A mixed bag

The performance of the London market was mixed last week, as continued bid activity was offset by some lacklustre earnings reports.

Quentin Smith from OMAM in the UK says that house prices rose by the most in 18 months in January, according to the Nationwide Building Society, rising 1.4% from December, when prices advanced 0.5%. The annual rise was 4.4%, the highest increase in eight months.

Over the week the All-Share lost 0.3%, with the FTSE 100 down 0.5%, while midcaps and smaller companies continued to make ground, advancing 0.4% and 0.8%.

With defensive stocks coming to the fore, utilities were among the sector leaders, while telecoms were among the weakest, suffering from a profit warning from Cable & Wireless.

Pay-television company British Sky Broadcasting (+4.1% to 505p) reported an 8.9% rise in second quarter profit on higher revenue as its cancellation rate declined.

The churn, or cancellation rate, fell to 10.6% in the quarter from 11.7% the previous quarter, while the company added 215,000 net new subscribers to bring its total to 8.1m users. BSkyB has used new pricing structures to combat slowing customer growth and competition from cable TV and Freeview, a subscription-free digital television product.

The company also recently expanded its services through the purchase of broadband provider Easynet Group and by offering films and sports programs that can be downloaded to computers.

British Airways (-4.0% to 318p), Europe's third largest airline, reported a 1.7% rise in fiscal third quarter profit as it carried more business passengers. BA also forecast that full year revenue would rise by more than previous expectations.

Sales growth was driven by strong traffic volumes, particularly for business travellers. BA has been reducing fares because of competition from low-cost carriers in Europe.