REED ELSEVIER fell to a nine-month low on concerns over an impending House of Commons investigation into the science publishing market and the increasing support for “open access” journals.

Shareholders in the Anglo-Dutch media group are still smarting from last week’s trading update, when it lowered its earnings growth target for 2004 in the face of a $50 million (£29 million) increase in investment and continued challenging market conditions, especially in education.

But the focus shifted to longer-term strategic threats to its franchise yesterday on signs that the normally stable business of publishing scientific, technical and medical journals — Reed produces 1,200 every year — could be faced with a period of dramatic upheaval.

The first of these came with the confirmation by the Commons Science and Technology Committee that it will conduct an inquiry into scientific publishing early in the new year. Following growing dissatisfaction in US academic circles with the cost of subscriptions to journals, MPs will look at the issue of access to such publications in the UK, especially with regards to their price and availability.

Critically, the committee will examine whether the Government should support the trend towards the free dissemination of academic research, as pioneered in the US through “open access” journals, which are free to the US and funded by the author, who is usually sponsored.

Meg Geldens, a highly rated media analyst in Investec Securities, highlighted these two issues yesterday as she repeated her cautious “hold” advice on Reed. She also highlighted recent moves by high-profile university libraries — such as Cornell, Harvard, University of California and University of North Carolina — not to renew their bundled journal subscription contracts with Reed in their present form.

Although Ms Geldens concedes that Reed’s business publishing arm could beat forecasts, she thinks the shares are unlikely to outperform until the concerns over science publishing — which accounts for 40 per cent of earnings — are addressed. Reed fell 10½p to 449¾p, against a 16.3 point rise in the FTSE 100 to 4,347.6.

Reuters perked up 5½p at 239½p after a well-received presentation by Devin Wenig, an executive director, at a UBS media conference in New York on Thursday. Mr Wenig told delegates that the £55 million of cost savings the media group is due to deliver this year under its Fast Forward programme are on track.

An increased price target from Credit Suisse First Boston helped mmO2 to settle just shy of its 22-month high. Jonathan Funnell, analyst, thinks the mobile operator’s German operation could beat consensus forecasts next year, and has raised his objective from 65p to 85p. However, the broker has retained a “neutral” recommendation in the light of fading bid prospects and the threat to mmO2’s competitive position from 3G handsets.

Rentokil Initial fell to a new four-month low, off 5¼p at 188¾p, after last week’s downbeat trading statement. Although ABN Amro yesterday raised its stance from “sell” to “reduce”, it is worried by the acceleration of margin pressure in the group, especially in its parcels business.

• NEW YORK: The blue chip Dow Jones industrial average closed at an 18-month high as positive forecasts from United Technologies and Coca-Cola offset a worse than expected reading on US consumer confidence. The Dow closed up 34.00 points at 10,042.20.

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  FTSE 100 up 16.3 points at 4,347.6

• Dow Jones industrial average closed up 34.00 points at 10,042.20

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