Market Report Insurer gets by with help from its friends

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The Independent Online

It was just like old times yesterday as takeover speculation once more drove Friends Provident to the top of the leaderboard. Rumours of a takeover bid for the UK life insurer are as old as the hills. French rival Axa and private equity group JC Flowers were again touted as potential bidders. Traders were undaunted by the familiarity of the story and the group saw strong volumes, especially in early morning trading. The stock finished the day up 4.25 per cent at 186.4p.

One of the early morning climbers was Johnson Matthey after support from Citigroup before next week's annual general meeting. The US broker lifted its target price to 2,000p from 1,800p saying it was confident of continued growth. It said that while the shares weren't cheap "there are few companies that can be certain of similar long-term growth". After rising 50p it slumped as the market fell, closing down 18p at 1,810.

As profit-taking continued to drive down the value of mining group Lonmin, its potential as a takeover target were being increasingly talked up. One market maker said the miner was a "hot takeover favourite to be taken out after last week's profit warning" and added he expected a £50-per-share offer sometime this year. The mining sector has been awash with consolidation chat since Rio Tinto's agreed takeover of Alcan earlier this month.

Cable & Wireless was the biggest loser on the top tier as investors prepared for the AGM showdown between shareholders and management over executive pay. Despite four-fifths agreeing to the motion to scrap the £20m cap on bonuses the company failed to rally, closing down 6.8p at 182p. Richard Lapthorne, the chairman, added that the company would consider a demerger next year.

The market opened up for the second day in a row after the Dow Jones had closed at 14,000, but it was a poor opening in the US that saw the FTSE 100 slip 55 points by the close to 6,585 points. The 164-point drop on Wall Street in early trading was triggered by a run of disappointing financial results.

Man Group was knocked after a disappointing first day of trading for its brokerage arm in the US. MF Group had opened $6 lower than the bottom of the range at $30 and finished Thursday at $27.55. Despite a brief rally, the group closed down 2p at 598.5p.

On the mid tier, the glitterballs had lost their sparkle for Luminar. The night club operator opened strongly following broker support before softening to close at 759.5p. The company, which owns nightclubs including Liquid and Oceana, had enjoyed a rally in July, but fell 16.5p to close at 750.5p.

Top of the mid tier was Galiform, which was given a bullish write-up by the broker Dresdner Kleinwort. The UK group soared almost 4 per cent to 130p after Dresdner said it was undervalued by 40 per cent. The group, which specialises in manufacturing and selling kitchens, was created when MFI Furniture Group sold its retail business and changed its name.

Investors shrugged off their bafflement over a bullish Panmure Gordon note to send Autonomy up among the top risers. The note expected a revenue jump of 20 per cent, but it was the target price that left the market scratching its head. The broker reiterated its buy recommendation, but left the target price at 886.5p, despite the stock already rising through 900p before publication. Autonomy was up 32p at the close at 935.5p.

There was plenty of buzz around Atrium Underwriting, which soared off the back of a recommended bid by reinsurer Ariel Re. The whole sector was lifted by the news as speculation mounted that the deal would spark a general consolidation. Atrium finished up 47.75p at 358.25p.

Rumours were swirling around AIM relating to activity in the small-cap debt companies. Debt Free Direct Group was up 4p as investors waited for an announcement that never came. There was some speculation that the high street banks had renegotiated more favourable terms with the debt groups, but following a deafening silence, Debt Free and its peers all closed down.

Uranium Resources was among the winners on the growth market, after announcing it was evaluating the results from drilling in Tanzania. The stock rose 1.37p to 7.62p as investors predicted positive results from the drill. Irvine Energy continued to receive backing from the market following its deal to buy oil and gas acreage from Metro Energy Group. It closed up almost 10 per cent at 1.12p.

Finally, it was a positive day for Mineral Securities, which was re-admitted to AIM at lunchtime after completing its merger with Scarborough Minerals, closing up at 97.5p.