Market Report: Barratt falls on rumours of acquisition plans

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Is Redrow about to be bought by its larger rival Barratt Developments? At the start of the day, traders seemed pretty keen on the idea as they rushed to buy into Redrow in the hope of making a quick turn should a bid emerge.

Is Redrow about to be bought by its larger rival Barratt Developments? At the start of the day, traders seemed pretty keen on the idea as they rushed to buy into Redrow in the hope of making a quick turn should a bid emerge. Shares in the group responded, touching a high for the session of 369p. But as the day wore on, the traders' fervour waned and Redrow closed just 1.25p better at 358.25p.

Rumours that Barratt, down 18.5p to 518.5p, is looking for an acquisition are nothing new and nor is the view that Redrow is a target. Barratt, with a market value of £1.2bn, could easily swallow its smaller rival, which at yesterday's close was worth less than £600m. Some analysts suggested that if Barratt made a move on the group it could prompt a counter bid from Persimmon, which fell 14p to 624.5p.

Traders were also excited about the prospects of consolidation among second-tier stock brokers after Numis Securities, up 55p to 610p, disclosed that it had received a takeover approach. With Cazenove and WH Ireland both presently up for sale, Jeremy Grime, an analyst at Altium Capital, told his clients that "consolidation in the sector is here" and referred to Evolution Group, up 1.25p to 150p, and Teather & Greenwood, 0.5p better at 35p, also as likely targets.

The mining sector was not so fortunate as Xstrata lost 41.5p to 858p, BHP Billiton retreated 26.5p to 573p, Anglo American fell 52p to 1,251p and Rio Tinto lost 51p to 1,452p. Dealers blamed a sharp drop in commodity prices and a downgrade of the sector by JP Morgan. The US broker cut its stance on the European mining industry to "neutral" from "overweight" and argued that the strong profits that major players are likely to enjoy next year are already priced in. Antofagasta, one of the world's biggest copper producers, slumped 74p to 1,066p after the price of the metal crashed 10 per cent in London.

Meanwhile, airlines breathed a sigh of relief as the cost of crude oil retreated. British Airways jumped 9.5p to 209p, easyJet gained 1.5p to 122.5p and Ryanair added 5 cents to ¤3.74. The FTSE 100 was 13 points weaker at 4,634 while the FTSE 250 gave up 41 points to finish at 6,271. Warner Chilcott fell 5p to 810p after Elan, the Irish pharmaceuticals group, sold its 3 per cent stake. Davy Stockbrokers placed the holding, amounting to 7.2 million shares, at 805p each.

Mmo 2 added 0.25p to 99.25p as Investec Securities referred to the mobile phone group as "significantly undervalued at current levels". It forecasts the stock will rise to 130p over the medium term and told investors to expect upgrades to earnings forecasts as subscriber growth continues both in the UK and Germany. Virgin Mobile added 4p to 185p while Vodafone improved 1p to 135.75p.

Cazenove helped Hilton rise 3.5p to 276.75p after the heavyweight broker returned from a meeting with the management of the hotels group in a bullish mood. It tipped Hilton shares to outperform in the coming months.

Electrocomponents gave up 4p 295.5p after Panmure Gordon urged investors to sell the electronics distributor. The broker warned that growth at the group will be hindered by any slowdown in the global economy, which it believes is likely over the next few years. Panmure said that Bunzl, up 1p at 425.5p, offers much better value for investors. Spectris improved 1.5p to 400.5p as Hans Nilsson, its chief executive, disclosed the purchase of 5,000 shares at 408p each.

Singer & Friedlander retreated 3p to 306p after Tuesday's jump on rumours of a move on the group from one of its Icelandic shareholders. Two Icelandic banks control a little less than 30 per cent of the group and yesterday gossips talked of demand for S&F stock from Baugur, the Icelandic retailer. Why the company which has steadily build up a presence on the UK's high street might be interested in one of the Britain's last remaining independent merchant banks is unclear.

BATM broke out of its recent trading range, gaining 1p to 19.5p, on whispers of improving trading at the group. Word has it upcoming results from Synergy Healthcare will not disappoint. However, the excitement among traders failed to move shares in the healthcare group, which finished at 332.5p.

Finally, brokers were eagerly awaiting today's float of Falkland Oil & Gas. Shares in the explorer are tipped to soar in their maiden session. The company raised £12m at 40p a share and word has it investors keen to get a piece of the action ahead of the listing were quoted a grey market price of 70p yesterday. The hedge fund RAB Capital, up 5p to 43.5p, will emerge as one of Falkland Oil & Gas's biggest shareholders, having been heavily involved in the placing.

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