Market Report: BHP Billiton settles Escondida copper strike

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The Independent Online

Production at the Escondida mine in Chile will begin again on Monday after its ownerBHP Billiton, 6p firmer at 1,007p, hammered out a deal with the local unions. The world's largest copper mine has been out of action for three weeks, but analysts believe the industrial action will have little impact on BHP's profits.

Evolution Securities upped its targets on BHP and Rio Tinto, up 28p to 2,685p, targeting 1,310p for BHP and 3,536p for Rio. Meanwhile, Deutsche Bank restarted coverage of Xstrata, naming the company as its top pick in the sector and giving the shares a 2,760p target as the stock climbed 69p to 2,427p.

Hardly a day goes by without some sort of takeover rumour getting banking investors excited. Yesterday, Barclays was back in focus, with US predators once again thought to be circling the UK's third largest bank. The shares added 16p to close at 673.5p as more than 44 million shares changed hands. Elsewhere in banking stocks, another perennial bid targetLloyds TSB firmed 4p to 525.5p.

Sticking with old takeover stories, Centrica was 5.2p better at 300.25p as Gazprom bid talk resurfaced. Most analysts are sceptical that the Russian gas giant will make an offer for Centrica and some traders put the revived talk down to investors talking the stock up in an attempt to get rid of shares bought when the story first broke in January.

The strong mining sector and rumours of corporate activity helped London shares end the shortened trading week on a high note, with the FTSE 100 closing 43 better at 5949.1.

Trading resumed in Croda International, the speciality chemicals group, after it confirmed the acquisition of the Uniqema division of ICI, an oleochemicals and surfactants business, for £410m. The market likes the deal, and Croda soared 56.75p to close at 490.5p. The broker Morgan Stanley upped its target for Croda to 560p and urged its clients to buy the shares, saying that initial synergy targets of £20m could easily double.

Testing consumer goods may not sound like a particularly lucrative business, but Intertek Group is currently worth well over £1bn. The group is due to report half-year figures on Monday and traders are expecting it to beat forecasts. A trading statement at the end of June made good reading and yesterday there was strong buying support for the shares, which added 17p to 708p.

Consolidation in the gaming industry is also attracting plenty of backers. Results from Rank did not set the market alight, but the shares still gained 13.25p to 226.75p, mainly on the back of a "buy" recommendation from Investec and Thursday's bid for London Clubs International, half a penny better at 133p. Stanley Leisure, another mid-cap gaming stock and another possible bid target, added 24p to close at 680.5p.

Bid talk at Premier Oil gathers pace as the shares gained another 29p to close at 1,059p. Shell and the Mexican national oil group Pemex are thought to be running the rule over Premier, with a bid of 1,250p thought to be in the pipeline. The interest in Premier was highlighted by the lack of support for other mid-cap oils, with rivals Dana Petroleum 22.5p worse at 1,196.5p and Soco International 6p worse at 1,292p.

In the small caps, Gasol returned from suspension, and, despite raising new funds at 15p and confirming a good-looking liquified natural gas deal in Africa, fell 0.5p to 10.75p. Market makers said the selling pressure comes from investors whose money has been tied up during the suspension.

Floors 2 Go, the laminate and wood-flooring retail group, is also thought to be on the verge of receiving a bid, although it will be a long way off the 100p the shares were trading at in early 2005. The word is that a bid valuing the shares at 28p each could come as soon as next week. The shares climbed 2.75p to close at 21p.

Gold Oil continues to attract speculative punters in the hope it will announce a deal sooner rather than later. However, if the deal is not as good as some investors hope, the word in the market is that the shares could make a rapid retreat again. Demand from retail investors sent the stock another penny firmer to 14.62p.

After hitting a ceiling at 22p twice in the recent past, Commoditrade looks set to test that level again, and it might drag Corvus Capital with it. The investment vehicle of the entrepreneur Andrew Regan, Corvus owns just over 20 per cent of Commoditrade stock, and trading is rumoured to be well ahead of internal forecasts. Commoditrade rose a penny to 20p; Corvus added 0.25p to 12.75p.

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