Yesterday's trading: A&L jumps on Aussie bid talk

By Geoff Foster for MailOnline
Updated: 02:37 EDT, 9 August 2007

Wouldn't it be nice to have a £5bn-plus bank bid for everyone to get excited about? Then we all wake up. But never say never.

Professional punters yesterday happily got stuck into Alliance & Leicester amid revived gossip that National Australia Bank - the largest bank down-under based on the assets it holds and owner of Scotland's Clydesdale Bank - is giving the UK mortgage bank the once-over. A&L jumped 63p to 1107p.

Formed by the merger of the Alliance Building Society and the Leicester Building Society in October 1985, A&L was floated on the LSE in April 1997, generating windfall payments to members of up to £5,000. Since then it has been tipped as the sector's likeliest takeover candidate.

Speculation was rife last year and led to Credit Agricole, France's largest retail bank, admitting it had had a good look at A&L but decided to walk away. Spain's Banco Santander is also said to have run its slide rule over the bank.

NAB blotted its copybook in 2004 when it reported hefty losses resulting from unauthorised foreign currency trades. Those losses triggered a major clean out of senior management, including the chief executive.

Rival mortgage bank Northern Rock rose 36p to 815p on yield considerations. Lloyds TSB lost 5p at 565p after axeing 31 Cheltenham & Gloucester branches and shedding 550 jobs.

Ignoring the Bank of England's latest inflation report, which suggested one more quarter point increase in interest rates to 6% will be needed to bring inflation back to target in two years, the Footsie raced 85.1 points ahead to 6,393.9. Early impetus was given by the Federal Reserve's decision overnight to keep US interest rates on hold for the ninth consecutive time.

It also reassured dealers that problems in mortgage lending and private equity finance would not be a drag on the US economy. Wall Street traded 117 points higher in the early stages yesterday.

Property shares were back in fashion on talk of a pending bullish circular. Liberty International advanced 69p to 1130p, Segro, the former Slough Estates, 31½p to 565p and Land Securities 83p to 1778p.

Michael Spencer's inter-dealer broker ICAP jumped 28½p to 500p. Oriel Securities advised clients to buy. As the largest conduit for financial flows the group is highly geared (positively) to current volatile trading conditions.

National Grid blew a fuse at 716½p, down 13½p. Deutsche Bank has been appointed to make the final repurchase offer to outstanding holders of its B shares. High Street giant Marks & Spencer closed a ragged 4½p cheaper at 632½p after Deutsche placed 6m shares at 631½p with various institutional clients.

F&C Asset Management, which is 52% owned by Resolution's proposed merger partner Friends Provident, jumped 27½p to 217½p on speculative buying. Investor Dawnay Day owns 14% of F&C is against the cosy £8bn marriage and wants to see somebody else step in. Motor insurer Admiral accelerated 87½p to 940p amid vague bid talk.

News of a 75% dividend increase and record profit and production figures helped Acquarius Platinum climb 108p to 1433p. Citigroup upgraded to buy and kept its £18 target price. As Credit Suisse advised clients that the stock was oversold, staffing company Michael Page International rallied 34½p to 567p. Permanent placement growth hit a seven-year high in July.

Pallets company Brambles rose 53½p to 533p on hearing Asciano, Australia's largest rail and port operator, has acquired 1.2%.

It was blue skies all the way for Air Partner as shares of the executive jet hirer touched 1240p and closed 37½p higher at 1225p following a bullish pre-close trading statement. The group has experienced strong trading across all divisions. As a result, it anticipates full-year profits will be 50% ahead of last year. Charles Stanley says buy and forecasts pretax profits of £7.6m. Its target price is £14.

Business class airline Silverjet, on the other hand, nosedived 27½p to 83p after stopping its FlyJet long-haul charter flights to the US in October when the leases on the two Boeing 757 aircraft operated by its subsidiary expire.

Eurasia Mining firmed ¼p to 4⅜p following confirmation of a platinum group metals discovery on the Kola Peninsula in north-west Russia.

Hichens Harrison, the oldest stockbroking firm in the City, gained 4½p to 361p. It has acquired AM Corporate Finance in a deal financed by a £2.3m placing at 350p a share. Blackrock Investment Management took stock and now holds 7.91%.

• Buyers have dosed up with CeNeS Pharmaceuticals, ½p dearer at 4⅛p, on news that Ono Pharmaceuticals has obtained the exclusive rights from CeNes in Japan to develop and commercialise CNS-7056, a short acting sedative.

Ono will pay upfront and milestone payments as well as royalties on sales of CNS-7056. Other global drug companies are showing a healthy interest in CeNeS's pipeline.