FTSE in-depth: Qatari bid talk fires up Centrica

By Tamsin Brown
Updated: 03:35 EDT, 12 May 2011

The rumour mill was in full swing once again. This time the spotlight fell on Centrica amid speculation that the Qataris were mulling a bid for the owner of British Gas.

Rumour mill: Bid talks came hot on the heels of Centrica's warning on Monday of slower growth

It was an easy rumour to patch together given the £2bn deal that Centrica struck in February which will see the Qataris supply 10pc of the UK's gas requirements.

The bid talks came hot on the heels of Centrica's warning on Monday of slower growth which pushed its shares to a ninemonth low.

Les Ames, dealing director at City stockbroker WH Ireland, said: 'They [the Qataris] are probably the only people that could physically take it in one hit. It is certainly plausible.' Sceptics pointed out that Centrica has long been a target of bid rumours. Shares in the gas giant were fired up 3p at 311.7p, off a session high of 316.7p.

Gossips dredged up the long-running rumour that pharmaceuticals group Shire (43p firmer at 1922p) could attract interest from AstraZeneca (up 2.5p at 3142.5p) and bid speculation continued to swirl around Burberry.

The luxury goods brand's fortunes were also buoyed by strong sales updates from peers Bulgari and Hermes, and shares in the label ended the day at the top of the FTSE 100 risers, up 36p at 1365p.

The FTSE 100 index failed to build on Tuesday's gains, shedding 42.89 points to 5976, weighed down by a weak start on Wall Street. By the closing bell the Dow Jones Industrial Average was down 130.33 points at 12,630 as a fall in the price of oil hit energy stocks.

There was weakness in British heavyweight oil giants too.

BP and Royal Dutch Shell shares fell 7.45p to 448p and 44p to 2205p, respectively, as they both went ex-dividend. Mining stocks were also under the cosh.

Retail giant Marks & Spencer bucked the trend, gaining 3.3p to close 399.2p, after a bullish note from JP Morgan Cazenove.

Analyst Gillian Hilditch lifted her rating two notches to overweight and hiked her price target to 460p from 310p.

She said: 'Given the recovery potential of the company, the self-help elements to the story and the demonstrable market share gain being achieved this lack of premium is in our view undeserved.' On the second line, Superdry owner Super-Group closed up 5p to 1574p ahead of its fourth quarter trading update due today.

The fashion retailer is expected to show a slowdown from the bumper growth recorded in its third quarter figures, when group sales were up an impressive 86.9pc.

Dixons Retail edged up 0.2p to 16p ahead of its pre-close update, also due today.

Investors will be keeping their fingers crossed that there is no more bad news after two profits warnings from the electrical goods retailer earlier this year.

However, Analyst Nick Bubb at Arden Partners fears a weak April in the UK could have knocked its full year pre-tax profits below the £85m that was earmarked at the time of its last profits alert at the end of March.

Back among the risers, Anglo-Dutch publisher Reed Elsevier gained 10p to 559.5p after holding an investor education seminar on Tuesday - its first since 2007.

Analysts gave a resounding cheer to its decision to become more proactive with investors.

Royal Bank of Scotland's Paul Gooden said: 'With further investor seminars planned, it would seem management is beginning to sell the Reed story after what has been a troubled few years.' International Personal Finance was propelled to the top of the FTSE 250 risers' board, up 25.2p at 375.5p after an upbeat trading statement from the emerging markets lender.

Bowleven shares gushed up 28.25p to 313p after discovering more oil off the coast of Cameroon.

TT Electronics shares surged 21.25p to 198.75p on news the electronics components supplier expects full-year results to top expectations.

Meanwhile, Russian Helicopters' plan to take off on the London Stock Exchange have been grounded - at least for the time being.

It is the latest in a string of Russian companies to pull flotation plans this year.

The state-backed business had hoped to raise £305.3m in the listing but failed to persuade investors it was worth as much as it thought it was.

Russian handset retailer Euroset pulled its £794m listing last month and three other Russian hopefuls put their plans on ice in February.