HOPES of further disposals and a mooted break-up valuation of nearly three times its current share price enabled Invensys to halt its steep slide.

Shares in the industrial automation and controls closed at 12½p on Tuesday, against the 52½p at which they traded at the start of the month, before fears of a profit warning — disastrously fulfilled on February 14 — began to take hold.

Although Invensys has reassured that its banking covenants are not under threat, followers took heart from reports yesterday that the company, which only completed a £1.8 billion disposal programme last year, may consider a further round of sales to shore up its finances.

Credit Suisse First Boston, which under Dan Manor, its now-departed engineering analysts, accurately predicted this month’s warning, also helped sentiment by upgrading its recommendation from “underperform” to “neutral”.

The Swiss broker suggests that Invensys continues to lose market share and may miss even its reduced margin targets, but places greater emphasis on a likely break-up of the company, on which it puts a 34p-a-share valuation. CSFB believes its production management business, which it values at £810 million, could draw interest from the likes of Siemens and GE, which are keen to expand in process automation, while parts of its energy management division, on which it places a £2 billion price tag, could be picked off by private equity players such as KKR. Schneider of France is also seen as a possible buyer of its power systems arm. With that view taking hold, Invensys added ½p to 13p.

The wider market suffered from a weak start on Wall Street and the move by some heavily-weighted FTSE 100 stocks to trade ex dividend, including Lloyds TSB, which lost a 23½p pay-off, down 27½p at 352¼p, and Barclays, 15¾p lighter at 350p, which gave up 12p final dividend. The FTSE 100, which traded higher in the early session, closed 28.2 points behind on a healthy turnover in 3.2 billion shares.

Legal & General, up 4¼p to 70½p, the best blue-chip rise, found strong late buying interest on talk that today’s full-year figures will reassure. Deutsche Bank repeated its bullish stance, highlighting a 91p-a-share target and the life insurer’s sound financial position after September’s rights issue. Scottish & Newcastle faded 6½p to 340p amid murmurs that Finland’s Hartwall family, which took a 12 per cent stake in the UK group upon the £1.2 billion sale of their brewing empire last year, are looking to offload their holding after the expiry of a lock-up period on February 14. But dealers said there was no sign of any Hartwall family representative, which has two seats on S&N’s board, seeking to place stock.

NEW YORK: Stocks fell as surging oil prices and war jitters over Iraq kept sentiment under a cloud, while Hewlett-Packard’s flagging sales reminded investors that earnings are not that bright. The Dow Jones industrial average closed down 102.52 points at 7,806.98.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts