Market report: Friday close
Speculation that Taylor Wimpey was close to selling a third of its shares to a US private-equity group ignited a scramble for the struggling housebuilder today that saw it rise by 25% to 44p at one point before backtracking a little to 37¾p, up 2¾p.
London Stock Exchange: Trading floor
A source involved in talks between Taylor Wimpey and its banks said the US investor would take a 30% stake, giving it seats on the board and the ability to block any future bids. This, the suggestion was, could avert the need for a £500m shareraising.
But the early enthusiasm subsided as investors realised the US investor being referred to was none other than Texas Pacific Group - Bradford & Bingley's lessthan-gallant would-be rescuer.
Currently valued at little more than £300m, Taylor Wimpey would be lucky to get much more than £100m although that is, apparently, exactly the hole missing in the finances behind the planned £500m rights issue.
Their chance of persuading TPG to cough up a premium are slim - although it's worth pointing out that 18 months ago investors were happy to pay 518p.
Other builders saw buying action with Barratt Developments, up 4¼p at 71¼p. Bovis was down 2p at 328p and Bellway down 10¼p at 451½p.
An early rally among blue chips proved short-lived as oil passed $147 a barrel and tensions in the Middle East fuelled fears of further oil price rises. Significant gains for all the oil producers and explorers stemmed the selloff-although the FTSE 100, down 145.20 points at 5261.6, was still back in bear territory.
The debate on the financial health of US mortgage providers Fannie Mae and Freddie Mac dominated the Amercan market. Wall Street was heading for a turbulent close with the Dow Jones down 155.19 points at 11229.02.
Cairn Energy was 102p higher at 2844p and Tullow Oil 24½p ahead at 866½p. BP was 1½p worse at 528¾p and Royal Dutch Shell rose 5p to 1940p. These gains were matched by the smaller producers with Dana Petroleum up 113p at 1655p, Salamander Energy up 8p at 313p and Premier Oil up 3p at 1443p.
Conversely, big fuel guzzlers suffered. British Airways lost 11.65p to 199.1p and easyJet was down 13¾p at 256p. Confidence in both was also damaged by the collapse of a planned tie-up between Thomas Cook and Air Berlin.
The City's biggest landlord British Land slipped 19½p to 663p despite telling investors it would raise the dividend.
Instead, the market focused on declining valuations in commercial property which have depressed the net asset value in the first quarter. Despite property sales of £669m, British Land said tougher markets are making progress more challenging. Miners made headway on the back of rising commodity prices. Eurasian Natural Resources led the FTSE 100 climbers, up 90p at 1137p. Ferrexpo was 7½p higher at 319¼p and Kazakhmys up 17p to 1427p.
It could be worth getting a round in at pubs group Mitchells & Butlers ahead of a trading statement later this month. UBS has upgraded M&B, up 812p at 198p, to buy from neutral, based on reports from rival pub groups.
'Updates from Whitbread, Punch Taverns and Greene King have all pointed to an improvement in managed pub trade,' it said. 'While July may prove more challenging, we believe M&B continues to outperform.'
However, plunging consumer confidence and evidence of falling sales from Magners maker C&C saw more sellers than buyers in the pubs market. M&B dipped 5¾p to 18¾p, Whitbread was down 63p at 957p, Enterprise fell 28½p to 302½p and Punch dropped 28p to 225p.
MONDAY'S AGENDA
• Fears of spiralling inflation will have weighed on the minds of the Bank of England's rate-setters when they decided to leave interest rates on hold yesterday. Members of the monetary policy committee are likely to have had a peek at June's producer prices - officially released nextMonday - to inform their decision.
The figures are expected to show the price of goods leaving factories is continuing to rise sharply. Factory gate inflation last month hit 8.9% as manufacturers grappled with surging food and fuel bills and increasingly passed on the price rises to customers.
• St Modwen, the regeneration specialist that owns the Elephant & Castle shopping centre, releases first-half results. The company posted record results in February, but chairman Anthony Glossop warned at the time that it was not immune to the property market slump, and it is expected to take a £35m hit to the value of its property portfolio.
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