Yesterday's trading: FTSE buzz gives a boost
It was just like old bull market times as rumours of an imminent multi-billion pound Footsie takeover bid helped the market shrug off depressing news of a 10.5% fall in UK house prices over the past 12 months and the worst monthly UK retail sales figures for 25 years.
Geoff Foster: Daily Mail
The Footsie retrieved a 31 point deficit to close 73.1 points higher at 5,601.2, a two-month high.
Dealers were also delighted to see Wall Street leap 152 points in early trading following better-than-expected second-quarter US growth figures and a drop in weekly jobless claims which helped allay concerns that the world's biggest economy is staring recession in the face.
More than 37m RSA Insurance shares were traded - four times Wednesday's total - as the perennial takeover favourite was chased up to 155.1p before closing 8.3p better at 154.1p.
Dealers heard for the umpteenth time that Zurich Financial Services is lining up a knock-out cash bid. More spice was added to the situation by the boss of Swiss Re who said in a TV interview that the world's largest reinsurer is on the European acquisition trail.
RSA is deemed to now be more attractive after settling a long running £580m legal dispute with General Motors over asbestos related claims.
J.Sainsbury was the day's other high-flier, soaring 25¼p to 344p on hot gossip that the Qatari investment group, which holds a threatening 26% stake, could be about to renew hostilities with the supermarket giant's family by tabling a cash bid worth £8.74bn or £5 a share.
Remember, turbulence in credit markets and escalating borrowing costs derailed its planned £10.6bn or £6 a share cash bid last November.
Before the Qataris showed their hand, Sainsbury had already rejected a bid from a consortium of CVC Capital Partners, Kohlberg Kravis Roberts and Blackstone, three private equity groups.
As one fund manager said last night: 'It's not a matter of if, but when the Qataris return with an attractive offer. In this awful consumer trading environment, Sainsbury's shareholders should this time be receptive'.
With 25% shareholder Kazakhmys (34p cheaper at 1305p) breathing down its neck and wanting to hammer out an arrangement with its rival that offers 'synergy benefits', Eurasian Natural Resources Corporation (ENRC) dipped 22p to 1022p. ENRC has so far refused to offer Kazakhmys a seat on its board because they are competing in the same region.
Rumours are rife that ENRC is on the verge of acquiring Uranium One, which owns the Akdala uranium mine in Kazakhstan.
Better-than-expected results from France's biggest retail bank Credit Agricole gave domestic banks a lift. Barclays rose 19¼p to 349½p and HBOS 12¼p to 305½p. Royal Bank of Scotland advanced 8¼p to 230p on further consideration of British Land boss Stephen Hester's appointment to the board.
He is favourite to succeed chief executive Sir Fred Goodwin who many believe should have jumped ship by now after paying an arm and a leg for ABN Amro in the middle of a credit crisis.
Water company Severn Trent sank 30p to 1375p after Goldman Sachs downgraded to sell from neutral and slashed its target price to 1396p from 1585p.
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British Telecom, on the other hand, buzzed 7¼p higher to 172½p after Goldmans added the stock to its conviction buy list, citing its 'beaten up valuation'. BT has underperformed the telecoms sector by 20% so far this year and by 40% over the past 12 months.
Housebuilders erected good gains on growing speculation that UK interest rates could be cut before November to arrest the decline of the UK housing market and help resuscitate consumer spending. Taylor Wimpey, which reported a staggering £1.54bn interim loss on Wednesday, jumped 5p to 53¼p. Persimmon added 27¼p to 376p, Bellway 46p to 640p and Barratt Developments 6¾p to 139¼p.
Office rental group Regus gained 6½p to 75¾p after Kaupthing advised clients to buy ahead of today's first-half results. The broker expects a strong trading performance supported by a confident outlook statement.
In-line interims and an upbeat view on fullyear prospects helped specialist printing and packaging group Macfarlane firm 2¼p to 26½p. Asterand, a leading supplier of human tissue samples and drug discovery services, put on 1⅛p to 10¾p following a strong buy recommendation from Daniel Stewart.
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