Hunger for bid rumours drives prices to a new high


The market's appetite for bid rumours is insatiable and continues to drive share prices forward into uncharted waters. The FT-SE 100 share index yesterday soared 30.8 points to close at an all-time high of 3,593.0, with market-makers convinced that several more takeover bids will be made among the corporate elite.

Additional fuel came from better than expected US trade data and a larger than forecast decline in UK unemployment. With UK retail figures providing yet more evidence of consumer resistance to price increases, there were fresh hopes of a further cut in interest rates.

Royal Bank of Scotland remained at the heart of the bid speculation, which at one stage during yesterday's session drove the FT-SE index to an intra-day trading high just 2 points short of the 3,600 mark.

Strong buying on the futures market did indeed take the December contract on Liffe comfortably beyond 3,600. The contract closed at 3,628, having touched 3,633 at one time.

Many dealers believe that, barring any spectacular corporate and economic accidents, the bull run will continue and that the 4,000 level will be breached by the spring.

Shares in Royal Bank of Scotland, a constituent of the FT-SE 100 index, climbed another 20p to 554p amid more speculation of a 600p-700p bid from south of the border from Abbey National, 1p better at 568p.

Some analysts, though, are showing signs of concern about the strength of the Scottish bank's share price, particularly if a bid fails to materialise.

A report published yesterday by analysts at Lehman Brothers said that without bid speculation the fair share price would be around 425p.

Dealers, however, expect more consolidation in the banking sector following the Lloyds Bank merger with TSB. Excitement in the sector is also being generated by the merger mania among US banks, which was yesterday capped by the mother of all deals so far: Wells Fargo's $10bn stock swap bid for the rival Californian banking group First Interstate.

Bank of Scotland, ahead 5.5p, is also tipped by some analysts as a potential bid target. National Westminster Bank, up 16p to 660p, is seen as a possible buyer of either of the two Scottish banks.

Gartmore, the fund management group, put on a late sprint and finished 5p up at 293p on further rumours that BAT Industries, down 2p to 548p, was close to agreeing a pounds 400m takeover bid.

Trading volumes in bank and financial shares were again high and helped swell the day's total turnover to 787.2 million shares. Almost 10 million were dealt in Royal Bank of Scotland, 2.78 million in Bank of Scotland, and more than 4 million each in Abbey National and National Westminster.

Business was topped off by a programme trade covering more than 100 stocks, encompassing leaders as well as second-liners, bang on the closing bell.

The day's star prize for being the most heavily traded share went to Trafalgar House, the financially strapped engineering and construction group which owns the luxury QE2 liner.

Investors must be praying that Trafalgar's shares, which fell to another low, become appended with a bid rumour. However, some dealers said there was a rumour that Hongkong Land, the company's major shareholder with a 26 per cent stake, was unwilling to inject further funds into the group.

The price closed at 21p, down 2.5p. Some trades were struck as low as 18p, and a massive 70 million changed hands. Trafalgar's preference shares dropped 4.25p to 43p.

Dalgety, the pet food and agri-business group, also missed the party and fell 5p to 424p amid talk from the opening bell that a large line of 7 million shares was on offer.

Total turnover in Dalgety's shares exceeded 14 million, and the gossip proved to be right at the close, with a single transaction for 6.95 million being registered on dealing screens.

Most of the dealings occurred late in the afternoon, and the ticker was awash with chunky delayed trades towards the close. Several of the deals were each in excess of 500,000 shares.

Virtually all yesterday's speculative activity was confined to the leaders. Second-line stocks moved forward at a sedate pace and the FT-SE 250 finished just 4.4 points higher at 3,941.3. The FT-SE All Share rose only 0.1 per cent to 1,751.32.

The Spurs, though, go marching on as Tottenham Hotspur hit another peak with a 10p advance to 205p.

Star performer of the session was undoubtedly Bluebird Toys, which soared 97p to 367p on a distribution and marketing deal with Mattel and Disney.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before