Market Report: Consolidation hopes boost the housebuilders

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The Independent Online

On a day when fallers were few and far between, the housebuilding sector was again the star performer. So good has the sector's performance been that anyone who had been out of the markets for the past 12 months might be forgiven for thinking the property boom days of the late 1980s were back. However, until Persimmon's recent promotion, it had been a sector without representation in the FTSE 100 and most traders believe it is still ripe for consolidation.

George Wimpey has long been favoured among analysts as a takeover target, and there were rumours again yesterday about a bid for the company, possibly from its rivals Taylor Woodrow or Barratt Developments. That sent Wimpey shares soaring 27.25p to 518p, a rise of 6.2 per cent.

Wimpey dragged its peers along in its wake, with Bellway, up 55p to 1,160p, McCarthy & Stone, up 29.5p to 698.5p, and Wilson Bowden, up 30p to 1,465p, all posting significant gains. The broker Panmure Gordon weighed in with a "buy" recommendation on Crest Nicholson, on the back of an upbeat trading statement, with a new price target of 520p. The shares climbed 11p to 473p.

Nolan Stanton, an investment manager at the fund manager Whitefoord, thinks bid speculation will continue to surround the sector. He said: "These rumours will continue to crop up from time to time but the sector can support them because most stocks are still not looking expensive relative to the rest of the market. That said, I am more cautious about the long-term outlook and I do not believe that the sector can maintain this momentum for much longer."

The Chilean copper miner Antofagasta surged past 2,000p for the first time as most of its rivals also posted all-time highs. It ended the day as the FTSE 100's biggest riser, up 137p at 2,052p, as it released a production report that was in line with expectations.

Citigroup became the latest broker to extol the virtues of the mining sector, increasing its price targets on Lonmin, up 90p to 1,955p, Vedanta Resources. up 14.5p to 980.5p, Rio Tinto, up 112p to 2,956p, and Xstrata, up 84p to 1,615p.

Citigroup's team estimates that $200bn (£110bn) is being spent globally on commodities. In its weekly mining update, the broker says: "Fund flows into the commodity market are adding another facet of demand ... strong supply-side fundamentals should support commodity prices and thus we have lifted our 2006 earnings forecasts."

Shares in Yell, down 3.8 per cent on Tuesday, bounced back to close up 24.75p at 532p. Traders are betting that the Competition Commission's "emerging thinking" report will have less impact on the UK's largest telephone directories business as it will not publish its final findings and recommendations until the summer. But brokers were divided on Yell's merits: Morgan Stanley advised clients to take Tuesday's fall as a buying opportunity, while UBS dropped its target price to 482p, maintaining its "reduce" rating.

It is a long time since Autonomy was part of the FTSE 100 and one of the darlings of the TMT boom. Its chief executive Mike Lynch was even touted as Britain's first technology billionaire.

How times change: the stock is still worth a fraction of its former value, but for weary shareholders things are beginning to look a little brighter. After a strong day's trading on Tuesday, Autonomy's shares were up another 5.8 per cent yesterday to close at 420p. The purchase of Verity has been completed and December's rights issue was well supported.

Shares in Icap, the world's largest inter-dealer broker, fell 5.75p to close at 389.75p as rumours about a $700m bid for the foreign exchange broker EBS circulated.

Empire Online, the internet gambling company, has risen the best part of 30 per cent in the past two trading sessions. It rose 8.5p to 108.5p on bid rumours and follow-through buying after Tuesday's upbeat trading statement. One trader said a bid price of 135p was not unreasonable, but as rival PartyGaming walked away from a similar offer in November others thought that was unlikely. PartyGaming fell 0.5p to 148.5p.

In the small caps Accuma, a provider of personal debt advice, rose 17p to 224.5p after a successful institutional placement of 5 million shares at 200p. Traders noted that demand for the stock had sent the price well above the placing price, one saying: "Lots of people are going to be approaching this sort of company when they can no longer maintain their own credit card debt." Shares in its rival Debt Free Direct rose 2.5p to 308.5p.

South China Resources jumped 1.87p to 15.12p. The company announced three "significant" new discoveries at its Danfeng project. Earthport rallied 6.25p to close at 50p on rumours of a significant contract.