Market Report: BG flares higher on renewed takeover talk

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The Independent Online

Reheated bid chatter, plus a recommendation that investors should take advantage of its recent weakness, helped BG Group rise up the top-tier index last night. The gas explorer advanced 41p to 1,373p as vague speculation spread late in the session that it could be in line for an approach.

Not for the first time, Exxon and BHP Billiton – up 35.5p to 2,379.5p – were named by market gossips as potential aggressors, but traders were dismissive of the idea, instead putting BG's gains down to UBS upgrading its recommendation to "buy".

The broker's analyst Jon Rigby made the move as he noted the group had lost more than 7 per cent of its share price since the release of its first-quarter results earlier this month, and said the dip was an opportunity to get involved in "a high quality long-term growth story, the shares of which are usually fully valued".

BG was not the only blue-chip group mentioned in renewed chitter-chatter, with Centrica the subject of bid talk yet again, although the latest mutterings saw the British Gas-owner edge forwards just 2.6p to 318p. There was also the return of vague speculation that Smith & Nephew could find itself receiving an approach, and the prosthetics manufacturer was lifted 8.5p to 684p.

As the market prepared for today's start of conditional trading in Glencore's shares, which are expected to be priced at 530p a pop, a bounce in metal prices left the miners in a good mood and helped the FTSE 100 to surge forwards 62.49 points to 5,923.49. Randgold Resources and Fresnillo powered up 177p to 4,797p and 22p to 1,330p respectively, while ENRC climbed 34.5p to 841p after Citigroup gave it a "buy" rating in the wake of its recent poor performance.

Down on the mid-tier index, Centamin Egypt started the day at its lowest level for nearly 15 months but ended up being driven forwards 11p to 126.8p. The rise came in the wake of comments made by Egypt's ruling military council earlier in the week which suggested private investors who had bought land from the previous government were unlikely to be penalised, although Credit Suisse's Ahmed Badr said he "wouldn't rule out the possibility that some investors and companies could still pay some kind of settlement fee to the government".

Back on the top-tier index, Cairn Energy ticked up 9.7p to 429.9p after investors concerned over its proposed deal to sell a controlling stake in its Indian unit were told their worries were overdone. The disposal of 40 per cent of Cairn India to Vedanta Resources – 37p better off at 2,135p – has still not been approved by the Indian government, and Cairn is expected to extend the deadline yet again at today's annual general meeting.

Despite the delay, Morgan Stanley added the oil and gas explorer to its "best ideas" list, saying the market is "pricing in a high probability of a worst case outcome" and that as a result its "upside potential is highly compelling".

It initially looked as if its $750m purchase of the skin substitute manufacturer Advanced BioHealing was going to knock Shire back, and the pharmaceutical company did drop to 1,871p in early trading. However, the market clearly had a change in heart, and – with Matrix's Navid Malik describing the deal as "highly transformational" – the drug maker ended the session 49p ahead at 1,949p.

A number of stocks were near the foot of the index after trading ex-dividend, including J Sainsbury which slipped back 10.7p to 344p. The supermarket received a further blow from the news that Judith Portrait, who is in charge of the Sainsbury's family trusts, has disposed of 1.5 million shares.

Pole position was grabbed by Land Securities, which moved 48p to 795.5p after announcing its net asset value had grown over the year by nearly 10 per cent. Others in the real estate sector duly followed, with British Land putting on 26.5p to 604.5p and Hammerson 15p stronger at 479.2p. Also updating the market was Compass, and it eased back 4p to 575p despite its first-half operating profit coming in ahead of expectations. Similarly, Experian saw a tiny slump of 1p to 796p even though its preliminary figures managed to beat forecasts.

On the FTSE 250, Mothercare announced its profits in the UK had dropped nearly 70 per cent, overshadowing a rise in its other markets of 18.5 per cent. However, the retailer ended high up the leaderboard with a shift of 23.3p to 448.5p as investors were cheered by its attempts to stop the rot with the introduction of a restructuring plan that will see 110 stores shut in less than two years.

Critics may not be keen, but Pirates of the Caribbean: On Stranger Tides was one of the reasons given by Cineworld for its optimistic outlook for the months ahead. The cinema operator revealed a fall in its revenues for the year so far of nearly 9 per cent, but said upcoming releases – including Johnny Depp's latest – look set to provide a boost, and it sailed ahead 11.5p to 205.5p on the small-cap index.

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