Market Report: Lloyds whisper sets L&G hare running

THE BLUE-CHIP bid rumour of the day was that the banking giant Lloyds TSB is to launch a pounds 10bn-plus offer for the insurer Legal & General.

The whisper unsettled Lloyds TSB, which ended 18p lower at 894p, but worked wonders for L&G, up 4.5p to 174.25p on heavy volume of nearly 30 million shares. The insurer managed to close higher despite the rumoured presence of a large seller in the market. Dealers welcomed the prospect of a chunky premium if, as mooted, Lloyds were to bid about 200p per share.

The whisper had a certain logic. It is no secret that Lloyds has the firepower and the will to do a deal, while L&G has long been seen as friendless in the fast-consolidating insurance industry. A tie-up between the two would create a financial services giant with a market value of over pounds 57bn and services ranging from retail banking to life assurance.

The rest of the market closed in positive territory, aided by bid speculation and a strong Wall Street opening. The FTSE 100 ended 29.5 higher at 6,378.3, while the mid cap finished 6.7 points better at 5,850, and the Small Cap posted a 3.2 rise to 2,586.4.

Traders lapped up shares in milk producers Express Dairies and Dairy Crest amid talk that the competition authorities are set to recommend a liberalisation of the milk market. Express finished 11p higher at 127.5p, while Dairy Crest rose 15p to 272.5p as the market predicted that the regulators' forthcoming decisions would boost profits.

The Competition Commission - the old MMC - is expected to urge the Government to break up the Milk Marque, the co-operative body controlling about half the market for the white stuff. Milk producers buy a large part of their supplies from the organisation and have often claimed that its complex structure allows it to ramp up prices, squeezing their margins.

If, as it seems likely, the Competition Commission heeds their advice and scraps the Marque, the producers' profits should receive a considerable fillip. The changing regulatory landscape could also unleash a wave of consolidation in a sector that in the recent past has been plagued by chronic overcapacity. Dealers were betting on a series of mergers involving Express, Dairy Crest, Unigate, up 10p to 445.5p and Robert Wiseman, unchanged at 174p.

Among blue chips, BOC stole the show. The stock soared 106.5p to a 12- month peak of 1,138p amid talk that it will merge with Praxair of the US to form the world's largest gas group. Good interim profits also attracted buyers.

BOC's bullish comments on Asia sent battered ICI 33p higher to 703p. Orange did even better, dialling a 46.5p advance to 852p amid rumours of a bid from overseas. British Energy powered 17p ahead to 617p on hopes of a pounds 500m cashback with today's figures.

HSBC lost 3p to 2,117p despite completing its $3bn share placing in under eight hours. Cigarette stocks were in demand; Imperial Tobacco rose 32p to 687.5p after great numbers and fighting acquisition talk. Rival Gallaher was dragged 22.25p higher to 393.75p, while BAT moved up 16p to 546p after an important court victory against some US smokers.

Retailer GUS surged 32.5p to 727.5p on bargain hunting, but poor old Marks & Spencer shed 5p to 402.75p as SG, Deutsche and Investec downgraded.

Oils were again on show; Shell rose 1p to 477.75p as rumours of a merger with France's Elf rumbled on. BP Amoco lost 0.5p to 1,139p after in-line figures.

Reuters put on 30p to 873p after announcing plans to float its US software division. Although, the information group will remain the major shareholder, the market is convinced the listing will unlock some of the value of the subsidiary.

The tumble of the day belonged to Rentokil Initial, down a hefty 70.5p to 291p after admitting that 1999 profit growth will total 10 to 15 per cent, below its legendary 20 per cent target. Fellow business services group Hays shed 33p in sympathy.

Next relaunched its blue-chip career with a 29p loss to 809p as profit takers moved in, while GEC fell 19p to 630p as talks over an alliance with the Japanese giant NEC failed to warm the market.

Morgan Crucible was the mid-cap bid favourite. The metal-basher was 19.5p higher at 314.5p as old rumours of a bid returned. Rival BBA, up 2p to 502p, or a European competitor were the hot tips.

