Market Report: Traders gamble on Tata retreat from Corus battle

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The Independent Online

The bidding war for Corus could be over tomorrow as the company holds an emergency general meeting to discuss competing bids from the Indian group Tata Steel and Brazilian rival CSN. However, the word in the market is that the battle could already be over. Traders believe that Tata is poised to walk away from the deal, leaving CSN's £4.9bn offer, worth 515p per share, as the only bid left on the table. The speculation in the market is that the price has got too rich for Tata's liking, £600m more than CSN is offering. The EGM might not produce a firm result anyway, with an adjournment until the early weeks of 2007 a likely outcome. Even so, if Tata decides that it has reached the bottom of its pockets, it could be irrelevant by then anyway. Shares in Corus nudged 3p lower to 528p as more than 20 million changed hands.

AstraZeneca's dismal end to 2006 continued as the pharmaceutical giant cast fresh doubts over its AGI-1067 artery treatment. Critics of the company have expressed concerns over its pipeline of new drugs for several years, and the poor prospects for this drug will do little to calm nerves. The shares closed 7p worse at 2,864p, a new six-month low.

The sugar producer Tate & Lyle gave investors a slightly mixed trading update, resulting in a 45p decline to 775.5p, wiping out most of last week's gains. However, the US investment bank Citigroup reiterated its "buy" advice on the shares with a 900p target, as it highlighted the strong pricing gains made across most of Tate's businesses.

The last week of trading before Christmas got off to a quiet start, with little to encourage traders to switch positions, as the FTSE100 closed relatively flat at 6247.4, a fall of 12.6.

A bout of pre-holiday profit-taking knocked the mining sector back as Rio Tinto shed 44p to 2,792p and BHP Billiton closed 10p worse at 941p, as the company expressed its disappointment at the Australian high court's decision to allow a competitor access to its rail network.

Aggreko, the emergency electricity generation group, has enjoyed an outstanding second half to the year, unusually without the help of bid speculation. The shares have almost doubled in the last three months on the back of favourable analyst comment and a strong trading update in mid-November. The shares closed high on the FTSE250 leaderboard, 12.75p better at 423p.

The online estate agency Rightmove, 24.5p firmer at 381p, was also in demand after the buy-out of the US group Realogy was revealed over the weekend. The private equity house Apollo Management, which specialises in technology-related investment, will pay £6.6bn for Realogy, once part of Cendant, and traders believe that the deal has positive implications for Rightmove's valuation.

The property investment group Daejan Holdings celebrated its first day of trading in the FTSE250 by promptly falling 270p to close at 5530p. More than 70,000 shares changed hands as traders booked profits, roughly double the average daily volume.

Skyepharma, the biotechnology group, climbed 2.25p to 24p on solid volume of 7.1 million shares, as the FDA approved the company's Foradil Certihaler asthma treatment almost a year to the day since the product was recalled from the German and Swiss markets over inaccurate dosing. The product has been modified and will go into immediate commercial production.

The word among small cap traders is that there are a significant number of short positions in Future Internet Technology via contracts for difference. The company raised £3m of new capital last week via a placing at 100p prior to a five for one consolidation, the equivalent of 20p per share. Any investor who backed that placing will be kicking themselves as the stock closed another 1.75p worse at 13.25p.

Clean Energy Brazil completed one of the largest initial public offerings on AIM of the year, raising £100m at 100p per share. The group will invest in Brazilian assets in the ethanol production industry, such as sugar fields and refineries. Brazil is the lowest cost producer of ethanol and the use of ethanol as a gasoline replacement is widespread throughout Brazil. The shares closed 2p better at 102p.

On the down side, Biofuels Corporation continued to tank. The shares were trading at 210p as recently as April, but since then the stock has been in freefall. Last week's production statement was disappointing and the company will have to raise more funds sooner rather than later. The stock closed 7p weaker at 29p yesterday, a new all-time low, as market makers said that many brokers were clearing it out of portfolios before Christmas statements go out.