Leading shares crept closer to the 6,000 point level yesterday as investors rediscovered their appetite for mining stocks and the market's biggest company, BP, rose sharply on the back of a research report that put forward the case for a demerger.
The final scores showed the FTSE 100 up 14.5 points at 5,965.1 - a five-year high - with Antofagasta, 101p higher at £20.65; Kazakhmys, 42p stronger at 986p, and BHP Billiton, 37.5p better at 980p, among the five biggest risers. Their gains came as the copper price hit a four-week high on the back of speculative buying and a weaker dollar. Copper, gold and a host of other metals are all priced in dollars and therefore any weakness in the dollar makes them more affordable to overseas buyers.
Meanwhile, BP, which boasts a market value of £133bn, rose 14p to 665p after the house broker, Cazenove, said the time had come to question the wisdom of its vertically integrated business model. "We believe that BP suffers a very material discount to its sum-of-the parts value and this could be substantially narrowed by separating its upstream and downstream businesses," the analyst Fred Lucas said.
Elsewhere, the FTSE 250 continued its record-breaking run, closing up 83.5 points at a record high of 9,729, while the FTSE Small Cap index firmed 4.9 points to 3,585.9.
The building materials group Hanson provided yesterday's main talking point. Rumours of a bid from Lafarge saw its shares hit 880p in early trading. But as the day wore on and there was no confirmation from Hanson about a takeover approach, they went into reverse, closing just 6p higher at 747p.
The session's other speculative story centred on the satellite broadcaster BSkyB, up 3.5p at 521.5p, and talk that Rupert Murdoch's News Corporation is mulling an offer for the 64% that it does not own. With a net cash position of about $5bn (£2.9bn), News Corp has the firepower to attempt what would be an audacious takeover. However, traders reckon BSkyB shareholders would be unlikely to sell for much less than 700p. They also noted that BSkyB is buying back shares, which would suggest that a deal is not likely at the moment.
Elsewhere, takeover rumours continued to swirl around Smith & Nephew, which gained 8p to 536p. Dresdner Kleinwort Wasserstein also believes S&N is set to get full US regulatory approval for its Birmingham hip-resurfacing implant system.
National Grid was marked 5.5p higher at 603.5p on rumours of predatory interest from Germany's RWE.
The online poker firm PartyGaming was one stock to miss out on yesterday's gains. It closed 7p lower at 120.5p as investors took some chips off the table ahead of last night's hearing of the internet gambling prohibition act in the US House of Representatives. City dealers also said there was a big seller around in the last half hour of trading. This was confirmed after the market closed when a line of 10m shares went through the stock exchange ticker at 123.6p.
Lower down the market, Aberdeen Asset Management bagged top spot on the FTSE 250 leaderboard, rising 12p to 186p on a bullish research report from Morgan Stanley. Raising its target price to 195p, the US broker said the market still undervalued Aberdeen organic growth potential and asset retention from the recent Deutsche Asset Management deal. Dealers also said there was heavy demand for Aberdeen shares from the racecourse at Cheltenham, where the company hired a corporate hospitality tent for the first time in four years.
Private equity bid rumours saw GCap Media, the UK's largest commercial radio company, rise 9.5p to 241.5p, while Woolworths improved 1.5p to 37.75p on rumours of a bid from a consortium fronted by the billionaire Reuben brothers. There was also talk of further stake-building by the 8% shareholder Baugur.
Venture Production eased 0.5p to 660p despite talk that it could be a takeover target for Centrica, 4p higher at 298p. On Tuesday, Centrica named Sam Laidlaw as its new chief executive. The former Enterprise Oil boss always looks to grow his companies by acquisitions and Numis Securities believes he will be no different at Centrica. "Venture is the exploration and production share most leveraged to the UK gas price and therefore the most likely to benefit from speculation about Centrica's acquisition plans," it said.
Among small caps, Scott Wilson, the engineering consultant, made a strong debut. Placed at 158p following a £68m fundraising by Brewin Dolphin, shares came to rest at 182p.
Elsewhere, Future Internet Technology, the cash shell where the financier Robert Bonnier has appeared as chief executive, closed within a whisker of its proposed fundraising price. Earlier this month, FTI announced plans to raise £50m via a placing of new shares at 35p. The fundraising is conditional on admission of the new shares to Aim. This is supposed to happen tomorrow. FTI shares closed 3.75p lower at 36.75p.
Post-results profit-taking saw Oxford Biomedica slide 0.5p to 29.5p. However, observers reckon the market has overlooked the potential of its ProSavin treatment for Parkinson's disease. Clinical trials are due to start later this year.
Buy and cell
There was renewed interest in Ceramic Fuel Cells (CFC) yesterday. The Melbourne-based company joined Aim this month following a £37m fundraising at 21.5p. Although its shares have made steady progress since listing the company trades at a big discount to rival Ceres Power. Ceres shares rose 22% on Monday after revealing it had successfully tested a 1 kilowatt fuel cell stack. Ambrian Research reckons this is unfair. CFC has also developed a 1kw stack that generates sufficient power for the average home. But unlike Ceres' product it is being tested in the field by several utility firms. As such, Ambrian estimates CFC is three years ahead of Ceres but notes the company is worth almost £100m less. CFC shares rose 2p to 27p, while Ceres Power added 4.5p to 283.5p.