FTSE Close: Old Mutual, Aviva, Pru up

 

17.25 (close)

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Takeover activity helped lift the London market higher today after blue-chip Old Mutual said it had entered into exclusive talks with HSBC to sell South African bank Nedbank.

Old Mutual, majority owner of Nedbank, saw its shares rise 3.9p or 3.2% in value to 124.9p, while HSBC rose 0.8%, up 5p to 635.5p.

The FTSE 100 Index followed suit, up 0.76% after a 39 point rise to 5235, marking a welcome return to positive territory after three consecutive sessions in the red.

On the other side of the Atlantic, markets fluctuated as concerns over US recovery continued. The Dow Jones industrial average fell 0.5%, after earlier gains.

In the insurance sector, Aviva and Prudential moved higher as traders searched for the next candidates for mergers & acquisitions activity. Aviva led the top flight, up 13.5p or 3.5% to 391.2p, while Prudential rose 13.5p or 2.4% to 571p.

Miners were in sharp focus in the UK and Australian markets as investors digested the implications of the country's inconclusive election result over the weekend.

The prospect of a hung parliament caused weakness in the Australian dollar early on, but stocks in mining companies rose as the Australian government's plans for a new tax on their profits were thrown into doubt.

Anglo-Australian mining group BHP Billiton was up 9p at 1830p in London as its aims to take over Canada's PotashCorp - the world's biggest fertiliser producer - also remained in the spotlight.

Potash, which has rejected the hostile approach, said it had been approached by third parties since news broke of BHP's 40 billion US dollars (£25bn) bid.

Other miners on the rise included Lonmin, up 24p to 1531p, and Anglo American, 23.5p ahead at 2376p.

After a shaky start, gas explorer and production group BG held on to last week's stellar gains seen on speculation that two possible bidders were willing to pay at least £16 a share, valuing the company at around £54bn. It was ahead 1.5p at 1096.4p.

In the FTSE 250, Lloyd's of London insurer Amlin lost 3%, down 13.7p to 408.2p, as its half-year results missed analyst expectations.

The group's profits slumped 39% after it was hit by the Chilean earthquake and windstorm Xynthia in Europe.

Rival Hiscox also suffered from claims relating to the natural disasters, but shares were 1% up - 3.3p higher at 347p - as interims topped market forecasts.

The pound rose to an eight-week high against the euro amid ongoing concerns over the state of European recovery, after the preliminary composite purchasing managers index for the eurozone fell to 56.1 in August from July's 56.7.

But the pound slipped against the dollar to 1.55 as a slide in US markets suggested a chill in demand for risky assets.

The biggest Footsie risers were Aviva up 13.5p to 391.2p, Petrofac ahead 48p to 1410p, Old Mutual up 3.9p to 124.9p and Sainsbury ahead 10.7p to 366.5p.

The biggest Footsie fallers were Aggreko down 41p to 1467p, Eurasian Natural Resources off 19.5p to 849p, Inmarsat down 11p to 659p, and African Barrick Gold off 9p to 563p.

16.00

America's Dow Jones Industrial Average rose around 70 points soon after opening as a pick-up in merger and acquisition activity boosted sentiment.

The FTSE 100 index followed suit, with a 66.7-point rise to 5,262.

12.30

The Footsie is now up 42.8 points to 5,238.1, with Wall Street's America's Dow Jones Industrial Average also heading for a higher opening.

Anglo-Australian mining group BHP Billiton is up 39.5p at 1,860.5p in London as its aims to take over Canada's PotashCorp - the world's biggest fertiliser producer - also remained in the spotlight.

Potash, which has rejected the hostile approach, said it had been approached by third parties since news broke of BHP's $40bn (£25bn) bid.

Other miners on the rise included Fresnillo, up 46p to 1326p, and Anglo American, 59.5p ahead at 2399.5p.

In the FTSE 250, Lloyd's of London insurer Amlin lost 3%, down 14.7p to 407.2p, as its half-year results missed analyst expectations. The group's profits slumped 39% after it was hit by the Chilean earthquake and windstorm Xynthia in Europe.

Rival Hiscox also suffered from claims relating to the natural disasters, but shares were 3% up - 10p higher at 353.7p - as interims topped market forecasts.

10.30

The London market got off to a subdued start with the Aussie election and bid reports and rumours providing the only direction for traders.

'In terms of a positive trend we have some more M&A speculation but that doesn't seem to have lit the touch paper in terms of the market,' Richard Hunter, head of UK Equities at Hargreaves Lansdown Stockbrokers said.

'Its a continuation of the August theme of light volumes and fragile sentiment.'

Miners were in sharp focus in the UK and in Australian markets as investors digested the implications of the country's inconclusive election result over the weekend.

The prospect of a hung parliament sent the Australian dollar down, but markets remained flat and stocks in mining companies rose as the Australian government's plans for a new tax on their profits were thrown into doubt.

HSBC is the subject of speculation it will buy up to 70% of South Africa's Nedbank, in a potential $6.8bn deal that would give Europe's largest lender a gateway to the fast-growing African continent.

HSBC shares were 5.2p higher at 639.4p.

However, financial conglomerate Old Mutual, which is the majority owner in Nedbank, rose to the top of the FTSE 100 risers' board with a jump of nearly 5% or 5.5p to 126.5p.

But gas explorer and production group BG Group eased back after last week's gains seen on speculation that two possible bidders were willing to pay at least £16 a share, valuing the company at around £54bn.

It was down 11p to 1080.5p today after a more than 10% hike last week.

Cairn Energy dropped 6.4p to 466.5p as Vedanta Resources' proposed acquisition of a majority stake in Cairn India came under threat from India's petroleum ministry, which wants state-owned Oil and Natural Gas Corp to be given a chance to buy the holding, the Mint newspaper reported.

Oil and gas services company Petrofac gained 28p to 1,390p after it forecast a 20% rise in net profit for the full year as its backlog of contracts continued to grow and it won its first contract in Iraq.

SABMiller was the top faller, down 7p to 1,858p as the beverage giant and Asahi Breweries were reportedly looking at Foster's Group's beer operations, valued at more than $10bn, but have not yet made any formal offers, sources said.

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