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Yesterday's trading: Chinese put Pru on buy-up menu

By Geoff Foster for MailOnline
Updated: 08:39 EDT, 10 February 2009

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Spicy speculation that Prudential could become a Chinese takeaway had punters licking their lips in anticipation.

Look east: Could the Pru fall to Chinese?

Shares of the UK insurance giant soared 20¼p to 374¼p on meaty turnover of 15m following a jackanory in the Chinese-language newspaper Apple Daily, which suggested that ChinaTrust, the country's largest private wealth management group, would like to acquire an insurance company. Apparently, it has the Pru, Allianz and Aegon at the top of its menu.

Chinese stakebuilding and takeover speculation has plagued the Pru for months. Its UK operation may have dragged its feet over the past few years but Prudential Asia, which has businesses in seven countries in the region, has performed well. It is the obvious attraction for any predator.

But Prudential was initially sold down to 342¼p on prevailing right issue fears. Chief executive Mark Tucker has revealed an interest in acquiring the Asian assets of troubled insurer AIG, and a major fundraising would be necessary to help finance such a deal. It would also bolster a balance sheet as the prolonged stock market slump has been a severe test of its capital reserves.

Hopes that President Barack Obama's stimulus and bank debt package would get the green light from Congress today and better than expected figures from Barclays (11.4p better at 116.2p) helped the Footsie. It retrieved a 47 point deficit to close 15.74 points up at 4,307.61p. Wall Street traded 25 points lower in early dealings.

A rush to close some mega short positions following confirmation of a heavily discounted rights issue - seven for five at 150p - saw Hammerson rocket 72¾p before closing 35¾p dearer at 432¾p. Other fundraising candidates in the property sector performed similarly with British Land closing 46½p to the good at 501p, Liberty International 32¾p up at 409p and Land Securities 39p better at 719p.

Sir Michael Spencer's giant inter-dealer broker ICAP jumped 17¾p to 241¾p ahead of Thursday's trading statement. Evolution Securities believes its valuation remains attractive. Although 2010 is likely to be a more challenging year its diversity of revenue streams and tight cost management should help it mitigate some of the impact of falling revenues. Its target price is 290p.

Amid the hullabaloo about big bonuses for banking buffoons, Lloyds Banking Group dropped 4½p to 100½p. Vague bid talk lifted consumer credit company Cattles 3¼p to 16p.

Merchant bank and market-maker Close Bros shed 3p to 512p after touching 499p on news of the appointment of a new chief executive. Preben Prebensen replaces Colin Keogh on April Fool's Day. He is currently chief investment officer at insurer Catlin, 8¾p cheaper at 386½p. Keogh was heavily criticised after failing to close out a £1.5bn takeover bid from broker Cenkos Securities (unchanged at 70¾p) in January 2008.

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Director Tom Attwood's purchase of 100,000 shares at 361p helped Intermediate Capital climb 31¼p to 431p.

Currys-to-PC World retailer DSG International was sold down to 24¾p on rights issue talk before closing 1p off at 25½p. The company has been badly hit by the consumer downturn and last month reported a 10% drop in quarterly sales as consumers postponed purchases until after Christmas.

Freddie George, analyst at Seymour Pierce, believes DSG's management will try for a rights issue on the announcement of the disposal of its Italian operation and possibly its underperforming European operations.

Reports of a pending upbeat circular attracted buyers to JKX Oil & Gas, 24¼p higher at 244¼p.

Telecom Plus lost a 14p gain to finish 1p off at 325p after announcing the sale of 1.5m shares held in treasury to various institutional investors. Chief executive Charles Wigoder said: 'Following the sale the total number of ordinary shares held as treasury shares is 856,721. It should also be noted that the average price at which we bought ordinary shares into treasury was approximately 182p per share.'

AIM-listed Iomart, the managed hosting company, advanced 4p to 33½p on consideration of the sector's defensive qualities. LPA, the manufacturer and distributor of electronic systems and components, rose 4p to 34p. Its Excil Electronics subsidiary has won a £4.7m contract to supply LED-based lighting for a new fleet of suburban trains in Sydney, Australia.

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