Renewed takeover talk and forecast-busting figures from United States Steel were behind gains yesterday for Anglo-Dutch steelmaker Corus, sending it to the top of the FTSE 100 leaderboard with a 3.45% jump to 419.75p.
Fuelled by higher steel prices, Corus's Pittsburgh-based rival reported a 62% surge in second-quarter profits, taking them from $249m to $404m, way ahead of analysts' expectations. There was also more takeover talk surrounding Corus, although the market was long on speculation and short on detail, as befits the onset of the school holiday season. The Russian steelmaker Severstal has been mentioned as a potential predator.
Shire Pharmaceuticals had led the FTSE 100 risers for much of the day, spiking 5% higher at one stage after US regulators approved its Elaprase drug. City analysts were taken by surprise because the drug, which treats Hunter syndrome, a rare and sometimes fatal inherited condition, was approved earlier than expected. They were also caught unawares by news from Shire that it plans to price the drug as high as $300,000-$400,000 a year per patient, depending on dosage - higher than anticipated.
Pharmaceutical analysts at Morgan Stanley raised their sales forecasts for Elaprase from just over $200m to a little over $300m, and their target price for the shares from 862p to 946p.
Shire, scheduled to report second-quarter results on Friday, ended almost 3% higher at 862.5p.
Leading shares ended below their best as Wall Street moved lower, but the FTSE 100 still consolidated Monday's 114.2-point rise with a gain of 17.3 to 5,851.2. Volumes were light but slightly ahead of Monday's tally, at 2.51bn.
British Airways was in demand, rising just over 3% to 343p as broker Morgan Stanley upgraded its recommendation from underweight to equal weight. MS analysts say the market will start to focus on the airline's performance rather than labour and regulatory issues, and that the company is on top of its costs.
At BP, there was more interest in the "will he, won't he?" debate over the chief executive, Lord Browne, than in the second-quarter figures. These came out more or less in line with market expectations, at a record $6.1bn, boosted by the booming oil price. But the shares eased 3.5p to 630p as Lord Browne, one of Britain's most admired businessmen, finally ended the speculation over his retirement date by making clear that he would go, as planned, in 2008.
Dresdner Kleinwort Wasserstein says BP is choosing to emphasise returns over growth, and that this is "a powerful strategy". DKW analysts reiterated their buy recommendation and 800p share price target.
Lord Browne said he would not be withdrawing from working life. Prospective employers should form an orderly queue now.
Still among oil stocks, Cairn Energy chief executive Bill Gammell was in New Delhi, where he reiterated that the group has no plans to sell its valuable Indian assets and will go ahead with a planned float of the division in India later this year or in early 2007. Cairn is to spend $1bn developing its Rajasthan block, which is estimated to contain as much as 3.5bn barrels of oil. Mr Gammell said he expected the company to repay the debt raised to finance the field by 2010. The shares climbed 27p to £20.68.
Vodafone marked time amid the sound and fury of the annual meeting, where embattled chief executive Arun Sarin survived a sizeable vote against him. He remains for the time being. Retiring chairman Lord MacLaurin told shareholders that Vodafone is perfectly happy with its 45% stake in the US cellular company Verizon Wireless, but would consider a "compelling" offer for its shares. Vodafone added 0.5p to 116p.
Financials were weak on the back of a report from HSBC highlighting increasing concerns over the quality of unsecured lending ahead of the banks' reporting season, which kicks off next week. Barclays, reckoned to have one of the biggest exposures, fell 3.5p to 608p, but HBOS was up 2p to 957p.
Software group Misys added 6.75p to 243.5p after it said it would open up its books to potential bidders. These include a group of former executives, the current management team led by founder and chief executive Kevin Lomax, and private equity interests.
Also opening up the books is Enodis, the industrial ovens manufacturer which supplies fryers to fast-food chain McDonald's. Wisconsin-based Manitowoc has tabled an indicative offer of almost £900m, which it said today will be worth no less than 220p a share.
Manitowoc is the biggest maker of ice machines in the US and is up against rival bidder Middleby Corp. Both have until mid-August to decide whether to proceed with formal offers. Enodis rose 2p to 217p.
Among the smaller caps, Games Workshop soared 36.75p to 327.75p, despite news of a 70% slump in full-year profits to £3.7m from the fantasy figurines group. The shares were supported by the decision to maintain its dividend total at 18.975p a share. Tom Kirby, the chief executive, said that reflected confidence in recovery prospects, although current trading remained challenging.
Going for a song
Radio and music publishing group Chrysalis shrugged off the GCap Media-related gloom, rising 7p to 109p on the back of director purchases and a couple of buy notes. Chairman Chris Wright added to his 26% family stake via the purchase of 10,000 shares by his wife, Janice, at 108p a share. And the senior independent director, David Murrell, bagged 14,000 at 110p for his personal pension scheme. At the same time, brokers were highlighting the value of the company's music publishing catalogue, which DRKW says could be worth £150m-£170m. Although a full disposal of the music business is unlikely, the broker says a small strategic stake could be offloaded. Bridgewell reckons a sum of the parts valuation for Chrysalis is 172p.