Market Report: Takeover speculators get Hunting in their sights

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The Independent Online

The oil sector was looking slick yesterday as takeover chat continued to boost the mid-tier players. Hunting was up with speculation it could be on the block unless it splits its operations.

The oil services company rose 10.28 per cent to 783p, the best mid-tier performer, after Evolution Securities said it could be broken into three to release value. "We suspect that, unless the company moves this way, then a third party could do it for them," Evolution said.

M&A is active in the industry, after the peer Abbot Group was approached by 3i. Evos added rumours of a Halliburton mega-merger with Baker Hughes had driven up the US oil service index to an all-time high.

Vodafone was up 4.97 per cent to 179.5p, one of the top risers of the day, due to what one market observer called "silly-season" rumours. The market was initially excited about talk that chief executive Arun Sarin had quit, followed by speculation the group had bid for Colt Telecom, a high-flying stock on the previous day. A source close to the company dismissed both stories out of hand. One trader said the stock was up after positive noises about the UK market made at Telefonica's investor day. The Spanish group owns the mobile rival O2.

It was a storming day for the FTSE 100, which soared just off seven-year highs, up 91.5 to 6,724.5. The move left traders bemused. "It's amazing, I don't really understand it," one said.

The miners, as well as a strong performance on Wall Street, led the index up, with Vedanta Resources the top riser on the day, gaining 5.8 per cent to 2,317p. The sector was boosted by rising commodity prices in copper, zinc and gold. The sentiment filtered through to the second tier, with Aquarius Platinum up a further 9.42 per cent to 1,847p, and Hochschild Mining up 7.27 per cent to 413p.

The defence group BAE Systems rose 9.5p to 506.5p, an eight-year high, after a Cazenove note predicted more positive news flow.

The insurer Resolution rose 12p to 692p after it rejected a bid from Pearl Group on Wednesday. Collins Stewart said Pearl's 660p-per-share offer was too low. "This must be a warning shot across the bows to push Standard Life to show its hand. Whatever happens, RSL shareholders will decide and we don't think they will agree to 660p," it added.

Among the worst performers was Sage Group, after a trading statement revealed senior managers in the US had left the group after a review of its operations in the region. The shares closed down 3.38 per cent at 243.25p.

The housebuilding sector retreated amid fears of a potential slump in the housing market. The worst affected was Taylor Wimpey, which weakened 4.28 per cent to 290.75p, closely followed by Persimmon, off 4.02 per cent at 1,003p. This followed a statement released by the Royal Institution of Chartered Surveyors, which said the number of new buyers is falling at its fastest rate since 2003.

Northern Rock finally spun off the track after a strong week, derailed by a note from Deutsche Bank. After the share price more than doubled in the previous three days, the note saw it shed almost 10 per cent to 246.5p. It slapped a target price of 225p per share and a "sell" rating on the stock.

Beyond the miners and the oil companies on the second rung, Cookson Group was also up 18p to 840p as it confirmed the takeover of Foseco for £497m. Landsbanki called the deal "strategically and financially compelling," adding that Cookson could be a 1,070p stock.

The defence group Cobham rose 5.75p to 204p after a contract win from Boeing Integrated Defense Systems.

Caution in its full-year statement sent WH Smith to the bottom of the mid-tier. The retailer announced group profits were up, but added it expects "Christmas to be very competitive". It shed 6.43 per cent to 393p.

The miners were also represented in the small caps, as Anglesey Mining rose 54.76 per cent to close at 16.25p after it said work at its Parys Mountain in Wales was gathering pace.

The air conditioning company Worthington Nicholls Group was up as rumours emerged late in the day of a possible bid from an unnamed suitor. It climbed 5.5p to 22.5p.

The dental equipment company Astek Group was another strong performer, rising 31.58 per cent to 3.13p. It confirmed it had signed a pre-contractual heads-of- terms agreement over a potential reverse takeover. The shares were subsequently suspended, relating to AIM rules governing a reverse takeovers.

The worst small-cap performer was the computer games company Warthog, which halved to 0.04p, saying its shares will be suspended on 12 November. The move honours a statement a year ago, which said shares would be suspended if it could not complete a reverse takeover within a year of shareholder approval. The company listed in 2001 with a placing price of 43p.