Market report: Wednesday close
Tory Party Treasurer Michael Spencer was making waves in the City today after his electronic broking firm Icap agreed to buy privately owned rival Traiana for $247m (£117m) in cash and shares.
Icap, where Spencer is chief executive, is paying $238m in cash and $9m in Icap shares for Traiana, which provides trading services to financial institutions such as banks.
Merrill Lynch reckons it is a ' sensible deal' for Icap, the world's largest interdealer broker, as it will smooth out inefficiencies in electronic trading markets 'thereby encouraging market growth'. But Daniel Stewart analyst Justin Bates said 'eyebrows will be raised' over the price, and Icap shares dipped 4½p to 525p.
Mining stocks chalked up strong gains today after Credit Suisse issued a bullish update on the sector.
'The catalyst is likely to be a breakout in copper that has so far failed to breach the magical $4 per pound that was reached in April 2006,' said analyst Jeremy Gray. 'Copper is likely to be the big call for the fourth quarter because it is the bellwether for the industry.'
Among miners to benefit were Kazakhmys, up 61p to 1524p, Antofagasta, 33p higher at 836½p, and Xstrata, which gained 146p to 3455p.
Sports Direct ticked 4½p higher to 143½p after it emerged Deutsche Bank has bought almost 20m shares, or 3.07% of the struggling company. The story in the City is that Deutsche was working for a client who is interested in stakebuilding. Recent rumours have suggested Icelandic raider Baugur is eyeing the firm.
One trader said the shares had been 'a complete disaster' since listing at 300p, and investors are on the prowl to take advantage of the low price.
It was a subdued day in the City as investors digested yesterday's Pre-Budget Report and a hawkish speech from Bank of England Governor Mervyn King. Hewarned that inflationary pressures were still very much alive, which was interpreted by many to mean that interest rates were unlikely to be cut any time soon.
That left the FTSE 100 index struggling for direction, although it closed up 17.6 points at 6,633 points. The City failed to follow the overnight lead ofWall Street, where the Dow Jones Average and S&P 500 index soared to record highs.
In London, Britain's biggest firm of vets enjoyed a strong debut on the stock market. CVS, which has come to the market on the lookout for acquisitions, floated at 205p and the shares jumped to 228½p, lifting the company's value to £117m from £105m.
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Oil and gas explorer Providence Resources leapt 1p, or 16%, to 7.38p after it said it had made a significant find during tests in the Hook Head field off southern Ireland.
There was a mixed reaction to yesterday's agreement between SABMiller and Molson Coors to merge their US brewing operations and take on Anheuser-Busch.
A string of brokers raised their price targets on SABMiller but the shares suffered a series of ratings downgrades, including from ING and SG Securities.
'The stock appears to lack upside potential for a buy despite continuing strong newsflow,' said ING. The shares slipped 1p to 1486p.
The banking sector was also out of favour after HBOS was downgraded by Lehman Brothers, which said it expected profits from mortgage lenders to take a hit a next year as the housing market stutters.
HBOS, off 29½p at 926½p, was joined on the slide by Royal Bank of Scotland, down ½p to 557½p, Lloyds TSB, 7½p lower at 563½p, and Barclays, with a loss of 10p to 655½p.
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TOMORROW'S AGENDA
• WH Smith's full-year preliminary results are expected to be strong after an upbeat trading update in August. Chief executive Kate Swann has transformed the High Street retailer's fortunes by shifting the focus of the business back to its core stationery, books and newspapers markets. The introduction of post office franchises into many stores has increased footfall. Analysts will be keen to see whether the solid performance looks set to continue in the crucial pre-Christmas period.
• The Royal Institution of Chartered Surveyors releases its housing market survey for September. City forecasters will be scrutinising the figures for further evidence of a slowdown in the property market. It reported last month that house prices fell in the UK for the first time since October 2005 as potential buyers were put off by high interest rates. An immediate recovery looks unlikely, with demand predicted to remain sluggish.
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