Market report: Thursday close

By Mickey Clark for MailOnline
Updated: 12:03 EDT, 29 May 2008

More than 280m shares in Royal Bank of Scotland changed hands today, more than twice that of Vodafone, down 2p at 160.9p, usually the stock market's most heavily traded stock, which today clocked up 125m.

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The price fell a further 6¼p to 231¾p with the nil-paid trading at 29¾p, after touching a low for the day of 24p. Dealers reported heavy short-selling of the shares. Investors have until next week to make up their minds about taking up the bank's fully underwritten rights issue. The terms were 11 new RBS shares for every 18 held at 200p.

RBS needs the money to strengthen its weakened balance sheet, which has been badly damaged by the credit crisis and the group's acquisition of Dutch bank ABN Amro for an eye-watering ¤72bn (£56.6bn). HBOS, which has called on shareholders for £4bn, slumped 18p to 413p.

Shares generally ran out of steam after an early mark-up. The FTSE 100 index closed 1.5 down at 6068.1. Over on Wall Street this afternoon, shares made a nervous start with the Dow adding 21.1 to 12,615.1.

Mining giant and bid target Rio Tinto got off to a flying start, closing 43p up at 6180p ahead of a meeting-with JPMorgan Cazenove and institutional shareholders.

The latest production report and BHP Billiton's proposed 6000p-a-share offer will be on the agenda. The world's thirdbiggest miner expects output to grow by 8.6% through to 2015, and says it is well placed to take advantage of an expected doubling of world demand for its metals and minerals by 2022. Seymour Pierce responded by repeating its buy rating and 7125p target.

But it is BHP's hostile bid that intrigues Rio shareholders. BHP, up 1p at 1960p, has offered 3.4 of its own shares for every one of Rio Tinto. The terms have been rejected by Rio amid talk of a counterbid from the Chinese. Aluminium Corp of China recently bought 119.7m shares, or almost 12% of the company, for 6000p a share. The speculators say BHP will have to raise its offer to nearer 7000p a share.

Mining shares generally ticked better with Anglo American falling 24p to 3446p and Eurasian Natural Resources up 71p at 1481p.

The latest slump in the housing market makes gloomy reading for housebuilders, a survey from the Nationwide showing prices falling at their fastest rate since 1991. Taylor Wimpey lost 8p to 85½p while Persimmon dropped 26p to 487½p and Bovis Homes retreated 19p to 429p.

Irish billionaire Denis O'Brien is continuing to add to his holding in shares of Independent News & Media, steady on €2.20. He has bought a further 14.4m, worth almost €32m (£25m), raising his total holding to 196.2m shares, or 23.61% of the company.

The board of Independent will be uneasy at the news. They have branded him a 'dissident shareholder', and are convinced he is plotting a takeover of the company.

There was further heavy turnover in takeover hopeful Ashtead. Shares in the plant hire group eased 1p to 75p after a line of 1.12m went through at 78.3p.

PR outfit Chime Communications leapt 9¾p to 129½p on news of directors buying the shares. Chairman Lord Bell, chief executive Chris Satterthwaite and finance director Mark Smith have between them bought 90,971 shares.

Cambrian Mining, up 2¾p at 190p, is buying miner Coal International, up 7p at 57p, in an all-share deal valuing the company at £56.2m. The diversified mining house said it will offer one share for every 3.25 Coal International shares held, a premium of about 216% to the previous closing price.

TOMORROW'S AGENDA

• Hopes of a recovery in consumer confidence are likely to be dashed, with sentiment worsening again in May. Economists expect GfK NOP's barometer to give its poorest reading since November 1992, with the headline figure falling to minus 25 from minus 24 in April as fears grow for the health of the UK economy.

• InterContinental Hotels, the group behind Holiday Inn and Crowne Plaza, will update shareholders at its annual meeting. Occupancies and bookings fell last month, and investors will be keen to see whether they have since recovered.

• Investors will be hoping for evidence that Brewin Dolphin is still shrugging off the credit crunch when the broker and fund manager reports first-half results. Brewin reported a 30% jump in full-year profits last year, but analysts warned that trading in 2008 could prove more challenging.