A rise in the miners and the usual spate of Monday takeover speculation pushed leading shares higher yesterday.
Anglo American added 84p to £26.22 on the back of a buoyant copper price and ahead of full-year results next week. Credit Suisse issued an outperform note on the company, saying it had enough fire power to increase its proposed share buyback programme from $4bn (£2.05bn) to $8bn. It also expects news on the pending demerger of its Mondi Paper division at the results presentation, which will be the first opportunity the market has had to hear from the new chief executive, Cynthia Carroll.
However, the bank warned: "If management disappoint on the buyback we would expect share price weakness."
Credit Suisse is also fairly upbeat on the outlook for commodities. Philipp Vorndran, investment strategist for the bank's asset management division, said demand for copper was driven by the US and Asia, and could be at risk from an economic downturn in those regions. But he added: "We think the scenario of a hard landing in both the US and Asia is highly unlikely and there are already the first signs of a renewed pick-up in copper demand from [Asia]."
He concluded that the global economy would be more robust than most assume and as a consequence, "commodities will come under the spotlight again for positive reasons in the second half of 2007, if not sooner".
Among the other miners, Kazakhmys rose 27p to £11.26 and Lonmin was up 94p to £32.90.
As for the takeover speculation, the supermarket group J Sainsbury rose 8.75p to 512.75p on hopes of a bid battle. The private equity groups Kohlberg Kravis Roberts, CVC and Blackstone said earlier this month they were considering a joint bid for the business, and over the weekend came reports that a Qatari investment fund was sounding out Marks & Spencer about launching a rival offer. A Qatari fund already owns about 1% of Sainsbury and analysts at Numis said such a move was plausible.
Another company said to be in the sights of a possible private equity bidder was Experian, the credit information agency, and its shares rose 10p to 622p.
Elsewhere, the mortgage lender Kensington jumped 120.5p to 882p after speculation that it was seeking to sell the business, perhaps to a US financial institution. It said it was reviewing options for maximising shareholder value but "there was no certainty it would lead to an offer". Analysts at Keefe, Bruyette & Woods said: "Our fair value take-out estimate is as high as £12.90, although we suspect the offers will start materially below this."
It tipped big investment banks such as Lehman Brothers, Bear Stearns or Merrill Lynch as possible buyers.
The building materials group Hanson was wanted, up 4.5p to 811.5p as Lafarge bid speculation re-emerged. Hanson is due to report results this Thursday, with analysts expecting an 8% rise in profits.
Traders also reported some interest in the telecoms group Colt, up 4p to 180p.
So by the close the FTSE 100 index was 24.9 points higher at 6444.4, while the FTSE 250 was up 79.7 points at 11,636.1. But volumes were thin with many traders off for half term and no guidance from Wall Street, which was closed for the President's Day holiday.
Among the fallers was Reed Elsevier, down 11.5p to 624.5p after Citigroup downgraded its recommendation from buy to hold. United Utilities fell 4p to 766p as Goldman Sachs added the water and electricity company to its sell list and set a 520p target. Goldman cited the increased regulatory risk, with Ofwat due to review the sector later this year.
The pharmaceutical group Shire lost 4p to £10.75p ahead of results this week and, possibly of more importance, a decision from the US authorities on its new attention deficit hyperactivity disorder treatment, Vyvanse.
Lower down the market, the Aim-listed healthcare group Tristel added 3p to 60p after it unveiled half-year profits up 23.4%. The house broker Teather & Greenwood issued a buy note on the company, whose products are used for infection control in hospitals.
MTI Wireless Edge, an Israeli-based maker of wireless broadband antennae, added 1p to 51p after full-year profits jumped more than 100% to $3.8m. The company, 48% owned by the computer group MTI, has a leading position in the $50m-a-year antennae market, and with $13.2m in the bank it is looking for acquisitions. It is seeking a bolt-on deal outside Israel, with Taiwan, South Africa and Ireland being possible targets. While it is in no hurry for a deal, it hopes to have something in place within the next year. The broker Corporate Synergy is forecasting $5m profits in 2007 and $6.2m the following year.
UraMin jumped 20.5p to 260.5p as the African-focused uranium miner said it would carry out a strategic review of its assets because of recent consolidation in the sector. Last week the Canadian miner Uranium One said it would buy its smaller rival UrAsia Energy to form a $5bn group.
Finally, Beowulf Mining rose 0.375p to 4.625p as buyers emerged after an upbeat meeting with institutions last week. It meets more investors this week.
ITM confidence
Fuel cell developer ITM Power has a great opportunity to lift its profile in the US when it takes part in a major solar and clean technology conference in New York tomorrow. In a 20-page note, the company's broker Panmure Gordon said the US symposium was not the only thing likely to drive the company's shares. ITM plans to spend £1m on building a new manufacturing plant in Sheffield and expects to generate revenues from the beginning of 2008. "This implies confidence in its technology and the prospects which should materialise from memoranda of understanding signed over the last few months," said Panmure. "Good progress with existing and new partners should reassure the markets." The broker set a 340p a share target, compared with yesterday's 150.25p close, up 7.5p.