Market Report: Jaded Invensys investors shrug off fresh bid talk

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The Independent Online

Invensys shareholders have faced so many false dawns over the past few years it is no wonder that most are now immune to rumours, even if the rumours are potentially good news.

Talk that the French engineering group Alstom is planning to make an offer for the industrial controls group failed to spark much movement in the share price even though more than 130 million shares changed hands. The group has struggled to break out of the 15p-25p range in the past three years, a legacy of the acquisition and debt-fuelled growth of BTR and Siebe, the two companies that merged to form Invensys in 1999.

Shares in Invensys added half a penny to close at 19.75p, valuing the company at just over £2.1bn including debt. Traders said that Alstom, with its dominant position in transport engineering, would make a logical buyer.

Tobacco stocks were strong on the back of news that a Florida court has thrown out a $145m damages case against the industry. Traders said that the decision could open the door to a bout of consolidation in the industry. BAT surged 36p to 1,416p, while Imperial Tobacco added 29p to 1,693p and Gallaher firmed 14.5p to 863p.

In the wider market, London shares were buoyed by the European Central Bank's decision to leave rates on hold and by oil clearing $75 a barrel on continued concerns over North Korean missile tests. The FTSE100 closed 63.3 better at 5890.

The London market is heavily weighted to the oil sector, with Shell and BP making up almost a quarter of the index. BP added 7p to close at 638p, while Shell climbed 10p to 1,914p. The best performer in the large oils was Cairn Energy, up 54p to 2,149p, as the broker Lehman Brothers reiterated its "overweight" stance on the stock with a price target of 2,650p.

The mortgage bank Alliance & Leicester continued to slide in the wake of Credit Agricole's decision not to proceed with a bid. The shares were sold off heavily on Wednesday and now look like testing the low for the year, 960.5p hit in February. Rival Northern Rock rallied though, as broker Merrill Lynch raised its price target to 1,250p and advised its clients to switch from A&L to the Newcastle-based lender. A&L closed the session 29p weaker at 1,055p, while Northern Rock climbed 22p to 1,053p.

Despite a small sell-off in the past couple of sessions, rumours are still doing the rounds about a bid for the steel-maker Corus Group, with traders saying that a bid will come from Russian rival Severstal. Activity in Corus was light yesterday, with only 11 million shares changing hands, nudging the price 0.75p better to 431.75p. Traders are speculating that the bidding is likely to begin at around 500p.

A bullish initial coverage note from Morgan Stanley on Woolworths sent the sweets and household goods retailer to the top of the FTSE250 leaderboard, 1.75p firmer to 33p on good volume with over 50 million shares changing hands. The US investment bank believes that the downside from its current price is limited even if the retail business continues to struggle. Some traders are still hoping for another bid for the group, after two offers in the past 12 months came to nothing.

The defence contractor Qinetiq has failed to spark much interest since its controversial flotation six months ago. The shares continue to languish at a 16 per cent discount to the flotation price of 205p, and rumours that the private equity backer the Carlyle Group is itching to get out of its remaining 10 per cent stake in the group are not helping. Carlyle is locked in until mid-August and the shares closed 0.25p lower at 173p.

In the small caps, there was a flurry of buying in China Gold Mines, despite the company saying that it knows of no reason for the share price movement. Market makers said that volume in the stock has been very thin in recent weeks and that a handful of "quality buyers" have moved the price higher. The shares closed 20.5p firmer at 102p.

One of the few survivors of the dot com boom, the Israeli technology group BATM Advanced Communications, was 1.5p better, although for long-term shareholders the news will bring little cheer. The company said that both sales and profitability this year will be better than market expectations, which at least is a step in the right direction, but the shares are still more than 96 per cent below the peak of 765p hit in April 2000.

Sun TV Shop began trading on AIM and became the first Chinese media group to list its shares in London. The group recently raised £5m in a private placement organised by Synergies, although it raised no new funds when listing. The shares began trading at 20p and closed 1.25p better.

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