Nearly four months have elapsed since the confectionery group was forced to recall bars of Dairy Milk over concerns of possible salmonella contamination. JPMorgan points out that the latest AC Nielsen sales data for the British chocolate market shows that Cadbury is struggling to regain sales momentum. Although the situation improved in August after the trough of July — when sales fell 18 per cent — Arnaud Langlois, analyst, notes that Cadbury’s performance deteriorated again last month, with sales down 8.8 per cent in the three weeks to September 24, against a 1.3 per cent fall for the market as a whole.

Mr Langlois says that this is important because the UK chocolate market accounts for 20 per cent of the company’s operating profit. Further, Masterfoods, the maker of Mars and Twix, overtook Cadbury as market leader last month.

JPMorgan reckons that the worst is not necessarily behind the company, with any decision by Birmingham City Council to prosecute Cadbury over the salmonella incident raising the prospect of further bad press in the run-up to Christmas. Perhaps most seriously, Mr Langlois says that Cadbury’s full-year profit targets look increasingly stretched.

Other brokers were also negative, including Merrill Lynch, which removed the shares from its “buy” roster, and Credit Suisse, which repeated its 510p target ahead of the company’s investor seminar on October 30. Cadbury fell 1½p at 556p.

Underpinned by Wall Street, the FTSE 100 — 15.1 points better at 6,172.4, a new five-year high — notched up its sixth successive session of gains, marking its best such run since August 2005. That performance came in spite of a severe sell-off at British Energy, off 133½p at 427p, or 24 per cent, on the disclosure of a cracked boiler tube at its Hinkley Point B reactor. Switching out of the shares of the nuclear generator, together with a rally in spot electricity prices, helped Drax Group, up 35½p to 813½p. The same phenomenon assisted International Power, up 5¾p to 338½p, where bid rumours refuse to fade. Hot money also chased William Morrison, 7½p dearer at 258½p, on new talk of a leveraged buy-out.

Speculation over the future of its Scottish Widows division dominated trading in Lloyds TSB, down 2p to 579p. Although Swiss Re and AXA, of France, have been touted as possible buyers of the life insurance operation, one intriguing theory is that Edinburgh’s Standard Life, up 4¾p to 286¼p, a post-float high, may be interested in pursuing a “north of the border” merger.

Kingfisher gave up ¼p to 265p on a downgrade to “underweight” from Morgan Stanley, which thinks the B&Q owner’s 80 per cent premium to the wider UK market difficult to justify. The same broker supported ITV, up 1½p to 102p, where it has raised its target to 117p and cited possible break-up interest.

• NEW YORK: Shares rose amid optimism about corporate profits in a slowing economy, sending the Dow Jones industrial average creeping closer to the 12,000-mark. It closed up 20.10 points to 11,980.60.

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