Market Report: Barclays climbs despite takeover doubts

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Those betting on a takeover of Barclays will be disappointed, according Dresdner Kleinwort Wasserstein. It views the UK banking giant as more of a predator then prey and told its clients the company is neither a willing nor a likely target for a bigger player.

Rumours of a bid for the group are a regular occurrence in City dealing rooms and usually name Citigroup or Bank of America as the likely acquirer. Over the past three weeks, Barclays shares have gained 12 per cent in part on the back of consolidation hopes but also thanks to a strong trading statement from its Absa unit in South Africa and upbeat comments from European rivals such as UBS and Credit Suisse. But Dresdner Kleinwort sees little further upside in the shares and urged a switch into Barclays' rival, Royal Bank of Scotland.

The German broker also warned about weakening revenues at Barclays' retail division as unsecured lending, especially via credit cards, slows. Barclays finished the day 3p higher at 598.5p. Elsewhere in the sector, Lloyds TSB gained 1p to 471.25p, HBOS gained 2p to 900p and Northern Rock put on 1p to 813.5p.

The FTSE 100 rose 5 points to 5,470. Roger Cursley, a strategist at Investec Securities, tips the UK market to underperform Wall Street in the final weeks of the year as the price of oil continues to weaken. He points out that a falling crude price is more favourable for the US market because oil and gas companies represent just 8.2 per cent of the Dow Jones. Mr Cursley is also sceptical that the UK consumer will recover as rapidly as equity prices are starting to anticipate in the absence of another rate cut.

The FTSE 250, 45.3 points higher at 8,089.2, was boosted by a buoyant housebuilding sector as investors responded to Friday's late Persimmon bid for its rival Westbury. Understandably, the duo led the sector higher. Persimmon rose 92p to 1,042p while Westbury soared 62.5p to 556.5p as it was suggested the tie-up would generate cost savings of about £50m and that the combined company is likely to get a place in the FTSE 100.

Elsewhere in the sector, Bellway gained 48.5p to 999p, Redrow gained 20p to 485p, Bovis Homes rose 12p to 670p and Wilson Bowden put on 27p to 1,225p. Numis Securities believes the completion of deal between Persimmon and Westbury will be great news for the wider industry. "Should the deal be successful we do not believe that any stock in the sector will trade at anything less than 1.15 times its forecast net asset value," Numis said. As for the question of who else in the sector could fall to a takeover, Bridgewell Securities tipped Bellway, while other brokers mooted Crest Nicholson, where the property entrepreneur Gerald Ronson has a 23 per cent stake.

London Stock Exchange roared 15.5p higher to an all-time high of 602p as punters bet on a formal bid emerging for the bourse in the near future.

Luminar dropped 31p to 477.5p amid nervousness before today's interim results from the late-night bars to nightclubs operator. Investors were were particularly concerned about the performance of Luminar's entertainments division yesterday. Recent comments from sector analysts have warned that the business is struggling and could prompt sizeable downgrades to the company's profit targets.

Not so long ago it was rumoured that Luminar was looking to sell the business. Altium Capital hopes the group will unveil a strategic plan for the entertainment division's future today. It is worried about its present performance, particularly of the Jumpin' Jaks chain which the broker fears has suffered from especially poor trading.

At the smaller companies end of the market, Empire Online slumped a further 13.5p to 74.5p as investors remained sceptical that its rival PartyGaming will bid anywhere near 100p for the group. Fulcrum Pharma ticked 0.25p to 4.12p after Jon Court and Geoffrey Smith each bought 250,000 shares in the company at 3.9p.

Latchways added 27.5p to 578.5p after unveiling a 50 per cent jump in first-half pre-tax profits to £3m. The group, which designs and manufactures protection systems for individuals working on tall buildings, also raised its interim dividend by 10 per cent and assured the City that trading in the second half of its year will also impress.

Finally, Goshawk Insurance rose 2.5p to 8.5p as long-term bears of the troubled company closed their short positions in the stock. Any trader short of Goshawk since the end of the summer will have done very well. The group's shares have lost 80 per cent of their value as it has stumbled from crisis to crisis. This month it admitted that it had breached its banking covenants.