Market report: Wednesday close
The prospect of further consolidation within the bustling mining industry has again whetted the appetites of stock market investors.
Latest: Updates from the astock exchange
It follows the move overnight by Xstrata to make an indicative £5bn offer, worth 3300p a share, for platinum producer Lonmin, which subsequently cut a dash in the Square Mile with a leap in its share price of 1094p to 3413p.
Presumably, speculators feel this is an opening shot across the bows by Xstrata, which will eventually have to improve its terms. Xstrata says it has already bought an 8% stake in Lonmin as a stepping stone for its bid. Shares in the Anglo-Swiss miner fell 33p to 3167p.
It should be remembered that BHP Billiton, 36p dearer at 1550p, still has an all-share offer on the table for Rio Tinto, up 115p at 4865p, worth an estimated 5300p a share. Speculators despair. They say this deal has been running almost as long as The Mousetrap in London's West end and still shows few signs of being resolved.
Meanwhile, Kazakhmys, up 45p at 1335p, recently increased its stake in rival Eurasian Natural Resources, up 67p at 1017p, by 98m shares, raising its holding to 286m shares, or 22% of the company. Dealers say the next step could be a full bid. Other miners going better included Anglo American, up 85p at 2779p, Vedanta Resources, 54p higher at 1828p, and Antofagasta, the Chilean copper miner, up 22½p at 542½p.
Shares generally traded in a narrow range for much of the day before posting modest gains this afternoon. The FTSE 100 index rose 31.6 to 5486.1. It was partly underpinned by that strong performance from the miners. Wall Street gave back some of yesterday's big gains this afternoon, the Dow losing 47.1 at 11,568.7. Troubled mortgage provider Freddie Mac has written down a further $2.5bn on risky loans.
Marks & Spencer has come up from a low of 217p since the start of July, with the shares changing hands today 4p dearer at 284p on talk of stakebuilding. Gossips say US fund manager Brandes may be getting back into the shares, but this seems unlikely. Another story doing the rounds is that French supermarkets chain Carrefour has built up a stake in recent weeks, but remains under the 3% disclosable level.
Peel hunt is unconvinced about talk of a bid for Punch Taverns, 1p lighter at 344p, from the private-equity outfit CVC Partners. It points out the price has shot up 32% since Friday, bolstered by bid talk and bear closing. They look expensive, making a bid unlikely.
Morgan Stanley, one of the two lead underwriters of HBOS's recent £4bn rights issue, has resumed coverage of the mortgage provider with an overweight rating and 430p target. The price slipped 3¼p to 333p. The broker says worries about the business model have been overdone and believes the shares will move back towards book value.
Reports of a military coup in Mauritania-could be bad news for those exploration companies with extensive interests in the north-western African state. These include BG Group, up 20p at 1070p, Roc Oil, down ½p at 58p, Premier, up 73p at 1228p and Dana Petroleum, 50p better at 1277p. All have minority stakes in a project run by Australia's Woodside Petroleum.
Morgan Stanley has downgraded Standard Chartered, staying put at 1542p, from overweight to equalweight and slashed its target from 1920p to 1520p in the wake of yesterday's first-half numbers. Goldman Sachs has cut Standard from 1790p to 1740p and is sticking with its neutral rating.
UBS has downgraded DSG International, down 2½p at 50½p, from buy to neutral with its target tweaked 5p higher to 55p. The broker says it has downgraded the struggling electrical goods retailer because durables demand is still likely to suffer from weaker consumer confidence, the housing market and other pressures on disposable income.
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