Market Report: De La Rue shares fail to take note of bid talk

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The Independent Online

The banknote printer De La Rue had pound signs flashing in front of traders' eyes yesterday as talk of a 900p-per-share bid did the rounds.

The group slumped to 688p in August following news of a police investigation over corruption allegations made by a former employee but has rallied since. It was also backed yesterday by a Panmure Gordon note, which slapped a "buy" recommendation on the stock with a 955p price target.

Traders said the rumour was "a licence to print money", although the stock failed to rise on the talk. It retreated 4.5p by the end of the day to 802p.

Kingfisher topped the FTSE 100 risers, driven up by bid chat. It stormed up 7.05 per cent to 185.3p, with a strong volume of 71 million shares changing hands, double its daily average. One trader wasn't buying it. He said: "I think this is a ramp to get the price up. There are a lot of short positions out there."

The gossips were chatting about the Indian group Tata coming in with a bid for Cable & Wireless. The telecoms group firmed 1.9p to 193.6p, although one trader put a severe health warning on the story.

One official takeover target is Resolution, which revealed it was in talks with Standard Life over a potential £4.9bn takeover on Thursday. Resolution was up 17p to 726.5p on news Pearl Group had waded back in with an increased bid.

The market had another brisk day, roaring up 85 points to 6,661.3. The miners held firm after rises the previous day, as commodity prices strengthened. Xstrata was the pick, up 5.6 per cent to 3,528p.

The support services group Capita rebounded after the previous day's losses, as several brokers lent support. It fell on Thursday after losing London's congestion charge mandate. Landsbanki said the stock had been oversold after the contract loss, helping Capita up 2.71 per cent at 719p.

Big oil was sitting pretty as crude prices once more hit a record. The rises, over supply concerns for the winter and political tensions in the Middle East, sent Shell up 3 per cent to 2,121p. BP also strengthened 2.69 per cent at 629p.

Legal & General managed to stay in positive territory despite a weak third-quarter earnings update. Sales fell 9.3 per cent to £361m, but the stock rose 3.5p to 135.2p as the losses had already been priced in.

The worst blue-chip performer was J Sainsbury following concerns over the potential bid by the Qatar-backed fund Delta Two. The investment fund said it was seeking an additional £500m for the bid, shortly after the UK Takeover Panel issued a "put-up-or-shut-up" ultimatum. Nick Bubb, analyst at Pali International, said the extra funding was good news, but added the 8 November deadline was tight. Sainsbury closed down 3.17 per cent at 565.5p.

Also down was BAE Systems as Goldman Sachs took it off its "conviction buy" list. It shed 2.33 per cent to 503p.

On the mid tier, Debenhams continued to rise, up 2.67 per cent to 115.25p. The stock strengthened on Merrill Lynch support and with traders saying that this is a crucial weekend for retailers. "It's half term and the Rugby World Cup is over," one said.

The worst mid-tier stock was Charter, down 4.8 per cent to 1,090p, after rivals Lincoln Electric and ITW warned of a slowdown in the engineering sector. Panmure Gordon cut the group's target price from 1,365p to 1,275p.

Another faller was Halfords after a bearish note from UBS. The Swiss broker said fundamentals at the retailer remain positive, but fears over the sector caused it to trim its price target to 390p from 430p. It closed down 2.48 per cent at 344.75p

Galiform, formerly MFI Furniture Group, also retreated 2.25p to 112.25p on talk that Merrill Lynch had placed 4 million shares at 112p.

Among the small caps, Feedback rebounded 20 per cent. It recouped much of the previous day's losses sparked by news its bid talks had collapsed.

Gulf Keystone Petroleum rallied off support in the market, with traders backing the stock to go further. Nick Brown, sales trader at Evolution Securities, said: "It is unquestionably the cheapest oil stock in the market." It rose 1.5p to 37.5p.

One company needing a shot in the arm was Healthcare Enterprise Group. The group returned to the market yesterday after it was suspended while it clarified its financial position, and immediately slumped 31.69 per cent to 1.25p. The group proposes to raise £1.75m in a refinancing package to repay much of a bank term loan and inject working capital into the group. It also plans to sell subsidiaries Ridgecrest Healthcare Group and CICS.

Also hit was Elephant Loans & Mortgages after it warned on full-year profits because of the credit crunch. Its shares spiralled 14 per cent to 0.75p on the news.

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