Barclays shares surge amid bid rumours

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The Independent Online

Shares in Barclays surged by as much as 10 per cent today after speculation of a bid from US financial giant Citigroup swept through the London market.

Dealings in Barclays shares were the heaviest of any blue-chip company as investors piled into the stock on the hope of a lucrative takeover deal.

The interest also forced up the share prices of other major banking firms after the sector had earlier been languishing in negative territory. Barclays shares later settled back to stand 5 per cent higher at 506p.

There was no comment today from Barclays on the speculation, which linked Citigroup to a bid in the region of 700p a share - worth around £45 billion.

The world's biggest bank has been seen as potential bidder as it is thought to be keen to boost its presence in the UK market while Barclays also has the lure of an attractive investment bank business. Citigroup has 275,000 employees and manages 200 million customer accounts worldwide.

Jeremy Batstone of Charles Stanley stockbrokers said: "I believe there may have been interest in the past but now is not the right time. We are looking at a sector that is reporting peak levels of profitability and it's difficult to see how those levels can rise as aggressively again."

The speculation emerged a day after Barclays chief executive Matt Barrett announced a 23 per cent rise in half-year profits to a record £2.4 billion.

Spanish bank Santander Central Hispano recently sparked takeover interest in the sector by agreeing a £8 billion deal for Abbey National.