Market Report: Prudential gains after bid speculation returns

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The life insurance giant Prudential was the focus of some vague bid speculation yesterday.

Early-morning murmurs suggested that the bid was in the offing, taking the company's shares to an intra-day high of 668.50p.

While no names were forthcoming yesterday, Prudential was the focus of bid talk earlier this month, when its Chinese peer Ping An was mooted as a possible suitor, around the time it won shareholder approval to raise fresh funds. Ping An's desire to expand is well known, and, with a crisp new cheque in its pocket, many traders thought it was only a matter of time before it approached Prudential, either by making an offer for the company or by raiding its shares for a strategic stake.

By the end of the day, Prudential's stock was up by just over 3 per cent or 19.50p to 659p.

Overall, the FTSE 100 index was up 86, or 1.5 per cent, to 5,776.4. The London benchmark, unmoved by what many in the market regarded as an unexciting Budget, registered a second consecutive day in the black following the central banks' co-ordinated credit markets intervention announced on Tuesday. The FTSE 250 was also buoyant, gaining 216.6, or 2.2 per cent, to 9,989.4.

On the FTSE 100, the mining sector struck gold, claiming a number of prized positions on the leader board. Kazakhmys was the strongest performer, climbing to first place on the index, up a spectacular 15.96 per cent or 245p to 1780p. The Kazakhstan-focused miner climbed following confirmation that it had taken part in informal merger talks with Eurasian Natural Resources, a rival miner which is expected to join the FTSE 100 at the end of this month and in which Kazakhmys already has a significant stake. Antofagasta was up almost 5 per cent or 36p to 760p, to fourth place on the leader board, on the back of reports that it was considering acquisitions in central Asia and the Democratic Republic of Congo.

Others in the sector, including Vedanta Resources, which gained 94p to 2,226p, Rio Tinto, which gained 191p to 5,442p, BHP Billiton, which gained 74p to 1,564p, and Anglo American, which gained 68p to 3,173p, were also buoyant yesterday.

On the FTSE 250, the commercial property company Capital & Regional was the focus of some mid-morning speculation. The rumours suggested that the company, which saw its shares soar after it surprised the market with better-than-expected preliminary results on Tuesday, had been, or was likely to be, approached by a suitor. The former chief executive Martin Barber was mooted as a likely bidder, and the company's stock reach an intra-day high of 594.50p, up 41.50p.

Later in the day, as the shares shed some gains, sources close to Capital & Regional suggested the contrary, and it is understood that the company has not received any approach yet. The company's stock closed down 0.50p at 552.50p.

Trinity Mirror and Johnston Press were down, following a bearish Citigroup note on the UK newspaper sector. Reducing Trinity to "sell" from "hold", Citi said that, although 2007 profits beat market expectations, "we see further downside to forecasts and the share price, despite the dividend yield and share buyback providing some support". And on Johnston Press, the bank noted that "while valuation is at an all-time low, with advertising sliding backwards in January-February, renewed pressure on forecasts and a deteriorating outlook, we can't see the stock progressing..." Johnston was downgraded to "hold" from "buy" and fell by 3p to 147.5p. Trinity was down 1.5p to 278.25p.

On AIM, Tissue Science Laboratories, the Hampshire-based medical device specialist, gained a spectacular 84.55 per cent or 46.50p to 101.50p after announcing a recommended 103.5p cash offer from Covidien, the $10bn global healthcare products giant spun out of US-based Tyco International. Investors were heartened by the premium – Covidien is offering almost 72 per cent more than TSL's average closing price over the last six months.

Allergy Therapeutics had a good day following market speculation which suggested that the specialist pharmaceutical company was about to receive a positive update from the US Food and Drug Administration. Last July, the FDA placed a hold on any clinical activity on certain grass and ragweed allergy products, to assess the report of a "rare adverse event classified by the physician involved as possibly related to the study drug".

Yesterday's speculation suggested that the FDA was close to lifting the restriction, taking the company's shares up by 18.12 per cent or 6.25p to 40.75p.