Biotech group Shire Pharmaceuticals was close, soaring 25.5p to 470.5p after good numbers and whispers of US and European buys. Exciting results and an Internet partnership with IBM propelled the software company Sage 215p higher at 2,252.5p, very close to its all-time high. No such luck for fellow computer group Guardian IT; the stock closed 60p lower at 490p as Merrill Lynch was believed to have gone bearish. Fading bid hopes hit the insurer St James Place, down 11p to 253.5p, and Rugby, the cement maker, 6p lower at 121p.

Condom maker London International was up 4.5p to 187.5p on heavy turnover. A US counterbid at 230p per share to the Seton Scholl merger is thought imminent.

The car auction house Dentmaster motored 7.5p ahead to 2.25p after agreeing a 7.1p-a-share bid from a unit of the US communications giant Cox Enterprises.

Clothes maker FII rose a smart 4p to 28.5p after selling its footwear unit, a Marks & Spencer supplier, to rival Peter Black, up 17p to 363.5p. FII received over pounds 5m for the business, just below the whole group's market value. Shares in Sunleigh, the Maclaren buggies maker, halved to 0.18p after it said it would leave the market because of financing difficulties.

Dowding & Mills, the electrical parts group, rose 3.5p to 50p amid vague talk of bid, while the packaging machinery maker BWI fell to a real bid from German rival IWK and rose 9p to 100.5p.

SEAQ VOLUME: 1.13bn

SEAQ TRADES: 77,013

GILTS INDEX: 108.68 +0.12

CALDERBURN, a small furniture maker, may be near to being taken over by an overseas predator. A German group is believed to be about to launch an agreed bid in excess of 94p a share, valuing the Lancashire business at over pounds 29m. Shares in Calderburn - sales of pounds 39m last year - have risen 84 per cent since announcing takeover talks in January. They closed unchanged at a 12-month peak of 72.5p.

CLYDE SHIPPING, a tiny maker of marine equipment, is in advanced talks to buy a rival. The Glasgow-based anchor maker is thought to be ready to spend over pounds 30m. It plans to fund the acquisition through cash and loans worth pounds 26m. The mystery target has assets of around pounds 40m and is expected to make a pounds 4m profit in 1999. News of the imminent purchase sent Clyde shares, listed on the junior Ofex market, 5p higher to 215p.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvReview: Top Gear team flee Patagonia as Christmas special reaches its climax in the style of Butch and Sundance
News
people
Sport
Ashley Barnes of Burnley scores their second goal
footballMan City vs Burnley match report
Arts and Entertainment
Peter Mayhew as Chewbacca alongside Harrison Ford's Han Solo in 'Star Wars'
film
News
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Tracy Emin's 1998 piece 'My Bed' on display at Christie's
artOne expert claims she did not
Arts and Entertainment
Catherine (Sarah Lancashire) in Happy Valley ((C) Red Productions/Ben Blackall)
TV
News
Hackers revealed Oscar-winning actress Lawrence was paid less than her male co-stars in American Hustle
people
Arts and Entertainment
Clueless? Locked-door mysteries are the ultimate manifestation of the cerebral detective story
booksAs a new collection of the genre’s best is published, its editor explains the rules of engagement
Sport
Robin van Persie is blocked by Hugo Lloris
footballTottenham vs Manchester United match report
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

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

A timely reminder of the bloody anniversary we all forgot

A timely reminder of the bloody anniversary we all forgot

Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

Homeless Veterans appeal

Former soldiers pay their respects to a friend who also served
Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

Scarred by the bell

The downfall of the TV star charged with bar stabbing
Why 2014 was a year of technological let-downs

Why 2014 was a year of technological let-downs

Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

Will revolutionary Cuba take 'bourgeois' golf to its heart?

Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

The Locked Room Mysteries

As a new collection of the genre’s best is published, its editor explains the rules of engagement
Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

How I made myself Keane

Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Parting view of Ofcom chief... we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
A look back at fashion in 2014: Wear in review

Wear in review

A look back at fashion in 2014
Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

Ian Herbert: My 10 hopes for sport in 2015

Might just one of them happen?
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?