SIGNS of a German regulatory crackdown on internet bookmakers triggered a 5 per cent fall in PartyGaming, which only last week took its first step into the sector through the €102 million (£69 million) purchase of Gamebookers.

With online gaming stocks still reeling from last month’s US indictment of executives at BetOnSports, the sector came under renewed pressure on concerns that Germany is set to prevent bwin, the Austrian-based internet bookmaker formerly known as BetandWin, from trading on its home turf. Shares in the company fell by as much as 31 per cent after Süddeutsche Zeitung, the German newspaper, reported that the state of Saxony will withdraw bwin’s bookmaking licence as early as today and ban it from accepting bets from German residents.

That setback prompted Arbuthnot Securities to reiterate its view that continental European markets are not necessarily safer than those facing the United States, and that companies with exposure to the former do not necessarily deserve a premium rating.

Paul Leyland, an analyst, reminded clients that all forms of unlicensed gambling remain illegal under German federal law, a position that the German Government is looking to clarify by the end of next year. PartyGaming dipped 6p to 112¼p, with mid-cap rival 888 Holdings down 8¼p to 156¾p.

The wider market recovered from early weakness to settle near its intra-day high, helped by a less hawkish than expected tone to the Bank of England’s quarterly Inflation Report. The FTSE 100 closed 42.4 points ahead at 5,860.5.

A raised 500p target from UBS, against 420p previously, pulled British Airways 11¾p higher to 390p. Tim Marshall, an analyst, has raised his earnings-per-share forecasts for 2007 and 2008 by 9 per cent and 16 per cent respectively, taking the latter to 20 per cent above market expectations. Mr Marshall cites the positive impact on yields from the flag carrier’s reduction in overall capacity and a potential favourable outcome to pension negotiations, which start next month.

A raised price objective also underpinned Barclays, up 11p to 644p, where Deutsche Bank increased its target from 710p to 750p after last week’s first-half results, which it described as “stellar”. The German broker has raised its 2006 and 2007 earnings forecasts by 4 per cent and argues that the shares look too cheap relative to their sector.

Scottish & Newcastle recovered 11p to 530p on an upgrade from Dresdner Kleinwort, which moved from “hold” to “add” with a raised 545p target after Tuesday’s badly received first-half numbers. Matthew Jordan, an analyst, highlights the underperformance of the brewer’s shares relative to Heineken and InBev over the past month, to such an extent that they now sit at an 18 per cent discount to their sector.

The German broker also assisted Reed Elsevier, up 11p to 545p, where it repeated its “buy” advice after last month’s interims. Dresdner has increased its 2007 earnings estimates by 3.9 per cent.

NEW YORK: Investors concerned over erratic oil prices and a slowing economy sent stocks lower, despite the Federal Reserve’s pause in raising interest rates. At the close, the Dow Jones industrial average was down 97.40 points to 11,076.40.

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