LONDON (ShareCast) - London closed above 5,600 for the first time since the end of June as bid talk resurfaced at Sainsbury’s and banks rallied after sentiment improved for US peers.

Shares in the supermarket giant flew off the shelves on rumours that a bid worth 500p a share, or £8.7bn, is in the pipeline. Qatari-based investment fund Delta Two abandoned a £10.6bn bid last year.

Hopes that the US government won’t have to bail out American mortgage finance giants Fannie Mae and Freddie Mac buoyed US finance stocks yesterday and again today. Barclays, HBOS and Royal Bank of Scotland were in demand Thursday.

Non-life insurers also did well, with Admiral and RSA Insurance ahead, while fund manager Schroders joined the fun.

Kazakhmys was the biggest loser as poor weather and changes in the timing of sales hit first half revenue and earnings at the miner. Rival miner ENRC was also weak, but iron ore pellet producer Ferrexpo added ground after revealing sparkling first half figures. Revenue and earnings were sharply higher.

Severn Trent trickled lower after Goldman Sachs cut the water group to ‘sell’ from ‘neutral’ with target price down to 1,396p from 1,585p. Scottish & Southern Energy and United Utilities were also down.

But real estate giants British Land and Land Securities improved following an article in the Financial Times that said Australian shopping centre owner Westfield had nearly filled its new White City shopping mall in west London

Tour operators TUI Travel, Thomas Cook and German airline Lufthansa are in "early discussions" to merge Condor, Germanwings and TUIfly Germany.

Full year earnings came in weaker than expected at Guinness brewer Diageo due to rising costs and lower consumer spending. Earnings per share for the 12 months to 30 June rose 7% to 59.3p, shy of forecasts

Engineering and project management firm Amec raised its margin target for 2010 and said it saw record trading performance in the first half with continuing strength in energy end markets.

Aircraft services group BBA Aviation is a heavy faller after reporting flat underlying earnings and predicting a similar second half.

Engineer Bodycote has made good on its pledge to sell its ledge to sell its testing unit and said it will return some of the proceeds from the sale to shareholders.

The acquisition of rival Alfred McAlpine helped construction and support services firm Carillion post first half results slightly ahead of expectations.

JP Morgan has initiated coverage on sweet maker Cadbury with a ‘neutral’ rating and a 710p target price. Johnston Press’s revenue trends are ‘abysmal’ JP Morgan said as it shaved its target price on the newspaper publisher by a fifth to 40p.

Estate agent Savills has soared after it said demand for its consultancy and property management services remained “good” even as it reported a 41% slide in profits and weaker revenues.

But Sinopec International has revealed it is no longer considering making a bid for Russia-focused oil producer Imperial Energy. Imperial expects to recommend acceptance of a 1,250p a share offer from ONGC Videsh.

Oil and gas exploration and production company SOCO International is once again generating operating cash inflows after selling its sole producing asset earlier this year.

Expectations of lower hydrocarbon production in the second half of 2008 prompted KBC Peel Hunt to lower its rating on oil and gas producer Premier Oil to ‘reduce’ from ‘hold’. Earlier, Premier said high oil prices and an increase in production sent first half net profit up to $71.2m, 247% better than a year ago. Production rose 11% to 38,000 barrels of oil equivalent per day.

Profit before tax from continuing operations fell 29% to £3.6m at Branston pickle and Hovis bread Premier Foods in the first half.

Soaring fuel costs have sent Aer Lingus into the red at the half way stage and the Irish low cost airline expects to report a loss for the full year.

Marketing communication firm Aegis has achieved a “good” result for the half year but said the trading environment is becoming tougher with its revenue outlook for the second half less certain.


FTSE 100 - Risers
Sainsbury (J) (SBRY) 344.00p +7.92%
Wolseley (WOS) 442.00p +5.87%
Barclays (BARC) 349.50p +5.83%
RSA Insurance Group (RSA) 154.10p +5.69%
Friends Provident (FP.) 97.90p +5.38%
Kingfisher (KGF) 133.30p +5.21%
BT Group (BT.A) 172.50p +4.36%
SABMiller (SAB) 1,170.00p +4.19%
HBOS (HBOS) 305.50p +4.18%
Next (NXT) 1,057.00p +4.14%

FTSE 100 - Fallers
Kazakhmys (KAZ) 1,305.00p -2.54%
Severn Trent (SVT) 1,375.00p -2.14%
Eurasian Natural Resources (ENRC) 1,021.00p -2.11%
Cairn Energy (CNE) 2,857.00p -1.86%
Petrofac Ltd (PFC) 621.00p -1.35%
Imperial Tobacco Group (IMT) 1,788.00p -1.32%
Vedanta Resources (VED) 1,829.00p -1.30%
British Energy Group (BGY) 717.00p -1.24%
Xstrata (XTA) 3,046.00p -0.98%
BP (BP.) 522.25p -0.67%

FTSE 250 - Risers
Savills (SVS) 283.75p +17.01%
Taylor Wimpey (TW.) 53.25p +10.36%
Regus Group (RGU) 75.75p +9.39%
Persimmon (PSN) 376.00p +7.81%
Bellway (BWY) 640.00p +7.74%
Trinity Mirror (TNI) 110.25p +7.04%
DS Smith (SMDS) 123.75p +6.68%
Bodycote International (BOY) 224.00p +6.67%
Travis Perkins (TPK) 674.00p +6.56%
Home Retail Group (HOME) 256.50p +6.54%

FTSE 250 - Fallers
Premier Oil (PMO) 1,243.00p -6.40%
Premier Foods (PFD) 92.00p -5.40%
Aegis Group (AGS) 110.00p -4.76%
Melrose Resources (MRS) 397.25p -3.99%
Moneysupermarket.com (MONY) 76.00p -3.80%
Xchanging (XCH) 259.50p -3.80%
Morgan Sindall (MGNS) 594.00p -3.02%
Hunting (HTG) 860.50p -2.66%
International Personal Finance (IPF) 308.00p -2.53%
Beazley Group (BEZ) 111.50p -2.41%

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