Market Report: Lloyds TSB grows fatter after brokers' dinner

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The Independent Online

The retail banking group Lloyds TSB went some way to proving that the way to brokers' hearts is still through their stomachs. It hosted a dinner attended by a number of investment banking heavyweights on Wednesday, all of whom must have liked what they heard as well as what they ate.

Morgan Stanley, Merrill Lynch, Deutsche Bank and ABN Amro were all thought to have attended the dinner, and all spent most of yesterday pushing Lloyds TSB shares, which have been a long-term under-performer against the wider market and against their sector rivals. Shares in Lloyds TSB closed 12p higher at 515.5p.

However, noises coming from Citigroup, the US banking giant thought to be stalking at least three London-listed banks, indicated it may still be some way from a major bid, dampening consolidation hopes. Even so, the positive response from the Lloyds TSB get-together was enough to push Barclays 6p better to 624p and Royal Bank of Scotland up 41p to 1,765p.

Strong results from the hedge fund manager and commodities trader Man Group pleased bulls of the stock, among the top performers in the FTSE 100 so far this year. Pre-tax profits rose 51 per cent to $1.3bn and the shares added 81p to close at 2,420p amid a raft of broker upgrades. The company also announced a six-for-one stock split, which will take place after the AGM and should improve liquidity substantially.

London markets were buoyed by good performance in the financials, with the FTSE 100 closing 25.9 firmer at 5,749.7, mainly thanks to a good day for the index heavyweight BP. The integrated oil giant, which makes up more than 12 per cent of the index on its own, closed 8p better at 633p.

Record-breaking results from the Indian copper miner Vedanta Resources could not prevent a bout of profit-taking that saw the shares drop 69p to close at 1,378p. Even so, the group looks likely to win a place in the FTSE 100 on Wednesday, when the latest reshuffle is due to be confirmed, and despite the recent weakness in commodity stocks, the group has a market capitalisation in excess of £4bn. Pre-tax profits more than doubled to $1.1bn, as the company cashed in on strong demand for its products and the global bull market for metals.

Another second-line mining group and potential entrant into the main index, Lonmin, also suffered, falling 83p to close at 2,547p. Traders cited bearish noises coming from China for the sell-off in mining stocks, as reports hit metal markets that the Chinese State Reserve may be about to start selling off some of its copper reserves. Rio Tinto shed 92p to 2,871p and BHP Billiton fell 23.5p to 1,026.5p.

The car rental group Avis Europe has been the subject of takeover rumours in the past, and some traders believe its weak performance as a publicly-traded company will persuade the majority shareholder, Belgian group D'Ieteren, to try to buy out the minority shareholders. Shares in Avis Europe rallied to 77.75p on the rumours, a 4.5p rise on Wednesday's close.

Elsewhere in the second liners, the retirement home builder McCarthy & Stone was well bid, 21.5p better at 787.5p, as takeover rumours once again did the rounds. The company is a niche player in a sector that remains a favourite for a bout of consolidation, and traders have long believed that McCarthy is the favourite to face a bid.

Anyone lucky enough to have taken a punt on shares in TTP Communications in the last few weeks will have spent the day laughing all the way to the bank. Having closed at 13p on Wednesday before today's results, the group announced an agreed 45p-per-share bid from DP Acquisitions, a subsidiary of US electronics giant Motorola. The shares jumped 30.75p to 43.75p, a rise of 236.5 per cent, one of the largest bid premiums seen in recent years. Not a bad result for a company that reported full-year losses of more than £27m, against a profit of £4m in 2005.

Futuragene, the developer of agricultural and biotechnological intellectual property rights, was also well bid although market makers were at a loss to explain the 11.5p jump to 69p. Some blamed a bear squeeze as short sellers closed positions, while others said the jump was due to an overhang, caused by former chief executive Bruno Ruggiero selling his stake, being cleared.

Shares in software group Synchronica remained unchanged at 24p, despite a very positive announcement on Wednesday that seems to have completely passed investors by. The group has signed a deal with US hardware manufacturer IXI Mobile to provide an operating system for the Ogo device, which some industry insiders believe could break Blackberry's stranglehold on the mobile data-only market. One analyst said: "Synchronica is trading at a substantial discount to its peers, undeservedly so."

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