Burberry shares were dearer than ever after a push from a broker and a generous deal in Europe.
Changing hands for 160p towards the end of 2008, they touched a record £12.35 yesterday, before paring gains to settle a modest 42p better at £12.
That was thanks, in part, to Goldman Sachs, which raised its target price for the shares from £13.85¾p to £14.52 in a note predicting 600 million more consumers of luxury goods by 2025, a third of them Chinese. It was also a consequence of the near-60 per cent premium that LVMH stumped up for a controlling stake in the Italian jeweller Bulgari.
The €4.3 billion (£3.7 billion) paid by the French owner of Louis Vuitton, TAG Heuer and a rash of other top-end brands made the British fashion retailer still look relatively cheap, traders declared.
Best-known for its check-lined macs, Burberry itself has been linked with a possible takeover by LVMH, among others, in the past.
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Yesterday’s deal also set traders musing over the possible implications for LVMH’s Moët Hennessy joint venture with Diageo. Although paid for with French shares alone, and without recourse to any fundraising, industry-watchers read LVMH’s move to be a further signal of the determination of Bernard Arnault, the chief executive, to concentrate on luxury goods rather than on drink.
Thus, a sale of its stake in Moët Hennessy to Diageo, the owner of Guinness stout and Smirnoff vodka, was deemed more likely. Shares in Diageo rose a penny to £11.95.
Overall, the stock market was resilient for much of the day, despite Moody’s Investors Service’s three-notch downgrade of Greece, stilldearer oil and a decidedly mixed bag of company results.
Then a weak opening on Wall Street unsettled London and the FTSE 100 drifted 16.61 points lower to 5,973.78. The continuing fighting in Libya spurred the price of a barrel of Brent crude to as high as $118.50 and US oil to its best since September 2008. Gains turned to losses in afternoon trading as profits were booked and a rumour circulated that Colonel Gaddafi was preparing to flee the country. Both Citigroup and Commerzbank lifted their oil price forecasts.
Unease that pricier oil would drive up costs and dampen economies unsettled the prices of base metals and the miners that dig them up. Vedanta Resources, of India, fell 87p to £23.65.
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But the unrest in the Middle East and worries about inflation continued to burnish the credentials of gold and silver as havens. In turn, that lifted the likes of Fresnillo, a Mexican silver miner, 25p to £16.33.
International Consolidated Airlines Group, formed by the merger of British Airways and Iberia, rose 3¾p to 230½p as it agreed to buy as many as 16 new aircraft.
Although results and an acquisition by the testing specialist Intertek were applauded widely, the caution from Inmarsat about sales sent the satellite operator 91½p lower to 593p.
More than 19p higher at a 471½p, Imagination Technologies was at its best since 2000 after being tipped by RBS to be one of those component makers likely to benefit most from the drive by makers of mobile phones and other devices to pack more features into smaller spaces. So, too, was ARM Holdings, up 6½p at 590p.
Ocado gave back Friday’s gains, yielding 5½p to 207p, after UBS, one of those that helped to float the internet grocery deliver company in July, said that it had trimmed its stake. After selling one million shares last week, UBS now holds 33 million of them.
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Forth Ports confirmed recent speculation that it was in takeover talks with one of its main shareholders and climbed 82p to £16.05.
Violence in Ivory Coast forced Cluff Gold to suspend mining at its Angovia pit there. Thought to be the smaller of Cluff’s two mines in West Africa, the shares still eased 11¾p to 109p.
Chariot Oil & Gas raised £90 million by selling new shares at 250p each through RBC Capital Markets and Ambrian Partners, its brokers. The explorer, which is drilling for oil off the coast of Namibia, will use the funds to sink two wells there and carry out seismic tests. Talks continue with potential partners. Expect a decision by the end of the month. Shares were marked 13.7 per cent lower at 267p.
Obtala Resources, the vehicle of the Monaco-based entrepreneur Frank Scolaro, paid $11 million (£6.8 million) for 37 per cent of an iron asset in South Africa that could contain more than two billion tonnes of ore. The shares rose 4.3 per cent to 53p.
SocialGO, Britain’s only listed social media company, was 15.8 per cent better at 2¾p, though still far from its 209½p March 2005 best. Testing is under way of the second version of its software to allow churches, sports clubs, politicians and others to tailor their own social websites. At 24, its chief executive Alex Halliday is thought to be the youngest boss of any company listed in London.
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New York
Stocks fell sharply on Wall Street, giving up earlier gains, as higher oil prices weighed on the markets. Oil hit a two-year high early in the day, nearing $107 a barrel. At the close, the Dow Jones industrial average stood at 12,090.03 points, down 79.85.