Market report: Wednesday close
Prudential enjoyed an early bout of speculative support today amid mounting speculation that the shares are being stalked by Ping An, China's second biggest life assurer.
The Pru, Britain's largest company in the sector, this week hit an 18-month low of 573½p. Today the price touched 641p before retreating along with the rest of the market to trade 7½p lower at 626p. The gossips claim Ping An has already built up a stake prior to making a full bid.
The Chinese company is raising an estimated £11bn through a sale of bonds and additional shares. Word is, it wants the money to invest in Europe and the US now that China's government has relaxed rules on companies and individuals investing abroad.
Reports from Asia claim the Pru would be a natural target, with Ping An taking a strategic stake or making a full bid. Pru chief executive Mark Tucker, who is at the Davos summit, has refused to comment on City gossip, but says he would welcome long-term investors.
Early attempts at extending yesterday's rally soon ran out of steam with the FTSE 100 index falling 130.81 to 5609.3. Fresh falls on Wall Street this afternoon choked off any remaining optimism that a recession in the US can be avoided following yesterday's threequarter-point cut in interest rates to 3.5%. The Dow fell 135.30 to 11,835.90.
Never a broker to hide its bullish tendencies under a bushel, Wall Street big hitter Morgan Stanley appears to be calling the bottom of the bear market.
'That's enough for now' was its message to clients today, having seen its own European share-trading barometer drop by 20% from its peak in last June. The MSCI Europe index closed last night at 1310 against its current target of 1500 and worst-case scenario of 1260.
The broker admits fundamentals remain 'highly uncertain' and sentiment is bearish, but points out that valuations remain more attractive than of late. It says key market timing indicators are also giving off a buy signal, and it believes the risk/reward profile for equities is now favourable on a three- to six-month basis after yesterday's US rate cut.
Morgan Stanley has chosen to sell part of its cash and bonds portfolio and plough the proceeds back into equities, where it now enjoys an overweight position. Shares it has decided to target include British Land, 30p dearer at 1013p, and Kingfisher, down 6.2p at 135.7p. Its biggest overweight positions are in pharmaceuticals, insurance and telecoms, while it remains underweight in industrials, oil majors and utilities. It prefers blue-chips to smaller-capitalised companies.
BHP Billiton, down 30p at 1270p, took time off from its battle to win control of Rio Tinto, 136p down at 4159p, to publish its production numbers. It says first-time output was successfully achieved at seven major projects in the quarter to 31 December.
ITV fell 3p to 70.7p - just a whisker above record lows - after Bear Stearns repeated its underperform rating. It expects the broadcaster to underperform the advertising market by between 2% and 3% this year.
AIM-listed Antonov rose 10½p to 34½p after making considerable progress in China and on its co-operation with Loncin. The automatic transmission concept developer said a wholly-owned foreign enterprise is being established in China and additional funding of €10m (£7.4m) has been secured.
Goldman Sachs has upgraded Catlin, 21p ahead at 348p, from neutral to buy with a target cut from 468p to 445p after a weak period. The shares fell 40% in the past three months following concerns about its US bond portfolio and fallout from the monoline insurers.
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