Some traders remain convinced that recent strong newsflow on Crestor will lead to a bid for the company, and the shares surged 111p to 3,242p. Dresdner Kleinwort became the latest broker to increase its forecasts for AstraZeneca and also upped its target price on the stock to 3,315p and its recommendation from "sell" to "add".
Since the UK rival GlaxoSmithKline lost out in the auction for Pfizer's over-the-counter operations, takeover talk has intensified with GSK thought to be keen to do a big deal this year. Although there would be regulatory issues to be overcome in the event of a GSK bid for AstraZeneca, traders said there would be a long queue of buyers for the parts of AstraZeneca that GSK would be forced to sell. GSK, a long-term underperformer in comparison to many of its rivals, added 33p to 1,500p.
There were rumours in the market that PartyGaming was set to go on an acquisition drive financed by a £500m bond issue, with Rank Group thought to be its No 1 target. One trader said: "While it would be a bit of a departure for PartyGaming, a bid for Rank would move the company into more of a 'bricks and mortar' operation." However, investors should be wary. Marconi was once touted as the "bricks and mortar" of the internet. PartyGaming closed 0.75p better at 114.25p, while Rank investors clearly weren't too enthusiastic about the rumours as the shares rose only half a penny to 199.75p.
After a quiet couple of weeks, mining stocks once again pushed the FTSE 100 higher, as traders reacted positively to reports that the Fed was likely to raise US rates by 25 basis points rather than the 50 points some had feared. Traders also said the big rise in the main index was helped by an element of short covering, as the FTSE 100 closed 112.9 better at 5,791.5.
Lonmin and Vedanta Resources, new additions to the main index, were sharply higher, up 84p at 1,336p and up 87p at 2,808p respectively, along with the established blue-chip stocks Xstrata, 110p firmer at 1,988p and Rio Tinto, up 111p at 2,835p. Miners occupied six the top seven places in the FTSE 100.
Drax, the energy generator, was one of only two blue-chip fallers, down 20.5p to 824p. The rumour is that figures, out today, will be in line with expectations but that the group is thought to be falling behind on its carbon emission targets and may be forced to buy further carbon credits to offset the increase.
The software developer iSoft has been all over the place recently, recovering from a low of 51p earlier this month to open at 85p yesterday. However, the word was that a surge in short positions has developed and the shares came under more selling pressure to close 3p weaker at 82p. Some traders expect the stock to revisit the 60p-65p range next week.
The online auction group QXL Ricardo, the best performer in the London markets during 2005, surged 2,289p to 12,249p on news that its long-running battle to regain full ownership of its Polish subsidiary has been won. The Polish unit made a profit of £8m last year in comparison to £2m at the rest of the group.
The broadband supplier Plusnet continued to come under pressure as traders sold the stock on concerns over increasing competition, with dealers reporting widespread shorting. The group, which provides broadband solutions for the commercial and home markets, fell 5p to 171.5p, nearly 60 per cent lower than the high hit in April, before Carphone Warehouse and BSkyB announced their intentions to enter the market, causing a potential price war.
Victoria Oil & Gas had bad news for investors, sending the shares into freefall, 44p lower to close at 97p, a 31.2 per cent decline. Two wells drilled at the West Medvezhye prospect in Russia have turned out to be dry and the company downgraded its overall reserves by 10 per cent to 1 billion barrels. Work at the smaller Danniella field, also in Russia, has been suspended after two preliminary wells showed no sign of recoverable reserves. With so many small exploration and production stocks to choose from, traders said a rapid recovery in the Victoria share price looked unlikely.
The future for Goshawk Insurance looks even more bleak, after it reported a larger pre-tax loss, caused by last year's active hurricane season in the US. It confirmed that the subsidiary Rosemont Reinsurance had seen its net assets fall below the level required by Bermuda regulators. The shares have collapsed from a high of almost 140p in early 2003, and shed 1.28p yesterday to close at 3.85p.
- More about: