Market Report: BG fired up by Shell/Petrobas takeover talk

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The Independent Online

BG Group was in focus yesterday, as takeover rumours returned to the stock with a vengeance.

Talk sweeping the market speculated that Royal Dutch Shell was to team up with Brazil's Petrobas to launch a 1,050p-per-share offer. Other names linked with interest in BG over the past week include Gazprom and Exxon.

One trader said: "Rumours in BG come up frequently. It could well be true, but why didn't they target the stock when it was down around 710p in August?" It closed up 2.12 per cent at 914p.

Other vague speculation to hit the sector surrounded Burren Energy. One analyst had heard talk that Eni, which had a 1,050p-per-share offer rejected last week, could face competition from a major Chinese or Indian group. The stock was up 14p in the morning but weakened to close up 5p to 1,175p.

After the previous day's 85-point fall, the FTSE 100 opened down again, a further 48 points lower in the morning. One trader said: "The market is feeling a little bit tired. It has performed a tremendous recovery, led by the oil and mining groups and people are concerned it's toppy." Another added: "It has been lethargic today; not much is going on." It closed down 30.2 points at 6,614.3.

The top tier was led down again by the UK financial sector in the morning with Northern Rock the worst performer, shedding more than 4 per cent. By the end of the day, it had pulled out a complete reversal, topping the leaderboard, 3.47 per cent stronger at 223.5p. News emerged that the company's board had offered to resign, but the offer was declined by its senior independent director on the advice of shareholders.

Elsewhere among the risers was Wolseley, which found buyers after it fell to more than three-year lows on Monday. Sensing an opportunity, investors sent the stock back up 2 per cent stronger at 815p. International Power rose 1.89 per cent to 472p after Deutsche Bank upped its target price from 300p to 450p after recent acquisitions.

Investors in Johnson Matthey locked in profits after Monday's rise fired by bid speculation. Cazenove said the reports weren't surprising as "the chemical industry remains in diversification mode". The stock retreated 4.73 per cent to 1,753p, the lowest of the day.

Talk of a placing in Rentokil Initial sent the stock down 2.1p to finish the day at 164.9p. It retreated after Deutsche Bank had supposedly placed 12 million shares at 165.5p each.

The market also sold into BAE Systems after it announced that chief executive Mike Turner – the definition of the term "lifer" – would step down next August. The shares gave up 1.86 per cent, although rallied to close flat on the news of Turner's retirement after 40 years at the company.

News emerged yesterday that Carillion had indeed bid for Alfred McAlpine, after speculation on Friday reported by The Independent. McAlpine confirmed a 570p-per-share bid, adding it had rejected the offer as it "materially undervalued the company". This follows a 560p-per-share bid from Carillion on 13 August. McAlpine said it was on course to complete the demerger of its business and project services groups into two listed companies by next spring. It closed up 6p at 538p. Carillion was the worst performer on the FTSE 250, down 6.1 per cent at 389p. Spirent Communications was another to suffer. It ended down 5.41 per cent at 61.25p.

Monday's whipping boy, Rank Group, shed a further 9.75p as brokers lined up to take a pop. Daniel Stewart, Deutsche Bank, JP Morgan, Morgan Stanley all cut their target prices following Friday's profit warning. Yet by the end of the day, it rallied, closing in positive territory, up 0.25p at 110p.

SSL International's premium brands Durex and Schott drove a bullish trading update on its first half operations. The shares firmed up 3.81 per cent to 518p at the close.

Towards the end of the day, reports emerged that UBS had placed 6.2 million shares in Rightmove via an accelerated bookbuild. The stock closed up 9p at 568.5p.

Among the small caps, SPI Lasers was at the foot, nose-diving a quarter to 62.5p. This followed news that the group, which designs and manufactures fibre-based lasers, intends to raise £10.5m through an equity fundraising.

Mobestar Holdings rose 8 per cent to 27p after revealing its mobile dating service mDate, launched in August, was performing strongly.

The AIM-listed oil group Petrel Resources ended flat after a £3.5m placing. Sources in the market said the move was designed to bring two investors into the stock. The names linked were Gartmore and Scottish Value.

Plexus Holdings should see buyers today, on word the oil and gas engineering services group is to announce a significant contract win with Gaz de France Britain, worth in the region of £700,000.

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