FTSE in-depth: Interest building in Cairn Energy
Light the touchpaper and stand clear. Cairn Energy edged up 0.6p to 461p amid whispers that shareholders could soon strike it lucky.
Geoff Foster: The Footsie marched back above 5,400
Word is a cash-rich oil giant has knocked on chief executive Sir Bill Gammell's door at the group's Edinburgh headquarters with a 'friendly' takeover proposal that values the oil and gas explorer at £9.8bn, or £7-plus a share.
The bidder would obviously like to tie up an amicable agreement before the market hears the result of the group's drilling programme in Greenland, due later this month. Analysts reckon the news could be transformational and put the shares into orbit.
In June, the Arctic island's cabinet gave the green light for Cairn to commence drilling the first of two wells in the Disko West area, offshore Western Greenland. Broker RBC says its campaign has the potential to open up a new hydrocarbon province. Success could add 290p to its 476p a share net asset value.
Cairn has said the deep waters off Disko Bay could conceal treasures of North Sea proportions, with 4.1bn barrels of untapped crude waiting to be discovered. Geological surveys have suggested that as much as 20% of the world's undiscovered but explorable gas and oil reserves lie under the Arctic ice.
Buyers chased Gulf Keystone 6.75p higher to 109.5p after the oil explorer said the reorganisation of its interests in Kurdistan have been approved and executed by the regional government. Evolution Securities said the news removed a layer of doubt and repeated its 'add' rating.
The Footsie marched back above 5,400, closing 78.13 points higher at 5,410.52. Wall Street rallied 20 points in the early stages amid hopes that following Friday's worse-than-expected US jobs data for July the Federal Reserve will today announce additional stimulus measures to keep the world's biggest-economy on the road to recovery.
Reflecting the market's strength, and 12% rally from June's ten-month low, pensions giant Legal & General put on 3.15p to 90.25p. Prudential advanced 14p to 585.5p ahead of Thursday's interim figures. Shareholders should receive a healthy hike in the dividend but will want to get reassurance from the board about future strategy in the wake of the bungled £24bn bid to buy its main Asian rival.
Vague bid talk prompted a 50p gain to 690p in Synergy Health, which provides sterilisation services to hospitals.
An Execution Noble buy recommendation helped engineering support services group Babcock International climb 32p to 564.5p. The broker reckons there is short term positive-potential in its rail and South Africa businesses, which could both turnaround this year.
Hansteen Holdings, which invests in UK and Continental European property, advanced 4.7p to 66.8p. Buying interest has risen since the company recently said it was adopting a new dividend policy. It now intends to pay two dividends each year and will pay some 40pc of the year's total on 25th November.
As maintenance company Connaught fell 4.5p, or 29pc, more to 11p on growing fears its banks will be running the show by the end of the month, shares of thriving social housing group Mears rose 2.25p to 255.25p.
Liberum Capital believes Connaught's demise represents a significant opportunity for Mears to win market share despite long-term risks of reduced outsourcing. The broker expects next Tuesday's interim results will please.
Highways infrastructure group Hill & Smith lost 14p to 280p after the company said a reduction in UK spending on new road projects, as part of the Government's spending review, to be announced on 20th October, seems 'inevitable'.
Synchronica firmed 0.075p to 1.55p after launching the first Instant Messaging service in Latin America with Movistar in Argentina. Movistar will charge $2.50 for unlimited use of the service as an introductory offer. It is the market leader in Argentina with around 16m mobile subscribers.
Support services minnow Southern Bear, where entrepreneur and chairman Nigel Wray sits on 14.7%, edged up 0.025p to 0.43p as it beefed up its board. Christopher Arnott and Neil Chapman, apparently both experts in the fire protection market, have been appointed.
RM closed down 1.25p at 135.75p despite announcing an IT service contract with an academy school in Tamworth. The contract is worth £2.5m to the company and is with the Landau Forte Charitable Trust, with whom RM has had a relationship for ten years.
Euromoney Institutional Investor added 2p at 617p after announcing its first acquisition for four years. It has bought Arete, a data business, for an undisclosed sum.
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