Market report: Friday close

By Mickey Clark for MailOnline
Updated: 12:04 EDT, 4 May 2007

For once, there was something more substantial than the usual round of Friday rumours behind soaring share prices today.

The prospect of a bidding war for Hanson kick-started the action today but enthusiasm for the building supplies group was soon overtaken in the stampede for EMI and Reuters.

Confirmation of a takeover approach for EMI, up 18p to 245½p, though widely anticipated following authoritative press leaks last night, galvanised investorswhile rumours about Reuters started flying almost as soon as the market opened. Somebody clearly knew something was afoot. More than 40m shares changed hands before the 9.45am statement.

Although traders were talking about a bid at 600p, that figure was soon revised upwards as Reuters soared to 615¼p, up 123p. 'You're looking at 650p, 675p,' said one, pointing out that Reuters reached more than 1400p during the techie bubble. Other media groups basked in the heat with Pearson up 14½p at 890p, ITV 1.9p stronger at 121p and Reed Elsevier 18p higher at 650p.

All this speculation on real and possible takeover activity pushed leading shares towards seven-year highs, with the FTSE 100 index trading briefly above 6600 before retreating slightly to 6594.1, up 56.2 points. In the US, the Dow opened up 4.10 points at 13,245,50 despite a rise in jobless figures.

In the City, Hanson leapt 5% on top of yesterday's 20%-plus gain. Britain's last remaining aggregates producer was 58p higher at 1083p as speculation mounted that a £7bn takeover from Germany's HeidelbergCement was imminent, and likely to trigger a full-scale bidding war. Analysts think Heidelberg could flush out rival bidders including Lafarge and Mexico's Cemex.

Broker Goldman changed its recommendation to neutral from sell in response to yesterday's raid by the Germans. It said that while it believes Hanson to be a well-managed company, it expects growth of just 2% in the current year as lower volumes in the US and the UK offset price increases. It raised its target by 1p to 786p.

Interdealer broker Icap surged on talk that Deutsche Bˆrse might be hatching a bid. By mid-afternoon, the shares were 25p higher at 535p, a 5.2% rise.

Tesco rang up a 10p gain to 473¾p as it went back on the shopping list at ABN Amro. The broker swapped its rating to buy from hold and raised its target to 602p. It based its endorsement on the retailer's ability and willingness to unlock value from its massive property portfolio. Sainsbury's by contrast slid 7p to 562p.

A 20% decline in operating profits at BG turned investors off the energy sector. BG was down 1½p at 753½p while Drax fell 7p to 775p.

The superior attractions of the London-stock market compared with its American rival were highlighted by SkyePharma's decision to cancel its listing on Nasdaq to save money. The British drugs group, steady at 23p, said it would delist its American Depositary Receipts because the cost of complying with US Securities and Exchange Commission-reporting rules was not worth the benefits. In particular, the onerous 2002 Sarbanes-Oxley rules were described as 'expensive and burdensome'.

Mid-tier stockbroker Collins Stewart dipped 2½p to 248¾p. Traders said the company had been dropped from one of Morgan Stanley's funds.

Meanwhile, Anglo-Australian explorer Oilex slipped 5½p to 67p as it announced plans to tap shareholders for A$67.5m (£28m) through a placing of 50m shares to fund ongoing projects in india.

Software group Microfocus gained support on the back of a positive trading update and the $40.7m (£20.5m) acquisition of US business Acucorp. It rose 21¾p to 281p after revealing it had closed more larger-value contracts than expected. Full-year sales should be up 18% on last year.

TAKING STOCK: An at-a-glance guide to the market

BANKING & FINANCE
Chairman and chief executive Billy Kane has bought an extra 500,000 shares in Finance Ireland at 9.75p each. It raises his stake in the Aim-listed provider of equity-release products for the over-sixties to 11.98m shares, or 13.01%. The shares have slumped from a peak of 19p struck in March last year.

