Market Report: Corus is fired up by £5bn Abramovich bid talk

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The Independent Online

Shares in Corus have been rising steadily in recent sessions, mainly thanks to the ongoing, and increasingly hostile, battle over Arcelor. Volume yesterday was very high, usually a good indicator that something is going on, as more than 38 million shares changed hands.

The talk is that Mr Abramovich will offer shareholders 550p per share, valuing the company at just over £5bn. Given that he is believed to be worth more than £10bn, an offer is well within his reach. Shares in Corus Group surged 21.75p to close at 430.75p, the best performer in the FTSE 100.

Market makers said the shares were well supported all day, but were sceptical about the possibility of a bid from Mr Abramovich, pointing out that he spent an estimated $3.1bn (£1.7bn) on a 41 per cent stake in the Russian steel group Evraz only last week.

Elsewhere in the blue- chip index, bullish research on the oil sector from Deutsche Bank helped BP to add 12p to 617p, and Shell, which closed 26p better at 1,821p. The broker believes that the global oil market is going to remain strong and that the recent sell-off in major oil stocks represents a good buying opportunity, and set new price targets of 800p for BP and 2,100p for Shell.

A quiet week for London equity markets ended with a listless trading session, with the strength in oils offset by weaker mining, telecommunications and property stocks. The FTSE 100 closed 8 higher at 5692.1, as Wall Street was also flat at the opening.

Rumours that the private equity giant The Blackstone Group is mulling a €60bn (£41bn) bid for Deutsche Telekom, the largest telecommunications group in Europe and the world's most indebted company, failed to spark much life into UK rivals, mainly because very few people believe such a deal is possible. BT Group was 3.25p weaker at 228.5p while Vodafone continued to attract little support, closing unchanged at 114.75p.

The sale of Stagecoach's London bus operations to Macquarie Bank for £263.6m caused plenty of excitement among investors, with transport companies taking four of the top five slots in the FTSE 250 leader board. Go-Ahead Group, Arriva, FirstGroup and National Express were all well bid as analysts mulled over the price Macquarie paid. Broker Investec said that it is "a very good deal" for Stagecoach, implying higher valuations on assets across the sector.

Go-Ahead added 134p, a gain of 7.5 per cent, to close at 1,931p, while FirstGroup added 23p to 437p, Arriva closed 33.5p better at 572.5p and National Express firmed 43.5p to 850p. Stagecoach was the worst performer of the lot, adding 3p to close at 110p.

Mediterranean Oil & Gas pleased investors with an excellent drilling report on the Ombrina Mare well, off the Adriatic coast. Results showed probable reserves with almost 80 per cent more oil and gas than was originally estimated. The company is thought to be very excited about the find but the market reaction was surprisingly subdued. After an early move to 211.5p, a rise of 17.5p, a bout of profit taking knocked the gloss off the announcement as the shares closed only 9p better at 203p.

ISoft continued to attract plenty of buyers, although market makers blamed short covering for demand as almost 13 million shares changed hands. One trader said: "There has been the odd takeover story doing the rounds, but I think buying the company now would be very risky, given the obvious difficulty it is in.Private equity groups may be running the rule over the company but it is way off the risk scale at the moment."

The heavy metal band Iron Maiden once sang "Run to the Hills", and shareholders of Sanctuary Group must be wishing they had taken Maiden's advice. The shares tanked again, down 14.25p to 23.25p, after the group's dismal warning yesterday, which indicated that losses for the current year would be between £17m and £22m. Traders said lots of short positions were being taken out on the group and most expect the price to weaken further before it shows any sign of life.

ClinPhone, a supplier of technology solutions to the clinical trials industry, hada good debut on the full market. Itraised £60.3m through an institutional placing priced at 148p by the broker Investec that traders said was six times subscribed. The shares closed at 173.5p, a 17.2 per cent premium.

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