent to 24.75p.

On the downside, a price war threatening to break out among the pubs dragged on the sector. JD Wetherspoon has slashed the price of some pints to just 99p and with consumer outlook depressed the stocks fell. Worst was Punch Taverns, which lost 5.98 per cent to close at 55p.

JJB Sports continued to benefit from the change in management announced on Friday, with the shares lifting 63.5 per cent to 8.6p. The reshuffle was backed by Investec, which thinks its chances of survival have improved. Another, unnamed broker was not so bullish, and believes it could be heading back towardspenny stock territory before too long.

On the growth market, there were whispers about the small brokerage house St Helen's Capital. The stock is very thinly traded but has come off from a 15.5p high last year to 3p. The rumour is that rivals could be looking at the group at these levels, or there might be a management buyout.

The technology group DDD, which specialises in software and hardware for three-dimensional consumer devices, soared after it raised £545,000 through a placing. This included a strategic investment from Wistron Corporation, a Taiwanese group, which had investors licking their lips. The stock rose 28 per cent to 4.5p.

On the downside, a profits warning from the climate change business Camco International sent the stock down just over 10 per cent. The group closed at 17.5p after admitting revenues would fall by €6m (£5.6m) this year.