REED ELSEVIER gave up some of this week’s gains on concerns that a slowdown in revenue growth in the publisher’s science division could leave its shares looking expensive.

In a circular entitled Science Friction, Citigroup suggests the Anglo-Dutch media group is at a “pivotal moment” in its history. Rogan Angelini-Hurll, an analyst, suggests Reed has been one of the best performers in its sector over the past four years, having outpaced the FTSE all-share index by 47 per cent. But the US broker now believes pricing pressure within science publishing could trigger a short-term de-rating of the shares, similar to their performance between 1997 and 1998.

Citigroup cites the diminishing impact of the move to electronic delivery, which initially enabled publishers to charge a premium for providing electronic and hard copy alongside each other. It says that this process is now nearly complete, meaning a potential drop in revenue growth. It also points to the unwinding of “bundled” deals with academic institutions, which, together with the electronic shift, has seen price inflation slow from 7 per cent to 5.5 per cent over the past two years.

Mr Angelini-Hurll also says that price pressure and the emergence of “open access” publishing will require publishers to invest more — either through internal capital expenditure or acquisition.

On those grounds, Citigroup has moved from “hold” to “sell”, while lowering its price target from 500p to 430p. Reed Elsevier fell 7p to 501p. The FTSE 100 closed little changed, up 0.2 points at 4,698.9, as a recovery in pharmaceutical stocks, such as GlaxoSmithKline, up 24p to £11.75, countered below-par US employment data.

Reuters had one of the best gains after Tom Glocer, chief executive, revealed in a memo to staff that revenues were up for the first time in four years. Although the financial information provider conceded that Mr Glocer’s update was not meant to imply that revenues will be positive for 2005 as a whole, the shares gained 11½p at 346p.

SABMiller rose by 10p to 750½p as Dresdner Kleinwort Wasserstein upgraded the South African brewer to “add” with an 835p target in a review of the global beer industry. But its rival, Scottish & Newcastle, the Kronenbourg and Foster’s brewer, slipped 7½p to 376p, amid revived speculation that Russia will push through a proposed ban on outdoor drinking. Analysts suggest that such a ban could have a bad effect on BBH, S&N’s Russian joint venture with Carlsberg. Separately, Ian McHoul, S&N’s finance director, declared the purchase of 5,000 shares at 379p.

Kingfisher gave up 4¼p at 311¼p on concerns that problems with the new fulfilment system at the do-it-yourself retailer’s Screwfix operation still persist. Credit Suisse First Boston is unsettled, and has cut its second-half sales and profit estimates for the division, triggering a 1.6 per cent fall in current-year pre-tax profit forecasts for the group. The Swiss broker has also moved from “outperform” to “neutral” after its 320p price target was met.

Rio Tinto lost 16p at £15.46 when Robert Adams, an executive director, sold 184,921 shares at £15.57 after the exercise of options at prices between 820p and 965p.

• NEW YORK: Stocks fell after oil prices climbed above $53 a barrel to hit a record high. The Dow Jones industrial average closed down 70.20 points at 10,055.20.

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FTSE 100 closed up 0.2 points at 4,698.9
Dow Jones industrial average closed down 70.20 at 10,055.20

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