Market report: Wednesday close
A new surge of speculative buying today sent shares of Anglo-Australian mining giant Rio Tinto soaring 355p to a record 3660p.
It followed heavy purchases of the shares overnight in Sydney, where the price rose as much as 11% amid persistent talk the company may be the target of a bid from rival BHP Billiton. Dual-listed Rio rose Aus$10 to Aus$99.69 at one stage before ending at Aus$99.40, valuing it at about £50bn.
But the miner today said it was not aware of any takeover approach from BHP, 64p dearer at 1249p.
The talk in London last week was of a private-equity tilt at Rio. But Citigroup says a bid by a cashed-up BHP would make more sense, given their operational synergies. A marriage would create the world's biggest iron-ore producer.
UBS said that rumours claimed BHP was lining up a 5500p offer for Rio Tinto, attracted by its lowcost mining assets and the potential for cost savings. But Numis Securities said such a deal would not make sense unless BHP was prepared to sell a large part of the iron-ore business to a third party. Merging the two ore businesses would hit regulatory opposition. Anglo American, up 109p at 2929p, was seen as a more suitable bid target.
Shares generally traded below their best levels as investors' thoughts switched back to the thorny question of rising interest rates ahead of the US Federal Reserve's meeting tonight and the Bank of England's decision on rates tomorrow.
London was also held back by the heavy list of companies going ex-dividend, which equated to an 11-point fall in the FTSE 100. The index closed 0.8 lower at 6549.6. The Dow was 3.40 points down at 13,305.70 this afternoon.
The profits warning from pubs chain JD Wetherspoon left its shares off 40p at 670p. This was followed by a placing of 5.2m shares, worth £35.3m. at 680p. Dresdner Kleinwort did the business. Citigroup also placed a line of 2.7m Millennium & Copthorne Hotels at a heavily discounted 735p. The shares closed unchanged at 751½p.
DSG International put on 8.6p to 176.3p after Morgan Stanley switched from underweight to equalweight with a target of 155p. The broker said DSG's call on Russian electrical retailer Eldorado was to become central to its investment case over coming months. Nick Bubb at Pali International agrees. He has a buy rating and 205p target on DSG.
Hanson was up 18p at 1048p. The building materials supplier, which last week received an approach from HeidelbergCement, has advised shareholders to take no action on their holdings. It is currently worth almost £7.5bn.
Reuters dipped 18p to 612p. ABN Amro has raised its target from 495p to 640p after the 686p-a-share bid from Canada's Thomson Corporation, but because of the share-price flurry has downgraded its rating from buy to hold. Rival broker SG Securities warns that regulatory entanglements and Reuters Trust issues could yet scupper the deal.
TAKING STOCK: Stock market at a glance
BANKING & FINANCE
Lloyds TSB chief executive Eric Daniels told shareholders at the annual meeting today: 'In the first few months of 2007, we have continued to make strong progress across the group and are confident that we will deliver another good trading performance for the half year.'
CONSUMER
Magners cider maker C&C predicts profits will rise by between 15% and 25% this year. For the year toFebruary, group operating profits soared 77% to €213m (£145m) on sales up 27% at €981m. The dividend rises 80% to 27 cents. A €150m share buyback is planned.
HEALTH
Anglo-Irish healthcare wholesaler and distributor United Drug today reported a 16% rise in half-year pre-tax profits to €29m (£19.8m). The company, whichhas strong links with Alliance Boots and chairman-designate Stefano Pessina, aims to expand on the Continent.
LEISURE
ABN Amro says the bidding for EMI could go as high as 260p - the same level at which Warner Music had expressed an interest following the music-maker's profits warning earlier this year. Dealer reckon three private-equity companies are interested.
RETAILING
Women have been spending on bras and corsets at home shopping group N Brown. Sales in the past 10 weeks are up 18%, leading to analyst upgrades. Profits for the year to February rose 21% to £65m. N Brown specialises in largersized womenswear, going up to size 38.
SUPPORT SERVICES
Revenues at law firm Linklaters are set to smash the £1bn barrier for the first time as it turns up the heat on rival Clifford Chance, the world's largest law firm. The Lawyer magazine says Linklaters will beat Freshfields Bruckhaus Deringer with growth of around 15% this year.
TECHNOLOGY
Shares in software group Sage fell 10¾p to 257½p today after results at the lower end of expectations, and on concerns about growth in the US. Sage, which provides payroll services to companies, posted pre-tax profits up 12% to £121.8m for the six months to 31 March.
TRANSPORT
Aer Lingus today followed British Airways by increasing long-haul fuel surcharges. The Irish flag carrier said volatile oil prices had prompted it to increase surcharges to €80 (£54) return on most flights and to €100 return on flights from Ireland to the US west coast.
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