Tate & Lyle topped the FTSE 100 list of risers yesterday as news that it was considering the disposal of part of its business - and another analyst upgrade - delighted investors.
The FTSE 100 closed up 32.1 points to 6214.6 - the highest since February 2001 - but traders were still cautiously waiting for the outcome of the US Federal Reserve's meeting on interest rates.
Tate & Lyle, the sugar and food ingredients group, said it could dispose of part or all of its European starch business in part because of new European Union regulations which state the EU sugar support prices should be cut by 36% over four years to bring them more in line with world sugar prices. A spokesman said besides the new regulations, the group was focusing on the value-added part of its overall business. Shares rose 29p to 801p, helped by analysts at Deutsche Bank upgrading their recommendation from "hold" to "buy".
Tobacco companies joined in the fray, with British American Tobacco up 36p to £14.82. The group is due to announce its third quarter results today and is expected to post an improvement in underlying earnings. The stock was also helped by good results at its US peer Reynolds American, in which it owns 42%. The news impacted on other tobacco companies. Gallaher Group rose 27p to 884.5p, and Imperial Tobacco was up 30p to £18.55.
Kingfisher benefited from its German counterpart Praktiker posting good results, due in part to its operations in Eastern Europe. The news prompted investors to reflect positively on the British home improvement retailer's prospects in that area. Shares were up 4.25p to 264.25p.
Rexam, the world's largest can maker, said it had disposed of its food plastics operations in the UK, Sweden and Denmark for a total of £25m. The company said it would use the money to reduce borrowings and shares rose 9.5p to 604.5p.
Miners were also on the up. Vedanta Resources rose 48p to £14.32, and Xstrata was up 42p to £22.54. Lonmin, the South-Africa focused platinum miner, rose 58p to £29.07 as it announced it had exceeded its target of producing 1m ounces of platinum for the year to end September. It said it had sold more than 952,000 ounces during the year, up 4.4% on the previous year.
A UBS note upgrading the pharmaceutical sector from neutral to overweight, and downgrading the insurance sector from overweight to neutral, caused quite a stir. GlaxoSmithKline, Britain's largest drug maker, rose 22p to £15.11 ahead of its third quarter results today.
Traders also speculated it could announce the disposal of its consumer healthcare unit at the same time. AstraZeneca, which reports its third-quarter results tomorrow, was up 42p to £35.29. Analysts at UBS said: "We believe the pharma sector is supported by the stage of the cycle, relative valuation, potential for cost-cutting and an undergeared balance sheet."
The insurance sector did not fare so well. The note said it suspected the insurance market faced tougher times over the next year. UBS said that in the reinsurance sector "we expect pricing to be weak in the January renewals season and see an 18% increase in capital committed to the sector."
Aviva topped the list of insurance fallers on the FTSE 100, dropping 10p to 792p. Legal & General was hot on its heels, with a 1.75p drop to 142.25p. Royal & Sun Alliance fell 1p to 148.5p, and Old Mutual edged down 1.5p to 169.5p.
Amvescap, meanwhile, was the biggest loser on the FTSE 100, falling 27p to 598p. The fund manager posted mixed results for the third quarter.
Pre-tax profit for the three months to the end of September rose 26% to $150.5m (£80) compared with the same time last year, but the result fell short of market expectations.
On the FTSE 250, two stocks fell due to disappointment over failed bids. Northgate Information Solutions, the IT group, saw its shares drop 11p to 82.5p as it announced it had terminated discussions relating to a number of "unsolicited" approaches it had received at the beginning of the month. The group reiterated that trading was in line with expectations, ahead of first-half results on December 11.
As for residential property investor Grainger Trust, shares dropped 11.5p to 668.5p as Regis Group, a private property firm, announced it no longer planned to bid for the company, only a week after it said it was interested in Grainger.
In the smaller capitalised arena, Isotron, a company that sterilises products using gamma radiation, soared 61.5p to 746.5p. Synergy Healthcare, an Aim-listed company, announced it had made an offer for Isotron for up to £160m.
Shares in the company, whose market capitalisation has risen from £13m when it floated in August 2001 to £259m currently, rose 11.5p to 695p.
And finally, on Aim, Pixology, the specialists in digital photography, saw its shares rise 9p to 42.5p as it said it was in talks regarding a possible offer for the company. It stressed dicussions were at an early stage.
Man in Blacks
Outdoor clothing chain Blacks remains the subject of bid speculation, up 10p at 443p. Mike Ashley, owner of Lillywhites, is rumoured to have taken a sizable interest through CFD derivatives. At least two firms known to offer CFD products have recently increased their presence on Blacks' share register - Credit Agricole, with 10.2%, and Man Financial with 10%. But yesterday, on the eve of its interim results, Blacks said it had been informed by Credit Agricole that it no longer held a notifiable stake. This suggests Mr Ashley may have either converted his position with Credit Agricole into shares or closed his CFD position, cashing in on bid speculation. Recent reports have noted Mr Ashley's habit of picking up large stakes in rival retailers without ever making an offer.