SIGNS of stability at Smith & Nephew (S&N) provided support to the replacement joints maker, as quarterly results helped to pull back recent share price falls.

The company headed the large-cap risers after beating City forecasts for the second quarter and reiterating its expectation of an improved second half.

Christopher O’Donnell, chief executive, said that further growth this year and beyond would be driven by new product launches over the next 12 to 18 months, including its Birmingham hip resurfacing technology, which should make hip replacements simpler.

His comments came as the group reported pre-tax profits of $141 million [£76 million] for the period, up from $128 million the year before and ahead of expectations.

Dresdner Kleinwort encouraged investors to buy into the stock with a maintained 536p target price, arguing that the results were a sign that the company had begun to stabilise.

In April the group’s shares fell by more than 10 per cent in one session after it reported first-quarter numbers and cut full-year forecasts, blaming restructuring costs and government spending cuts.

The shares, which in April finished at just above 450p, have been on the slide since, touching 400p earlier this month.

Reassurance of better things to come drove the shares up 30¾p to 462¾p yesterday, offsetting the recent slide but still leaving the shares a long way short of their pre-warning level. S&N’s gains came against the backdrop of a rising market. The FTSE 100 closed up 52.4 points at 5,929.5 on trading volumes that were slightly below the typical daily level.

Signs of improvement at Anheuser-Busch, the Budweiser brewer, bolstered SABMiller on expectations that the London-listed group, which brews Miller lager, will benefit from the same trends reported by its US rival.

Anheuser-Busch beat forecasts with a 7.4 per cent increase in quarterly profits and indicated that it had increased its pricing power during the quarter, reporting average revenue per barrel up 0.9 per cent in the period.

Trevor Stirling, senior analyst at Sanford Bernstein, said this was good news for SABMiller and “consistent with our expectation of solid pricing progress from Miller in the current financial year”.

Mr Stirling expects a bullish update from SABMiller at its annual meeting today. The shares closed up 16p at £10.44½.

Better than forecast profits at Amvescap and reports of continuing fund inflows led the Anglo-American fund manager up 20¾p at 522½p.

AstraZeneca notched up the biggest large-cap fall, dropping 111p to £32.09 as investors locked in profits after results.

A flurry of changes from brokers failed to stimulate Northern Rock further. The bank gave up 21½p to £11.06½ after Wednesday’s gains despite a target price of £12.25 from Dresdner Kleinwort. A higher target from Goldman Sachs of £11.67 left little to aim for, while WestLB upped its target to 950p and restated its “sell” rating.

NEW YORK: Shares fell moderately as investors worried about the timing of the launch of Microsoft’s new operating system. The Dow Jones industrial average closed down 2.10 points at 11,100.40.

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