The mortgage giant HBOS was out of favour, 8p lower at 1,069p, on rumours that the group is poised to bid for Suncorp Metway, one of Australia's largest lending and insurance groups. Suncorp has a market capitalisation of £5.2bn, a fraction of HBOS's £40bn valuation, and according to some traders would make a good fit for HBOS, which already owns BankWest in Perth, Western Australia. One trader said: "HBOS could be thinking about buying Suncorp and merging its business with BankWest, giving it a far stronger position in the Australian mortgage and insurance market."
The move was in line with the rest of the banking sector, with the perennial takeover favourites Barclays, 2.5p worse at 712.5p, and Lloyds TSB, 6p weaker at 562.5p, bearing the brunt of the selling. Traders reacted negatively to comments on Thursday from Chuck Prince, the chief executive of the US banking giant Citigroup, who ruled out making a major acquisition in western Europe. Citigroup has been linked with a number of European banks, and with a takeover premium in most prices the sector could come under more pressure next week.
An institutional investor presentation in Paris by the property group Hammerson had the desired effect as the shares rallied strongly to close 34p better at 1,335p. Traders said a large stock overhang that has been holding the shares back in recent weeks has also been cleared. Real estate analysts at the US investment bank JP Morgan obviously enjoyed their trip to Paris, but not enough to rate the shares a "buy". The broker retained its "neutral" stance with a price target of 1,400p.
In the wider market, a positive start was wiped out as New York shares opened sharply lower on profit taking. The FTSE 100 closed 0.8 worse at 6155.2 having been 43.8 better by mid-morning. Among the worst hit were Reckitt Benckiser, 27p lower at 2,186p, and Xstrata, off 20p at 2,221p, after strong gains on Thursday.
Brokers reacted to bad revenue news from Wolfson Microelectronics by downgrading the shares en masse, with Bridgewell Securities, Citigroup and Panmure Gordon all changing their recommendation to "hold" from "buy". Charles Stanley was the sole positive voice, telling its clients yesterday's weakness has created a buying opportunity. Although the shares staged a mild rally early in the afternoon, sellers regained the upper hand as the stock closed at 279p, a fall of 166.75p on the session. The rival microchip group CSR was also out of favour, not surprisingly, shedding 52p to close at 773p.
The department store group Debenhams found some support, up 3.5p to 180.75p, ahead of next week's full-year numbers, although the mood among retail investors is bleak thanks to the warm autumn weather. The shares are still trading at a discount to their May listing price, with some traders blaming the company's previous owners. Texas Pacific, Merrill Lynch Private Equity and CVC, the private equity groups, still own 43 per cent of the stock and some traders believe the knowledge that they will eventually sell is holding the stock back.
The gambling group Ladbrokes was among the mid-cap leaders as rumours of a management buyout swept the market again. However, most analysts are sceptical about a private equity-backed deal. Even so, the shares ticked 10.25p firmer to close at 401.25p. Some traders had expected the shares to react more positively to the fallout from the online gambling industry meltdown as investors switch into more traditional and sustainable gambling businesses. High street rivals William Hill were also firmer, closing up 6.5p at 638.5p, close to an all-time high.
Although Commoditrade remained unchanged at 29.5p, volume was decent with 1.6 million shares changing hands. The word among traders is that the company is up for sale and a mystery suitor is already undertaking due diligence. According to one market source, "all the right people are buying this stock".
Psion appointed a new chief executive but the move provoked a mixed reaction among shareholders. The technology company, which featured in the FTSE 100 index at the peak of the dotcom boom, promoted Jacky Lecuivre to the top job from her previous position as head of worldwide sales. Some investors had been hoping for a higher-profile external appointment, as the shares shed 5p to close at 120p.
Finally, shares in SMG may have hit an all-time low, dropping 13.5p to close at 55.5p, but if talks with its creditors fail to produce a satisfactory outcome there could be worse to come for the media company.Reuse content