BUILDING & PROPERTY
Upmarket housebuilder Berkeley Group's shares climbed above 1800p to close at a new record, helped by positive comments from UBS. The broker has raised its recommendation from neutral to buy and says there is still scope for improvement in the shares. It has subsequently raised its target from 1800p to 2082p.

CONSUMER
Stores chain Wal-Mart pulled sets of baby bibs from its stores throughout the US yesterday after they tested positive for high levels of lead. The bibs, sold under the Baby Connection name, came in packs of two to seven, with embroidered prints or images of Sesame Street characters. Some were sold as long ago as 2004.

ENGINEERING
Smiths Group is to return more than £2bn to shareholders following completion of the sale of it aerospace division to General Electric for £2.4bn. Speaking at the company's investor day, chief executive Keith Butler-Wheelhouse said all regulatory approvals were in place and the deal would be completed 'very shortly'.

HEALTH
Citigroup has given its approval to solid first-quarter numbers from Smith & Nephew and news that chief executive Sir Christopher O'Donnell is being replaced by chief operating officer David Illingworth. The broker is comfortable with its share-price target of 727p and expects the new boss to bring more dynamism to the artificial joint maker.

INDUSTRIALS
Rexam says strike action at nine of its North American beverage can plants has cost up to £15m. The strike began on 10 April. Earlier this week, the packaging specialist negotiated a tentative agreement with the workers, and this will now have to be voted on. Despite the strike, Rexam expects this year to be in line with expectations.

LEISURE
Merrill Lynch has repeated its sell rating and 150p price target following yesterday's Rank trading update, which the broker complained added little new to the recent investment debate. Merrill also reckons news regarding the taxation of the UK casino market significantly reduces Rank's potential as a bid target.

MEDIA
The Thai government plans to sue video-sharing site YouTube for posting videos deemed to be insulting to the king. The video, branding the muchrevered monarch 'the king of the apes', appeared on Google-owned YouTube shortly after a Swiss man was jailed for 10 years for defacing posters of the king.

NATURAL RESOURCES
Lehman Brothers International has raised its stake in Aim-listed newcomer Renewable Power & Light from 1.67m shares to 4.11m. or 4.78% of the company. The generator of renewable energy was floated in December and has traded as high as 137½p. Other shareholders include Rab Capital and Credit Suisse Asset Management.

RETAILING
Keppler Teather & Greenwood Merrion says the acquisition of Storey Carpets underpins Carpetright's dominance of the domestic market and adds a business that should generate a return that more than justifies the money spent. But this is unlikely to outweigh recent gloomy trading news, so it is retaining its hold call on the shares.

SUPPORT SERVICES
Panmure Gordon has raised Communisis from sell to hold and lifted its target from 50p to 62p after meeting the company. The 2008 pre-tax profit forecast has also been increased from £10.5m to £11m to reflect recovery in direct mail and print management. Communisis' shares have underperformed since results in February.

TECHNOLOGY
Chairman Robert Jeens has bought 71,204 shares in nCipher, worth £188,690, at 265p. It takes his total holding in the software specialist to 171,204 shares or less than 1% of the company. nCipher is in the process of arranging a tender offer at 285p a share to return up to £34m to shareholders.

TELECOMS
The EU is confident the European Parliament will vote through its proposals to cap mobile roaming charges next week. The plenary will vote on the proposed regulation to bring downcharges next week. This must then be approved by the Council of Ministers and will come into effect ahead of the summer holidays.

TRANSPORT
SAS will lay off personnel in Denmark following last week's three-day wildcat strike among the airline operator's cabin crew. The group plans to restructure during the next six months to increase its focus on SAS Sweden and SAS Norway, but does not know how big the reductions of the Danish operations will be.

UTILITIES
Takeover target Endesa, Spain's biggest power company, suffered a massive 40% drop in profits in the first quarter of the year due to the lower price of wholesale electricity. Endesa, in the process of being bought by Italy's Enel and Spain's Acciona, said profits fell to e633m (£432m) from €1bn a year earlier.