Market Report: ARM touches highest level since January 2002

A flurry of bid speculation drove ARM Holdings to pole position on the FTSE 100 last night.

The semiconductors group rose by as much as 32 per cent in mid-morning trading, touching its highest level since early 2002, amid rumours of bid interest from Apple, the American technology giant which is widely believed to use ARM-based chips across its iPhone and iPad range of devices. The chatter has been around before, and had boosted ARM's share price around the time of Apple's quarterly results in April. Besides lifting ARM, the rumours also drove gains in mid-cap peer Imagination Technologies, which was 14 per cent, or 33p, higher at 272p, and which counts Apple among its shareholders.

Though some pegged their hopes on the prospect, many in the market remained sceptical about the possibility of Apple switching roles from customer to acquirer. There were questions about how other ARM clients – the company's technology powers a whole host of products, including Samsung, Toshiba and BlackBerry phones – would react to it being taken over by a rival such as Apple.

Indeed, ARM's president Tudor Brown, responding to the last round of rumours, played down the prospect by highlighting the fact that "ARM's business model is fundamentally about being independent". Though he added that "there aren't any poison pills in our contracts", he went on to say that "in a sense the whole business model is a sort of poison pill in that it works best by being fiercely independent, not owned by anybody". As it was, the chatter subsided as the session progressed, with ARM, which declined to comment on last night's rumours, relaxing to 290.1p, up nearly 6 per cent, or 16.1p, at the close.

Overall, the FTSE 100 continued to rise, adding 46.64 points to 5,132.5, while the FTSE 250 rose by 122.5 points to 9,609.68 upon confirmation that Chinese exports had jumped in May. Confidence in the country's ability to keep growing, and in turn keep consuming copious amounts of commodities, lifted the mood across the mining sector, with the likes of Xstrata, up 41.3p at 1,003p, Kazakhmys, up 38p at 1,144p, and Lonmin, up 40p at 1,602p, clocking steady gains. The sector received an additional boost from an Australian newspaper report which suggested that the country's Prime Minister Kevin Rudd may be about to revise the proposed tax on mining profits.

Banking stocks also continued to trade higher, with Lloyds adding 2.44p to 55.91p and Barclays gaining 5.15p to 287.85p, against the backdrop of the Institute of International Finance (IIF), a banking lobby group, saying that proposed regulatory reforms could hamper economic growth across the US, the eurozone and Japan. Beyond that, the IFF report suggested that banks may need to raise large amounts of common equity and issue new debt to comply with proposed capital, liquidity and other reforms.

On the downside, BP fell by as much as 11.9 per cent in the morning, with traders taking their cue from overnight falls in oil major's American depositary shares. The declines were pinned on worries that the company, which is coming under increasing political pressure in the US as it attempts to contain the Gulf of Mexico spill, may hold back from paying dividends. The stock pared losses as the session unfolded, however, closing about 6.7 per cent, or 26.05p, behind at 365.5p amid suggestions that it could end up as a target for PetroChina.

The analysts at S&P Equity Research said the sharp falls in BP's shares had been "overdone", "leaving it trading well below its true worth". Still, the broker lowered its recommendation to "hold" from "buy", citing "the political sensitivities regarding BP keeping its 2010 dividend", "the costs of the clean up" and "upcoming civil charges", among other factors. Bank of America Merrill Lynch stuck to its guns, however, calling for a reality check and reiterating its "buy" view, albeit with a lower 575p target.

Elsewhere, ITV, up 2.5p at 55.25p, was in focus after RBS analysts mooted the prospect of a combination with RTL-owned channel Five. "RTL has indicated that it exploring a disposal of Five. We regard ITV as the natural buyer," the broker said, repeating its "buy" view, and estimating that ITV could deliver £70m in cost synergies. "While regulatory hurdles are meaningful, we don't see them as being insurmountable," RBS added, raising its target for the stock to 75p.

Further afield, Essar Energy, which will move up to the FTSE 100 when the results of the recent index review are implemented, was 7.25p down at 442.25p as profit-taking overshadowed some positive broker comment, with Deutsche Bank initiating coverage with a "buy" view.

"[Essar's] expansion plans are likely to require significant capital investment over 2010-13. Yet, as the investments come onstream, our financial analysis points to the delivery of post-tax profits in 2014 of around $2bn.... This compares with pro-forma profits of just around $90m in the nine months to December 2009," the broker added, setting a 520p target price on the stock.

Start your day with The Independent, sign up for daily news emails
ebooksNow available in paperback
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
Ruby Wax has previously written about her mental health problems in her book Sane New World
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: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie