FTSE 100 close: Takeover talk boosts shares

By Dan Hyde
Updated: 12:32 EDT, 13 July 2009

Takeover talk across the markets saw the FTSE 100 index of leading shares rise back over the 4200 mark today.

Latest trading: Reports from the market updated throughout the day

The morning's trading saw a fluctuating Footsie fall reasonably flat after touching its lowest level since April last week. That was until it began a steady rise at around 09.30. By the close of trading it had gained 74.96, hitting 4,202.13.

It was a very positive sign for the markets, as investors anticipated the release of important figures on inflation, due to be released tomorrow at 9.30am.

With investors watching closely, the Bank of England's inflation report is expected to show levels once again hovering below 2% after the MPC put the brakes on the Bank's quantitative easing programme last week.

The Footsie's lacklustre start, though, owed much to a flat first hour for the mining sector. Xstrata closed down 14p at 583p, recovering slightly after an early morning fall and Lonmin, the world's third largest primary platinum producer, slipped steadily, losing 14p to 995p by the close.

There was better news for Friends Provident and Venture Production. Takeover talk has investors feasting on early opportunities, speculating on both companies, contributing to the mid-morning rise.

Clive Cowdery's on-going bid for Friends Provident, up 7.6p (12.58%) to 68p, and Centrica' hostile approach toward North Sea oil producer Venture Production saw the pair both make gains. Venture was 43.5p stronger at 828.5p.

Other insurers were lifted by the interest in Friends, with Standard Life up 9.4p at 182.4p and Old Mutual ahead 4.9p at 79.78p.

Broker Keefe, Bruyette Woods reajusted some of its targets on insurance firms. It has raised Hiscox, 5.75p stronger at 289p, from 335p to 345p and Amlin, 3.25p better at 305p, 340p to 355p.

But it was not so positive on Brit Insurance, up 3p at 182p, tagging it with an underperform rating. And it has moved Catlin, up 1.75p at 295p, from 460p to 420p.

Oil and gas explorer Emerald Energy also registered a strong start after receiving a takeover approach from an unnamed party. Emerald shares - which have more than doubled in the past nine months - finished up 12.76% and 71.5p at 632p, making it one of the day's biggest risers.

After a troubling week beset by controversy over reports that Chairman Sir David Jones' took a £1.5m loan from rival retailer Mike Ashley, JJB was 0.5p better at 19.25p. Investors learned yesterday that Jones has now repaid the loan, restoring early confidence in the sportswear firm.

Shares in pork supplier Cranswick rose 6.50p to 610p after it reported increased sales in the first quarter and it remains confident of its prospects for the future.

Analyst Charles Hall of KBC Peel Hunt says: 'We expect the good trend to continue and believe the shares to be excellent value.'

The broker says Cranswick's gourmet sausages have been supported by a good barbecue season, a consumer switch to pork and by the 'Jamie Oliver effect' - a surging interest in good quality food spurred by celebrity chef Oliver.

Companies releasing results today had mixed openings. Global business services company Experian Group finished down 1.75p at 447.50p, while retailer Dunelm improved significantly, 25.5p (12.13%) dearer at 235p.

Experian, best known for running consumer credit checks for banks, said total growth in the three months to end-June was up 1 percent at constant exchange rates, but down 8 percent at actual exchange rates.

'We are managing the business tightly and are on track for the year to broadly maintain margins,' chief executive Don Robert said.

Homeware chain Dunelm – seller of kitchen, bedroom, bathroom and general home furnishings – reported a 5% rise in like-for-like sales today.

Over the past six months, the firm has performed well in a difficult sector and said its 'simply value for money' products have helped it weather the stormy economic conditions.

Investors await news tomorrow of the retail sector's performance for the month of June. The British Retail Consortium will announce its sales monitor for the past month after it showed a like-for-like fall of 0.8% in May with food sales slowing after the Easter rush.

Retailers' strong performance last week was put in check today as sellers took advantage of the price rises. But after an early fall, Next recovered rising 15p to 1610p. Sports Direct also lost 0.25p, down to 80p ahead of its finals this Thursday.

Media companies attracted interest today after broadcaster ITV was upgraded to Buy from neutral by broker UBS. Shares in the television firm rallied 2.25p to 34.25p having fallen 13.84% over the past year.

UBS cited an increased probability that ITV could switch to a pay-TV model from an ad-funded one as the key reason for the upgrade.

'Our analysis suggests foregone advertising revenues would be more than offset by carriage fees from pay TV retailers,' said the broker said.

On the Irish Stock Exchance meanwhile, Magners firm C&C saw shares slump 9% today after the drinks company admitted it got its figures wrong in an upbeat trading statement last week.

Instead of the 3% rise in revenues for the four months to June 30, C&C has revised the figure to show a drop of 5%. Cider sales were down 6% rather than the 3% increase reported to investors on Wednesday last week.

Andrew Holland, an analyst at Evolution Securities, said today: "There has been no change to the volume figures, but the implication is that cider pricing, which last week appeared to be positive was actually negative."

Shares were trading at down €0.36 at €1.84 cents.

Further afield, investors were ruing heavy loses in Tokyo and Hong Kong. Tokyo shares hit their lowest levels in the last eight weeks, sparked by embattled Prime Minister Taro Aso's aim to call a general election for 30 August. Growing political uncertainty has been hampered the markets.

The Nikkei ended down 3.78 at 9287.28, its lowest since 18 May.

Shares also tumbled in Hong Kong on talk of a likely tightening of China's loose monetary policies while stocks in Shanghai drifted lower on news of an impending massive new listing. The Hang Seng index was down 438.89 points at 17,269.53.