Market Report: Rumour of £600m bonds sale dents HHG

HHG, the fund management business spun out of Australia's AMP last year, is considering raising up to £600m by selling bonds backed by its closed London Life, NPI and Pearl life insurance businesses.

HHG, the fund management business spun out of Australia's AMP last year, is considering raising up to £600m by selling bonds backed by its closed London Life, NPI and Pearl life insurance businesses.

This was the talk of the market yesterday, as HHG shares jumped more than 6 per cent, by 2.75p to 47p.

A securitisation was being tipped by Bridgewell Securities as the most likely option for the HHG life businesses, with several tranches of bonds being issued from perhaps as early as the end of this year. In due course, the cash raised could be passed back to HHG shareholders. And there was also the hope that HHG is close to outsourcing the administration of the life funds in a move that would give an immediate boost to profitability.

Other companies are also looking at ways of releasing value from closed life businesses. It has been rumoured that Abbey National, up 2.75p at 513.25p, has been looking to dispose of Scottish Mutual and Scottish Provident, although one broker who has been in to see the company was yesterday dampening down that speculation. Royal & SunAlliance has already said it is in talks to sell its life interests. Its shares were up 2p at 82.5p.

The financial uncertainties facing the closed life funds were underscored yet again as Chesnara, which was demerged from the Countrywide Assured estate agency business earlier this year, issued a profits warning. New regulatory rules have forced it to increase provisions for the mis-selling of endowment policies, and its shares tumbled 2.75p to 102p.

Investors had kept their powder dry for most of yesterday, preferring to wait for the US interest rate decision before taking any firm punts. But that changed at 3pm when disappointing manufacturing data was released in the US. The FTSE 100 lurched lower as a result, ending the day at 4,464.1, off 48.3.

United Utilities shares performed worst. The electricity and water giant was stripped of the value of its 29.88p dividend, which is being paid out to people on the shareholder register on Tuesday night, and the stock closed 28.5p lower at 518.5p. United Utilities 'A' shares - issues as part of the company's £1bn two-stage rights issue, and which attract half the dividend - were off 15p at 332.75p.

A vote for industrial action at its largest Chilean copper mine sent shares in Anglo American down 10p to 1,128p, while its sector mate Antofagasta tumbled 11p to 940.5p on fears that strikes could spread across the country. Miners want to share the spoils from surging copper prices this year.

Tobacco stocks were in retreat amid threats to ban smoking in public places across the UK. A similar ban in Ireland was behind a dismal trading statement from Gallaher earlier in the week, and its shares were another 19.5p lower at 666.5p. Imperial Tobacco, whose brands have the biggest market share in the UK, was weakest of all, down 37p to 1,188p, while British American Tobacco was off 13p at 854.5p.

BAE Systems rose again, up 1p at 219.25p, after a further round of upbeat meetings with analysts. And other aerospace contractors also gained, with Rolls-Royce up 2.5p at 251.75p and Smiths Group 1.5p better at 746.5p after Deutsche Bank upgraded its target price for Smiths shares.

Encouraging drilling results from an oil well in the Congo was behind a 21p rebound for shares in Burren Energy, which closed at 325p. The company was at a conference for fund managers which also included exciting presentations from Regal Petroleum, up 9p at 431p, and Tullow Oil, which gushed 6p higher to 123p. Petroceltic, an Irish outfit which yesterday bought stakes in two Italian exploration projects, was also on the bill and saw its shares rise €1.43 to €11.40.

A mysterious seller sent shares in Telford Homes, which specialises in building London flats, down 3p to 148.5p, raising fears it will soon admit to a cooling housing market. The nationwide housebuilder George Wimpey, which said it had experienced a drop in visitors to its sites, saw its shares drop 5.5p to 369p.

London Asia Capital was 0.75p better at 14.24p after buying a stake in a Malaysian investment boutique, which it said would speed up its search for lucrative investment opportunities in China. Incepta, the advertising and public relations agency, was up 1.5p at 85p with brokers pushing the stock amid gossip of strong trading at its marketing services division. And Xenova was up 1.63p at 11.25p after the drugs group was profiled on CNBC television.

News that Sir Elton John will be performing a benefit concert for his beloved Watford FC failed to generate any interest in Watford Leisure shares, which were unchanged at 70p. The stock is virtually untradeable, because market makers have a 50p to 90p spread on the stock, meaning sellers will only get 50p, but buyers have to pay 90p per share.