Advertising optimism helps invigorate ITV

Broadcaster climbs 2.8% as London market stalls on low volume

Advertising optimism helped ITV hit a five-year high in a flat London
market on Monday.

Broadcaster climbs 2.8% amid talk of stronger than expected first-quarter ad sales and bid talk while the wider London market stalls on low volume

The broadcaster climbed 2.8 per cent to 120.3p amid talk that first-quarter ad sales have been much stronger than expected

Feedback from media buyers suggested net ad revenue for March was up between 8 per cent and 14 per cent, partly reflecting the timing of Easter, said Merrill Lynch. That follows a strong January and February for ITV, with the group said to have benefited from a contract dispute between Channel 4 and media buyer Group M.

The resilience of UK retail sales, increased government spending and competition among pay-TV providers was helping compensate for this year’s absence of Euro 2012, Merrill said. The broker raised its 2013 earnings forecast by 7 per cent to 9.9p per share.

Continued bid speculation also played a part in ITV’s strength, with an assortment of private equity funds credited with an interest. Traders were cautious of the talk ahead of ITV’s full-year results next week, when management is expected to start a share buyback of at least £100m.

The wider market stalled on low volume, with the FTSE 100 down 0.2 per cent, or 10.07 points, at 6,318.19. The start of half-term holiday in the UK and the closure of US markets meant blue-chip turnover about half the daily average.

Miners followed metals prices lower after Chinese retail sales growth slowed unexpectedly. Antofagasta lost 1.9 per cent to £10.98 and Kazakhmys was down 2.8 per cent to 726p.

Anglo American lost 2.8 per cent to £19.83 following violent clashes between guards and workers at its Anglo Platinum mine.

ENRC shed 3.1 per cent to 390.3p to lead the fallers, with Citigroup reiterating “sell” advice in reaction to the stock’s 50 per cent jump since November.

Carnival slipped a further 1.7 per cent to £24.62 following its warning last week that a fire on board the Carnival Triumph liner would cut its half-year earnings by about 4 per cent.

Sage Group slid 1.6 per cent to 332.5p on news it had sold seven businesses previously identified as non-core for up to £93.4m. The sales would dilute earnings per share by about 5 per cent, though that should be largely offset by the proceeds funding a more aggressive share buyback, said Credit Suisse.

Smirnoff maker Diageo drifted 0.6 per cent to £19.22 after chief executive Paul Walsh sold 75,000 shares in return for £1.45m.

Property group Hammerson led the blue-chip risers, up 3.5 per cent to 504p. Dealers put the strength down to the execution of a large programme trade near the end of the session.

Man Group gained 1.9 per cent to 109.6p ahead of a boardroom reshuffle, with the hedge fund manager expected to promote former managers of GLG Partners, the rival it bought in 2010.

Wm Morrisonrose 1 per cent to 263.9p after announcing it had bought 49 Blockbuster sites from administrators Deloitte.

The purchase put Morrison one store away from its target of finding 70 convenience store plots by January 2014, suggesting it would upgrade the target when delivering results due in March. “Although helpful for sentiment this is not a sufficiently large deal to make a meaningful difference to forecasts,” said Deutsche Bank.

Ahead of this week’s shareholder meeting, Bumi Resources advanced 4.4 per cent to 394p after Indonesian investor Rosan Roeslani sold its near 10 per cent stake.

Drug developer Phyto-pharm slumped 81 per cent to 1.9p after mid-stage trials of its Parkinson’s disease treatment showed it was no better than a placebo. The failure of its key drug left the group with 1.6p per share in cash.

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