Market Report: British Steel surges as pounds 600m cash deal nears

BRITISH STEEL forged a solid performance as investors rushed to the shares amid talk of an imminent pounds 600m-plus cash payment.

The steel giant bucked a soggy market to surge a stainless 5.5p to 154.75p in good volume of nearly 12m shares as both institutions and arbitrageurs piled into the stock.

The near-4 per cent increase was driven by shareholders' desire not to miss a special 35p-per-share cashback.

The one-off payment - which should total around pounds 694m - was promised by BS in June when it announced its pounds 2.9bn takeover of Dutch rival Hoogovens.

At the time, the British company said that its long-suffering investors would receive the gift shortly after the completion of the Hoogovens deal. Rumour has it that the takeover will receive final approval from shareholders and regulators in a couple of weeks. Some dealers were even more precise and pointed to 5 or 6 October as the most likely dates for the completion of the deal and the opening of the cash floodgates.

These rumours did not go unnoticed by the arbitrageurs. So far, the cunning arbs have been shorting BS and buying Hoogovens as a cheap way into the new company. However, the arrival of the pounds 600m cash injection has prompted them to reverse their arbitrage play and buy BS in order to be on its shareholder register by 5 October. Institutional investors, who had been dumping the stock during the recent rally in sterling, also returned to the buying fray attracted by the 35p-per-share carrot.

Braver dealers ignored the steady but dull BS and focused on the out- of-favour Marks & Spencer. The fallen hero of the British high street rose 2p to 317.5p a day after its second profits warning.

Excitable minds said that, with the shares at a near seven-year low, M&S is primed for a merger with the likes of Kingfisher, down 9p to 639p, or the equally-troubled Sainsbury's, 1.5p lower at 385.25p. Talk of a takeover by Tesco - 3p higher to 188.75p - after a meeting on its international plans and a price target of 250p from Salomon Smith Barney - or an overseas player was also heard.

However, sceptics said that the real reason for the rise was sustained buying by US value investors which had been attracted by the fall in M&S share price.

Remaining blue chips had a terrible day as an opening tumble in Wall Street and weakness in the all-important banking sector halved Monday's 141-point gain. The FTSE 100 lost 71.4 to 6,007.2 and looks once again in danger of falling below the key 6,000 barrier.

Turnover - at just over pounds 1bn - was lower than usual. Some market watchers believe that the much-feared pre-millennial liquidity squeeze is beginning. Many big fund managers are closing their books for the third quarter and there are growing concerns that they might do little in the last part of the year.

The second liners were also unwanted, with the FTSE 250 closing 27 down at 5,672.9 and the Small Cap falling 2.7 to 2,681.1.

Profit-taking in the financials sector following the recent bid-inspired rally was a major drag on the FTSE 100. Bank of Scotland, interims today, plunged 50p to 745.5p, amid wild rumours of an increase in its pounds 21bn bid for NatWest, 25p lower at 1451p. Mooted counterbidder Royal Bank of Scotland fell 72p to 1,319p while rumoured white knight HSBC dropped 29p to 697p.

Scottish Power played gooseberry to the banks in the FTSE 100 fallers' list with a 24p fall to 534.5p after joint house broker HSBC lowered its forecast. The HSBC analysts blamed the high cost of chopping trees that obstruct electricity pylons and a lower contribution from Scottish Telecom as the reasons for the downgrade.

British Airways nosedived 17.75p to 325.25p on concerns over rising fuel prices and next week's passenger numbers. The chemist Boots was down a sickly 20.5p to 671.5p on fears of poor trading and concerns over Asda's cost-cutting drive in toiletries and medicines. National Power fell 11.75p to 473p despite continued bid rumours.

Among the risers, gas group BG flared 14p higher to 355.25p after a push from Deutsche Bank and Commerzbank. Revived rumours of a strike from Shell, 9p lower to 447p, also did the rounds. Oils were depressed despite Commerzbank's decision to increase its 2000 Brent price forecast to $17.5 per barrel from $15. Explorer Lasmo fell 4.75p to 130.25p despite on-going rumours of a strike from Italian giant ENI.

Drinks group Allied Domecq frothed 5.5p higher to 353.75p even though French rival Pernod denied having talked to private equity groups Hicks, Muse Furst and CVC about a bid.

Chip designer ARM Holdings beamed 47.5p higher to 937.5p after deals with 3M and Ericsonn.

Trafficmaster, 24p to 525p, was given the green light after a tip on Channel 4's "Show Me The Money" programme. Whispers of a bid from a larger rival pushed telecom operator Kingston Communications 8.5p higher to 107.5p. Engineer Cookson firmed another 8p to 190p on continued management buyout talk and a Deutsche "strong buy" advice.

Electronic company Racal buzzed 9.5p to 417.5p on whispers that the sale of its telecom division to Energis,12p better at 1,399p, is near.

Talk of buoyant interims lifted clothes chain Next 14p higher to 630p. The shock withdrawal of a secondary share offering sent property developer Canary Wharf 21.5p lower to 362.5p.

Among the minnows, steak-and-frites restaurant operator Groupe Chez Gerard sizzled 10.5p higher to 199p on talk of bid, possibly from Whitbread, 9p higher to 744.5p.

Defence engineer Chemring shot 9.5p higher to 196p on revived whispers of a bid or management buyout.

Health care tiddler Medical Solutions firmed 1p to a record 13p on talk of two licensing deals, while airport group Wiggins lost 02.5p to 23.5p despite rumours that today's AGM may bring news of the purchase of an airfield in Florida. Telecom minnow Telspec shed 13p to 61p after poor interims.

SEAQ VOLUME: 1.02BN

SEAQ TRADES: 70,041

GILTS INDEX: 102.77 -0.19

VOYAGER 2000 is travelling towards some good news. The cash shell, set up by entrepreneur Stephen Dean, is rumoured to be close to the acquisition of a private IT company in the UK or Ireland. The mooted purchase would re-start trading in Voyager's AIM-listed shares. The stock, floated in May, was suspended at 9.5p in July after the acquisition talks were announced. Mr Dean has a reputation as a tough deal-maker and many are betting the shares will rise.

TINY MINERAL explorer Ennex International may be about to unearth a positive announcement.

The Ireland-based penny stock drilled a 12.5 per cent, 0.75p, rise to 6.75p yesterday amid rumours of a large alliance. Well-informed dealers believe that a major partner is poised to join Ennex's zinc exploration project in Kazakhstan. The economic recovery in the former Soviet republic is also lending support to Ennex's shares.

Suggested Topics
News
The surrealist comedian at the Q Awards in 2010
people
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
PROMOTED VIDEO
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to American media group
Extras
indybest
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidate on the verge of tears as they were ejected from the boardroom
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
News
ebooksAn unforgettable anthology of contemporary reportage
News
Wilko Johnson is currently on his farewell tour
people
Voices
New look: Zellweger at Elle's Women in Hollywood awards on Monday
voicesRenée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity, says Amanda Hess
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?