Investors vote for Autonomy

AUTONOMY, the business software group, led the FTSE 100 risers yesterday after dismissing fears that it would miss earnings targets.

The Cambridge-based company rose strongly after saying earnings would be in line with expectations, with strong cash generation despite tough operating conditions.

On Tuesday, Autonomy was the biggest faller in the FTSE 100 after analysts at Astaire claimed that its failure to sign any significant deals in recent months meant it might struggle to reach forecasts. But yesterday Autonomy's shares jumped 90p to 1,560p after its chief executive predicted a 47 per cent rise in adjusted earnings per share.

The wider FTSE 100 traded lower for much of the session on talk that a leadership battle in the Labour Party might bring forward a general election. However, the market eventually dismissed the concerns, closing up 7.54 points at 5,530.04, continuing its recent rally.

Royal Bank of Scotland, the part-nationalised bank, continued its recovery, climbing 1.28p to 36.68p.

Other banks were also in demand, with Barclays climbing 8.9p to 307p and Lloyds Banking Group finishing 0.56p higher at 54.59p.

The retail sector was again the main focus, after Marks & Spencer reported a smaller than expected rise in sales and outgoing chairman Sir Stuart Rose warned that trading would remain challenging this year.

M&S shares, which have risen 10 per cent since the end of October, slid 7 per cent to close 27.5p down at 377.4p.

The news from M&S helped to pull down a number of other retailers.

Homebase and Argos owner Home Retail Group declined 6.4p to 283.5p, while B&Q owner Kingfisher dropped 3.4p to 230p and supermarket giant Tesco slipped 8.4p to 412.05p.

There was some cheer in the retail sector when midcap Majestic Wine said its recent trading had been better than expected.

Shares in Majestic Wine jumped 6 per cent to 12.5p at 227.5p, after it said that a recent adjustment in its minimum purchase policy had boosted Christmas sales.

In September, Majestic lowered the minimum its customers had to buy from 12 to six bottles in an attempt to broaden its customer base – particularly in towns and cities, where people are more likely to walk to its stores instead of driving.

The home-delivery pizza firm Domino's also rose, up 4.7p to 305.3p, after it reported an 8.6 per cent rise in like-for-like sales and said it continued to open stores at a record rate.

Wood Group, Scotland's largest oil services company, climbed 5.4p to 324.5p.

On Tuesday night, Morgan Stanley analysts named Wood as one of the bank's top picks in the sector, predicting a strong rise in spending on European oilfields in 2010.

Petrofac, the FTSE 100 oil services company, dropped 26p to 1,005p after the same Morgan Stanley analysts downgraded its rating on the shares to "underweight" from "equal weight".

Among the commodity-related companies, stronger metal prices helped to offset weaker crude oil, which fell on higher than expected US supplies.

Miner Xstrata was one of the FTSE 100's strongest risers, up 41p to 1,229p, while Kazakhmys rose 39p to 1,436p.

Oil companies were broadly lower, with BP shedding 0.7p to 619.4p and Royal Dutch Shell down 24.5p to 1,859p.

Scottish & Southern Energy rose 6p to 1,176p after Scottish ministers approved a plan to upgrade the Beauly-Denny transmission line.