Market Report: Burren energised by hopes of higher offer

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The Independent Online

News that the Italian oil and gas group ENI, among others, had launched a takeover for Burren Energy had the market buzzing yesterday.

Burren released a statement in the morning saying it had rejected Eni's 1,050p-per-share indicative offer, along with "a number of approaches", with the highest worth 1,100p.

One trader said: "There is clearly more money on the table; it is unlikely Eni will be put off by Burren's rejection." He said an increased offer of between 1,150p and 1,200p could interest shareholders. Analysts at Dresdner Kleinwort were even more bullish, saying Eni could pay anything up to 1,400p. Burren closed the day up 27.98 per cent at 1,180p.

Other mid-cap oil stocks soared, with one trader calling them "the next obvious targets". Premier Oil, which was approached last year, rose 8.21 per cent to 1,120p, while Dana Petroleum was up 5.89 per cent to 1,187p.

On the top tier, BG Group, which hit the Brazilian press on Monday as a potential target for a joint bid from Petrobas and Royal Dutch Shell, rose a further 2.96 per cent to 851p.

The sentiment buoyed FTSE 100 new boy Tullow Oil. The group shrugged off news it had abandoned an appraisal well in Ghana after failing to find enough oil, to rise 2.56 per cent to 601p.

The FTSE 100 reversed the previous day's losses, climbing 74.5 to 6,615.

British Land enjoyed late support, ending the second highest riser on the day, up 5.04 per cent at 1,147p. This followed speculation it will announce today that a Saudi Arabian sovereign fund had taken a significant position in the group.

Top of the leaderboard was Northern Rock which hauled itself back over the £2 mark on its second consecutive day of gains. The Newcastle lender soared 19.86 per cent to 206.75p after the Treasury agreed to extend its guarantee to include new deposits. The stock was further supported by reports that Lone Star could be the latest group interested in tabling a bid.

Another sector in focus was water utilities. This followed news that a consortium led by JP Morgan's infrastructure investment arm had sealed the takeover of Southern Water Capital. Severn Trent rose in the wake of the £4.2bn deal, as traders started chatting about sector consolidation once more. The stock closed up 33p at 1,466p.

The worst blue-chip performer in the morning was the building materials group Wolseley, which fell 2.12 per cent to 855p. The talk in the market was the drop had been brought on by a placement of 9 million shares by Citigroup at 837p each.

It was overtaken by Kazakhmys at the end of the day, as it shed 2.6 per cent to 1,463p. The miner fell after UBS cut its rating to "sell" in a note yesterday. The Swiss broker cited the 14 per cent rise in the share price last week, as well as the previous day's news that its copper cathode production would suffer after flooding at a mine.

Reports of a hitch in Delta Two's proposed takeover of J Sainsbury saw investors sell into the stock. The supermarket group weakened 4.5p to 579.5p after talk that pension issues could derail the bid.

Beyond the excitement in the oil stocks, another solid mid-tier riser was LogicaCMG. The computer services group revealed it had hired BT big hitter Andy Green as its new chief executive, sending the shares roaring up 10.25 per cent to 166.75p.

Speculation was once more circling the building group Alfred McAlpine as the shares shot up 5.12 per cent to 523.5p despite no concrete news flow. One trader said: "I think there could be some beady eyes looking at McAlpine, it is looking vulnerable." For want of something better, traders were once more linking Amec with possible interest. Amec, which was up 13p to 782.5p, has previously been linked with Abbot Group.

Chemring Group ended bottom of the mid-caps. The defence company fell 4.58 per cent to 1,874p on reports of an explosion at a munitions factory near Rome. The company confirmed it was investigating an incident in its Simmel Difesa factory, that left one worker dead and a number of others injured.

Top of the small caps was Premier Absolute Growth & Income Trust, which almost trebled in value to 1.55p as the board announced proposals for the winding up of the company.

The food producer Cranswick was up 29.5p to 785p after a positive trading statement showed sales up 22 per cent and strong cashflow.

Nipson Digital Printing Systems was another solid performer after the announcement it had appointed a new broker. News it had hired Keith, Bayley, Rogers & Co, sent the shares up 11.11 per cent to 5p. On the flipside, Elephant Loans & Mortgages fell 23.81 per cent to 1p as it announced its adviser Hichens, Harrison & Co was to step down.

Another supposed Amec target, Subsea Resources, was down again, falling a tenth to 1.1p. This came after it admitted the wreck it found last month might not actually be the lucrative 19th-century bullion wreck it had thought.