Market Report: Halfords pedals higher on talk of Japanese bid

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The Independent Online

The bicycle and in-car gadget retailer Halfords was in focus yesterday, as talk of a takeover bid hit the trading floors. The group's shares freewheeled 5 per cent higher to 362p on speculation that Autobacs 7, a Japanese retailer which already holds a 7 per cent stake, could launch a full bid.

Late last week, Autobac launched a convertible bond issue. The Y65bn raised is reportedly designed to fund potential acquisitions.

Investors were further concerned over Delta II's prospective takeover of J Sainsbury, sending the stock down 2.3 per cent to 552.5p. The re-emergence of an old rumour failed to calm the nerves, possibly as several traders dismissed it out of hand. The talk was that Marks & Spencer was negotiating to buy Delta II's holding before launching a full bid for its supermarket rival. M&S closed up 14p to 642p.

Carphone Warehouse was in focus last week, supported by its mobile operator deal with Vodafone, as well as vague talk of a suitor. The talk strengthened yesterday, with the US electronics retailer Best Buy supposedly keen. The stock rose 11.75p but weakened to close down 1.25p at 345.25p.

The miners helped lead the market up in the morning. After a commodities review, the US broker JP Morgan said there was "further potential upside" in the sector. Best performer was Vedanta Resources, which firmed 3.43 per cent to 2,230p, after a 21 per cent target price upgrade. Kazakhmys was close behind, ending 3.42 per cent up at 1,514p. The miners were also bolstered by consolidation talk, after Xstrata's announcement that the Australian nickel group Jubilee Mines had recommended its A$3.1bn bid.

The FTSE 100 rose 44.7 points to 6,706. Yet volumes were pretty thin, which had David Buik at Cantor Index predicting that the market wasn't as bullish as it seemed.

The oil majors remained strong as the price of crude continued to rise. Shell closed 13p higher at 2134p.

Broadcaster BSkyB was another riser, firming 1.53 per cent to 661.5p as it offered to concede its shares in ITV to an independent trust. The move was designed to sate the Competition Commission, which had said the 17.9 per cent holding was anti-competitive. Later in the day, it announced its broadband service had more than 1 million customers, less than 14 months after it was connected.

Northern Rock found itself bottom of the blue chips in the morning, after reports that it may have to cut 2,000 jobs. It rallied in the afternoon, recording a 0.5p loss at 190p.

The highest fallers by the end of the day were the housebuilders, with Taylor Wimpey the lowest at the close. The group is expected to announce bearish sentiment on UK housing in its trading update on Wed-nesday, which dragged its shares down 3.56 per cent to 230.5p. One trader added that the sector suffered after a run at the close on Friday and negative reports over the weekend. "The housebuilders are looking a bit unloved at the moment," he added.

One of the strongest mid-tier performers was Talvivaara Mining Company, up 6.16 per cent at 297.25p. The Finnish nickel group came off in the four months after listing at 265p in May, but has stormed up 46 per cent since.

Elsewhere on the second string, the construction company Kier Group was up 3.07 to 2,113p as it released its first-quarter results. The group said it had returned record revenue in the construction division and its order book was 4 per cent ahead of last year.

Another riser was Bodycote, which strengthened 3.43 per cent to 309.25p. It was the first day of trading after Sulzer could return to the table with a renewed takeover assault on the group. There were a few murmurs of a new bid, but nothing especially convincing.

The biggest faller on the mid-tier was Beazley Group, which shed 6.34 per cent at 166.25p.

The recruitment services group Imprint rose 12p to 105p as traders anticipated some takeover-related news flow. Earlier this month, there were reports of an indicative bid for the group. The firm was then hit by the departure of chief executive Brian Hamill, who also launched a bid for its Wood Hamill division.

Shares in Absolute Capital Management were up 22.6 per cent to 84p after investors approved the restructuring of four funds. They agreed to keep most of their money in the funds, avoiding what could have led to their voluntary liquidation.

The automotive component maker Metalrax Group was smashed up by a profit warning. The company said its full-year results would be significantly worse than expectations after some major setbacks. It lost 31.7 per cent to close at 38.25p.

Elsewhere, Bezant Resources retreated 9p to 87p on some retail selling. This comes despite a 146p price target from Mirabaud and some potentially interesting drilling news expected next month.