Skip to main contentSkip to navigationSkip to navigation

Lloyds TSB and miners race ahead

This article is more than 16 years old

The rival attraction of Royal Ascot meant trading was reasonably light today. But despite that diversion- or perhaps because of it - the rumour mill was out in force.

Lloyds TSB was the main recipient of gossip, up 2p to 576.5p on talk that France's Société Générale was running the rule over the bank. With the current battle between Royal Bank of Scotland and Barclays over ABN Amro, it would be unwise to dismiss anything out of hand, but traders were nontheless unconvinced.

Property group Hammerson was also the subject of vague bid talk, up 13p to £15.16p. Private equity groups or rival British Land have been mentioned as possible predators, but then British Land has also been suggested as a bidder for Sergo, formerly Slough Estates.

Elsewhere miners were wanted after a hefty 30-page note on the sector from Goldman Sachs.

Goldman's analysts have raised their targets on a number of the miners in the expectation of further price rises for iron ore, platinum and base metals.

"We expect rising global growth in 2008 to lead to accelerating demand growth for metals, further tightening supply/demand balances," said the bank's analysts.

They rate BHP Billiton, up 19p to £13.84p, as the key buy in the sector, and raised their price target from £14.60 to £16.80.

Xstrata, up 4p to £30.82p, is upgraded from neutral to buy, while Goldman has also lifted its targets for Vedanta Resources, 53p higher at £16.24, and Lonmin, up 75p to £42.54.

Depite the strength in the miners, the FTSE 100 slipped back from earlier gains to close 0.9 points lower at 6649.3.

Standard Life was wanted, up 9p to 349p. The group had seen a brief dip recently on worries that private investors would start selling once they receive their bonus shares next month. But analysts believe these concerns have been overdone. Another possible boost to the shares was news that company executives including chief executive Sandy Crombie are on a week long roadshow around Europe and the US, which has reached Chicago today.

Aero engine maker Rolls-Royce revved up 7p to 552p after announcing at the Paris Air Show today a $1bn contract with India's Kingfisher Airlines. And hedge fund group Man climbed 13.5p to 625.5p. The company reported a 3.55% weekly rise in its key AHL fund, prompting an upbeat note from Evolution Securities with an add recommendation and 630p target.

Among the mid-caps, Bluetooth technology group CSR added 47p to 784p after Credit Suisse upgraded from neutral to outperform and raised its price target from 817p to 900p.

"We are increasingly confident on the earnings growth of the company," said the bank. "In our opinion, CSR's earnings potential is not yet fully discounted at current levels."

Tullow Oil, up 57.5p to 504.5p, also benefited from a positive analyst note, this time Merrill Lynch with a 560p target price.

Among the fallers ICI slipped 5.5p to 633.5p on reports that there was no guarantee that bidder Akzo Nobel would come back with a higher offer. ICI has rejected a 600p a share bid from the Dutch chemical group.

James Knight at Collins Stewart advised clients to lighten their positions in ICI.

"We think there is a strong chance of an imminent formal offer from Akzo, but not over 650p, just 2% above the current price," he said. "There is a small chance Akzo looks elsewhere - for example, Sherwin Williams - and the offer could take time to realise given the timing of the cash inflow for Organon [which Akzo would use to fund the bid], the need to gain Akzo shareholder approval, and possible - but minor - anti-trust delay.

"We see limited chance of other bidders. BASF, DuPont and Dow could all afford ICI but have minimal synergy opportunity. The same goes for private equity."

A trading statement from banking group Standard Chartered revealed good operating profit growth in the first half, but a warning of cost increases saw the shares dip 8p to £16.58.

Back among the bid talk, Irish building materials group CRH added 1.4 cents to €37.70 on talk of a possible break-up of the company, while in the same sector, Wolseley was 4p better at £12.88 after a buy note from Evolution Securities with a £14.75 target.

"The shares are undervalued on any private equity interest and the growth and recovery predicted through the next fiscal year to July 2008," said Evolution.

Pharmaceuticals giant Shire slipped 1p to £12.20 after it agreed to pay up to $825m for the rights to Juvista, an experimental treatment for scarring, from biotech business Renovo, up 27p to 214p.

United Utilities has finally disposed of its remaining shares in telecoms group Thus, placing its 22.63% stake with institutional investors at 183p a share. United was unchanged at 767.5p, despite some traders believing it could now become a bid target, while Thus slipped 11.5p to 185.5p. Cazenove said the sale removed an overhang and moved its rating from underperform to in-line.

Lower down the market, Aim-listed Vyke Communications edged up 0.05p to 2.3p after it signed an agreement with The Cloud Network that will allow customers to use its mobile VoIP products in The Cloud Hotspots including London, Manchester and Amsterdam.

I-Mate, which specialises in Windows mobile devices and software applications, added 14.5p to 78p after it announced partnership deals to expand in Asia.

And a bid battle broke out for dental group Oasis Healthcare. Private equity firm Duke Street Capital had made an 82p a share offer for the company but today rival dentistry outfit ADP Healthcare - which owns 18.25% of Oasis - topped that with a 91p a share counter-bid. Oasis added 2p to 93p.

Finally garden centre group Dobbies jumped 47.5p to 1837.5p after Sir Tom Hunter raised his stake in the business yet again, buying another 418,283 shares at £18.45 to take his holding to 25.57%. Dealers said he could now scupper the £15 a share bid from Tesco without bidding himself. The Tesco deal requires a 75% acceptance level.

Most viewed

Most viewed