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FTSE close: Tesco lower; De La Rue, Punch bids

By Ed Monk for Thisismoney.co.uk
Updated: 12:22 EDT, 6 December 2010

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17.05 (close)

Dealers monitor their screens on the trading floor of IG Index in London

Market watcher: Shares should rise this morning.

The market edged forward today as takeover talk provided the main focus on an otherwise slow day for traders.

Banknote printer De La Rue surged 32% as its French suitor confirmed it was behind a near-£900m approach for the troubled firm, while blue chip miner Rio Tinto was also in the spotlight after its £2.2bn approach for Australian firm Riversdale mining.

The Footsie rose 24.96 points to 5770.3 amid the takeover excitement, despite early losses on the Dow Jones Industrial Average in America.

US stocks fell after Federal Reserve bank chairman Ben Bernanke hinted that a third round of quantitative easing may be needed to keep America's recovery on track. He said in an interview last night that the US economy was still struggling to become 'self-sustaining'.

Disappointing US payrolls data on Friday has added to concerns over the recovery.

The pound was up against a weakened euro at 1.18, as concerns in the eurozone over the debt crisis continued. Sterling was down against the dollar at 1.56.

In London, investor attention was set firmly on takeover developments in the Footsie and second tier.

FTSE 100 listed miner Rio Tinto has sparked a potential bid battle for Riversdale after it was flushed out as a suitor, with Rio's shares lifting 40.5p to 4456p.

However, much of the focus was outside the blue chip index with De La Rue top of the FTSE 250 risers board - up 193.5p to 841p - after it confirmed an 'opportunistic' approach.

French rival Oberthur Technologies later revealed it was De La Rue's suitor.

Punch followed closely behind it with a gain of 4.3p to 69.2p in the wake of a report suggesting private equity firm CVC Capital Partners was preparing to bid for the group.

And elsewhere outsourcing firm Mouchel was 33% higher, up 15.7p to 72.3p, as it said it had received a number of approaches after recent hefty share price falls on financial fears.

Back in the FTSE 100, supermarket Tesco was among the fallers after broker UBS downgraded the group citing expectations for growth to slow over the next 10 years.

Shares in the retail giant, which reports back on third quarter figures tomorrow, dropped 6.9p to 420p.

Rolls-Royce was enjoying a better session, up 13p to 640.5p, thanks to news of recent energy project contract wins worth more than 110 million US dollars (£70.2m).

The biggest Footsie risers were Capita up 34p at 669.5p, BP ahead 14.8p at 450p, Xstrata up 47p at 1437p and Burberry ahead 30p at 1109p.

The biggest Footsie fallers were Cobham down 4.8p at 194.5p, Randgold Resources off 145p at 5885p, Vedanta Resources down 49p at 2143p and Eurasian Natural Resources off 19p at 914p.

16.00: With the close in sight, the FTSE 100 is 36.66 points higher at 5781.99.

14.40:

On Wall Street, the Dow Jones has opened lower and is now 18.84 points down at 11,363.25.

In London, however, fortunes are looking better with the FTSE 100 now 27.3 points better off at 5772.63.

13.20:

Among the firms reporting today, insolvency firm Begbies Traynor has issued a profit alert after a slump in the number of companies going bust.

The firm's shares fell nearly 8%, or 5.25p to 62.5p, after the profit warning. It said adjusted pre-tax profits for the six months to October 31 were expected to be 16% lower than a year earlier, down £700,000 to £3.6m.

The Footsie is now 18.49 points better off at 5763.81.

12.15:

We have an update on De La Rue, the troubled banknote printer which got a boost after confirming it had received a bid approach. Its suitor is widely reported to be French rival Oberthur Technologies.

De La Rue dubbed the approach 'highly preliminary and opportunistic', but its shares have soared 120.5p to 768p.

The Footsie is trading up 16.12 points at 5,761.44.

11.30:

The wild goose chase for oil in the South Atlantic continues with Desire Petroleum announcing that its recent Falklands discovery was not a discovery after all.

Desire, along with fellow small cap oil exlorer Rockhopper, has seen its shares chased up and down as reports of significant discoveries are made, and then proved to be wrong.

Shares in small-cap Desire had gained 26% since Thursday when it said initial findings had indicated a find at the closely watched Rachel North well.

But they plummeted 59.75p to 73.5p this morning, after additional analysis forced the company into a U-turn.

In the top tier, the FTSE 100 is 2.36 points down at 5742.96

10.00:

The FTSE 100 struggled to gain ground today as a broker note hurt Tesco, although bid talk has spurred a handful of stocks from the second tier.

The blue chip index was 5.5 points lower at 5739.79 ion early trading today.

Supermarket Tesco was the leading Footsie faller with a 2% drop after broker UBS downgraded the group citing expectations for growth to slow over the next 10 years.

Shares in the retail giant, which reports back on third quarter figures tomorrow, dropped 10.2p to 416.7p.

A raft of stocks saw shares surge ahead today on news of takeover interest from opportunistic bidders.

Banknote printer De La Rue and outsourcing firm Mouchel raced higher as they confirmed approaches following their recent stock market woes. De La Rue shares were down 34% this year until this morning. Today they have rallied by 23% - up 149.5p to 797p.

Pub group Punch Taverns was also making strong gains in the second tier after weekend reports of a potential private equity bid. Shares were 4.85p - or 7.5% - up at 69.8p.

There is not expected to be much help coming from Wall Street later either. The futures markets predict the Dow Jones will open lower today.

But much of the focus was outside the blue chip index today due to takeover moves.

De La Rue was top of the FTSE 250 risers board - up 23% or 152p to 799.5p - after it confirmed an approach, thought to be from French rival Oberthur Technologies for around £750m.

Punch followed it with a gain of 5.3p to 70.3p in the wake of a report suggesting CVC Capital Partners was preparing to bid for the group.

And outsourcing firm Mouchel was 32% higher, up 19p to 75.5p, as it said it had received a number of approaches after recent hefty share price falls on financial fears.

The pound at 9am was worth $1.5717 compared to $1.5717 at the previous close. Against the euro, the pound was worth €1.1804 compared to €1.1759 at the previous close.

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