Ad revenue fears hit ITV

Broadcaster ITV came away with the worst performance in a bright FTSE 100 yesterday after blue chip broker Cazenove drew attention to a bearish article in Campaign magazine.

The piece claimed the company, formed by the merger of Carlton and Granada earlier this year, could lose £100m of ad revenue if its market share fails to improve by the end of the year.

This is because of the new advertising sales system, known as contract rights renewal, which the two firms signed up to in order to get the merger past the regulator.

Under the terms of this system ad agencies can reduce their commitment to ITV in proportion to any decline in audience share.

According to the article, if present trends continue ITV's share of the £3.3bn TV advertising market could fall from 51% to 48%.

ITV shares closed 2.25p lower at 114.75p.

It was quiet session as many traders decided to leave early for the weekend. The FTSE 100 tracked Wall Street higher to close 19 points higher at 4,454.4, with Cable & Wireless the best performer. Its shares rose 3.75p to 131.25p on positive feedback from its post-results roadshow. Over the week the Footsie gained 23.7 points.

Elsewhere, the FTSE 250 index climbed 51.9 points to 6,096.8, thanks to a strong showing from index heavyweight Corus, up 2p to 34p, and mining company Vedanta, 13.25p higher at 283p. The FTSE Small Cap index rose 10.1 points to 2,509.5.

Market turnover was average with about 2.6bn shares changing hands.

In the bond market, gilts ended lower following strong US employment data which, dealers said, virtually guarantees an interest rate rise when the Federal Reserve next meets. The benchmark 10-year gilt finished around 98.3, yielding 5.215%.

Wm Morrison, the new owner of Safeway, underperformed, unsettled by the May till roll data from market research firm TNS. According to the report, Safeway's market share was down 1.1% on last May and down 0.2% on April. Analysts said the figures highlighted the challenge Wm Morrison faces in integrating the ailing supermarket chain. Its shares fell 2p to 226.75p.

BP, off 4.5p at 484.5p, and Shell, down 2.25p at 394.75p, were also in the doldrums as the oil price continued to fall in the wake of Thursday's decision by Opec to increase output. The lower oil price was not bad news for everybody. British Airways firmed 4.5p to 258p as concerns about the impact of rising fuel costs on its bottom line faded.

On a brighter note, satellite broadcaster BSkyB finally rallied, ending the day 13p higher at 597.5p.

Abbey National gained 7p to 463.5p excited by reports that Santander Central Hispano, Spain's largest bank, would have cut costs by £500m if its offer for the troubled mortgage bank had not been rejected.

Away from the blue chips, MFI Furniture Group, 3.25p better at 159.25p, remained in demand as rumours of a bid approach or a break-up refused to die down.

One person who thinks there could be something in the speculation is Nick Bubb, the Evolution Beeson Gregory retail analyst, who yesterday lifted his recommendation on the stock to add from reduce. "We now sense something is going on at MFI and that a bid may materialise soon," he said.

Further talk of a shareholder rebellion pushed Big Food Group, the owner of the Iceland frozen food chain, up a further 2.75p to 109p.

Among the techs, LogicaCMG gained 4.75p to 189.25p amid suggestions that US rival Comverse, which has around $1.5bn (£815m) in the bank, is lining up a bid for its wireless network division.

Food producer Geest improved 5p to 562p on news that its new Icelandic shareholder, Bakkavor, had increased its holding to 14.72%.

Among the small caps, Yates Group advanced 6.5p to 130p as dealers bet that a management buyout team could table a 170p-a-share offer alongside next week's preliminary figures. Given that the takeover talks are at an advanced stage and the net asset value of Yates is 174p a share, that looks a fair bet. Dealers also said trading at Yates has stabilised in recent months.

Heavily indebted holiday group MyTravel firmed 0.5p to 9.25p after non-executive chairman Michael Beckett surprised the market by announcing the purchase of 150,000 shares 8.75p each.

Retail Decisions gained 1.5p to 15.75p after unveiling Travelocity, the online travel firm, as a new customer for its ReD1 electronic payment gateway.

TT Electronics, the supplier of sensors and other equipment to the automotive sector, rose 4p to 148.5p on rumours of strong trading at its Optek division.

Traders reported a buzz around Virotec International, the environmental clean-up expert. They reckon it will announce the winning of a couple of contract over the next month or so, one of which has the potential to transform the company's fortunes.

Virotec claims to have developed a compound that binds together metal and other impurities in polluted water. Virotec rose 2p, or 10.8%, to 20.5p.

On AIM, African Gold improved 0.25p to 6.75p as a large sell order was finished and rumours of corporate activity did the rounds. According to gossip the firm is in merger talks with a Canadian group.

Ahead of full-year figures on Monday Intellexis, the e-learning company that recently acquired rival Key Skills, rose 8p to 82.5p.

Intec picks up US asset

A few weeks ago Intec Telecom Systems admitted it was in talks to buy the retail billing arm of US-based ADC and yesterday the deal came off, helping Intec's shares add 0.25p to 64.75p.

The acquisition of Singl.eView adds another leg to the Intec business - which develops software platforms for telecoms - and will greatly increase its scope and size. Singl.eView has 600 staff, works in 17 countries and has annual sales of up to $150m (£81m).

Intec will meet the $74.5m price tag with $3.5m of its own cash and a placing to raise the remainder. Existing shareholder General Atlantic Partners - which has investments in smaller British software firms - has picked all the 60.4m shares, upping its stake from 4% to 25.6%.

Baird, Intec's house broker, described the deal as well-timed and at a cheap price. "Whilst the unconventional funding structure might surprise some, we are comfortable that it was the best (and possibly the only) way to achieve the desired result," the broker added