Analysts do a demolition job on builders

Property market worries were bad news for building materials group Wolseley, sending its shares sharply lower yesterday, weighing on a FTSE 100 already burdened by wider economic jitters.

Wolseley was the biggest faller on a descending blue chip market after analysts at Goldman Sachs flagged up risks caused by the wider turmoil. They cut their recommendation on the shares to sell from neutral and dropped their price target to 565p from 775p, saying they expect earnings to continue to fall as construction markets in the US and Europe weaken. Deutsche Bank cut its price target to 649p from 763p.

The downgrades left Wolseley's shares down 37p, or 6.3%, at 550p.

That compared to a 1.5% sell-off in the wider market, with the FTSE 100 losing 84 points to 5692.4 - almost wiping out the previous session's gains. A late flurry of activity as Wall Street came off its lows meant the London market was able to come back a little from deep losses caused by sell-offs around the world on the back of a weak dollar and continuing credit market turmoil.

The dollar's fall boosted gold and oil prices, the latter keeping British Airways under pressure. Along with other airlines, its shares fell on continued concerns about fuel prices and closed down 12p, or 5%, at 230.5p, while midcap peer easyJet was down 4.9% at 396p.

Financial stocks also came in for heavy selling. Royal Bank of Scotland was down 16.5p at 342.35p. HBOS lost 16p to 562p and HSBC fell 18p to 777.5p.

There was plenty of action in the mining sector, not least thanks to a fresh record for gold prices, with US futures pushing through $1,000 an ounce.

Financial betting site BetsForTraders.com said the rise prompted a rush towards wagers on Rio Tinto. The site reported that seven times the average number of bets on the miner were processed yesterday, with 82% of its clients forecasting a rise in the company's share price. "Based on the fundamentals and the pattern of client betting, we are forecasting gold at $2,000 per ounce by Christmas 2008," said the bookmaker's market analyst, Ryan Kneale.

Rio Tinto shares ended down 35p, or 0.6%, at £54.07.

Rival Kazakhmys was down a much sharper 2.0% at £17.45 after it told the market it had not received a takeover proposal from Eurasian Natural Resources. Bid speculation had driven the shares up 16% on Wednesday.

Xstrata was headed the other way, up 68p, or 1.8%, to £39.21 and one of the FTSE 100's biggest risers, on market talk that its prospective buyer, Vale, was nearing a conclusion in negotiations with Xstrata's biggest shareholder, Glencore.

Unilever was another big riser, gaining 51p, or 3.2% to £16.51 on the back of upbeat news from rival Nestlé.

Energy companies were also up, boosted by renewed talk of interest in Scottish & Southern from RWE. Both parties declined to comment but speculation in the market lifted shares in the UK utility company 36p, or 2.5%, to £14.56. International Power rose 2%, National Grid rose 1.6% and United Utilities 0.7%.

Further down the market, shares in IT group Horizon Technology more than doubled after it reported a bid approach from an unnamed suitor. The Dublin-based company's shares were also boosted by news of double-digit sales growth and ended up 110.5% at 69p.

TalkSport radio station owner UTV Media was up 4.25p at 250.75p after its 2007 results. The Irish broadcasting company said operating profits were up 5% and this year had started well.

On Aim, security specialist Image Scan Holdings rose 1.1p to 6p after reporting a strong order book for products including its portable x-ray scanning system. But 2waytraffic, the media company which owns the rights to quiz show Who Wants to be a Millionaire? was lower despite news that Sony Pictures is buying the Dutch company for £137.5m. The shares were down 5p at 102.5p.

There was more manoeuvring in the fight for online marketing group TMN as former chief executive of Datamonitor Mike Danson picked up a 7.6% stake. Earlier this week rival Tangent, run by the nephew of former Carlton boss and major shareholder Michael Green, tabled a 50p-a-share offer for TMN.

TMN chief executive Mark Smith is understood to be no fan of a tie-up but two of the company's big shareholders, Hargreave Hale and William Currie, who own 11.1% in all, have said they would back a deal. Danson's move may point to positioning by the board to see off Tangent. Danson became a multimillionaire by selling Datamonitor to Informa, and one of his non-executive directors at the time was Peter Harkness, now TMN's chairman. TMN closed up 4p at 51p with Tangent flat at 12p.

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