Chinese mines bid for Anglos

By Geoff Foster for MailOnline
Updated: 05:56 EDT, 21 September 2006

Speculation that a major Chinese industrial group had been around the market attempting to buy 3% of takeover target Anglo American got dealers excited. Shares of the mining giant rallied sharply from a depressed level of 2059p to touch 2161p before closing 2p dearer at 2140p.

Anglos has been the subject of break-up talk as the group searches for a replacement for chief executive Tony Trahar who leaves in March. Brazil's CVRD, Xstrata and Rio Tinto were recently rumoured to have told financial advisers to buy Anglos, but the market still awaits confirmation.

Sector analysts believe Anglos is an 'eat or be eaten' situation. The mining industry is awash with cash thanks to higher metal prices and Anglos has so far shown little interest in going on the acquisition trail.

Instead, it recently returned £2.6bn cash to shareholders. A Chinese takeaway of 3% would mean the buyer would have to purchase around 40m Anglo shares.

Last night's closing turnover total of 17.1m fell well short of that figure.

Other miners were dragged higher by the fun and games at Anglo having earlier fallen sharply in sympathy with flat commodity prices.

Copper futures dropped nearly 4% to $7210 a tonne, gold dipped to $577 a troy ounce and the oil price to below $61 a barrel - its lowest in six months - following hedge fund Amaranth Advisors' announcement of a loss of more than £1.6bn on its natural gas investments.

Rio Tinto recovered from 2355p to finish 18p better at 2427p and Xstrata firmed 1p to 2152p, after earlier falling to 2079p.

Copper miner Kazakhmys remained in the dog-house at 1162p, down a further 48p. Despite Tuesday's denial that outgoing chief executive YK Cha will sell shares when his lock-in handcuffs are removed on October 7, dealers still feel he will end up significantly reducing his 15.6% stake in the short to medium term.

As Wall Street jumped 77 points at the outset following stonking third quarter figures from investment banking giant Morgan Stanley and on hopes that the Fed would leave US interest rates on hold at 5¼p the Footsie closed 34.4 points up at 5866.2. The FTSE 250 added 52.4 points to 9,791.1.

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Reflecting lower fuel prices and a bullish Collins Stewart note, British Airways climbed 17p to 437¾p.

Analyst Andrew Fitchie expects there to be an agreement between management, the trustees and trades unions on its £1.8bn pension deficit within the next couple of weeks. Terminal 5 will be a business-transforming move for BA with significant revenue benefits and cost savings likely from end 2007. The shares should trade up to £5 by next year. Talk of a pending bullish circular left Rolls-Royce 12¾p better at 455¾p.

International bank Standard Chartered shrugged off the military coup in Thailand and responded to renewed Temasek stakebuilding speculation. The close was 37p dearer at 1357p.

Mortgage bank Northern Rock rose 29p to 1170p as rumours of a merger with Bradford & Bingley (¾p off at 463½p) refused to lie down.

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Former British Steel group Corus added 10p at 369¾p after Morgan Stanley moved to overweight and suggested that a value enhancing deal is in the pipeline during the next six months. Analysts recently poohpoohed private equity bid talk at Next only days before it reported excellent results from its Next directory operation.

The story was doing the rounds again yesterday and the shares closed 50p up, reaching a year's peak of 1886p.

Continuing to draw strength from a recent Panmure Gordon circular, Carphone Warehouse buzzed 11¾p higher to 296p.

Investment holding company Frenkel Topping firmed 1p to 8½p on hearing that thriving Manchester-based investment bank Zeus Capital sits on 9.5%.

Exhibitions group Mice gained 2p to 38¼p as buyers nibbled following the interims and news that Oriel Securities has been appointed shop broker.

UK telecoms equipment minnow Newport Networks, in which multi-millionaire chairman Sir Terry Matthews is a 17% shareholder, crashed 23/8p to 3¼p after reporting increased first-half losses of £7.4m and warned that revenue in the second-half is likely to be delayed and less than market estimates.

A bullish AGM lifted ITIS 3½p to 54½p.

• GALLEON softened ¼p to 5½p but should bounce today. Whispers suggest its subsidiary Croco Worldwide has won a £1.12m order for the supply of 80m bespoke children's toys from a major U.S. consumer goods company. It is the first order placed for the high margin 'soft' toys and covers only four countries. As Christmas approaches there is plenty of scope for a roll out to other countries.