Market Report: Bid rumours make a comeback around Man

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The Independent Online

Man, the London-based hedge fund group, was in focus amid a renewal of takeover speculation last night.

The stock touched an early-session high of 232.5p on the back of a rise in weekly net-asset values at Man's flagship AHL fund and another round of bid talk, with speculators revisiting theories of interest from the Bank of New York Mellon. The American lender was once again said to be mulling an offer of more than 300p per share, with some suggesting it could make a move in the next few weeks.

Not everyone was convinced, however, not least because Man, which closed at 225.9p, down 1.7p, is in the process of acquiring its rival GLG Partners in a $1.6bn (£1bn) deal. That said, the recent spate of deals on the FTSE 100 and beyond has stoked hopes of a revival in mergers and acquisitions, with speculators touting bid rumours across a variety of sectors.

Overall, stocks were lower amid worries about the recovery in the world's largest economy. Overnight data showed that US pending-home sales had slipped to a record low in June, while consumer spending and personal incomes remained flat, adding to evidence of a slowdown in the pace of growth. As a result, both the FTSE 100 and the FTSE 250 fell back, with the former shedding 10.32 points to 5,386.16 and the latter easing by 9.46 points to 10,126.41. Though behind at the close, the indices pared losses in the final hours of play, as a firm start on Wall Street, which was supported by some positive figures on the US service sector, lifted the mood in London.

Concerns about the macro-picture weighed on the outlook for commodities, depressing the sentiment across the mining sector. There was some improvement after trading commenced on Wall Street, however. Lonmin, for example, went from an early low of 1,622p, down 23p, to 1,657p, up 12p, by the close. The Eurasian Natural Resources Corporation, underpinned by a quarterly production report and some supportive comment from Morgan Stanley, was further ahead, adding 23p to 962.5p. BHP Billiton and Rio Tinto were among the losers, easing by 10.5p to 2,009p and by 21.5p to 3,412p respectively.

In the banking sector, Lloyds smashed City expectations with strong half-yearly profits. The news boosted the state-backed lender by 2.57p to 74.49p, leaving the Treasury sitting on a small profit on its investment. Standard Chartered, on the other hand, fell by more than 5 per cent or 98.5p to 1,804p despite beating expectations with its interim results, with the weakness being pinned on profit-taking.

In terms of analyst reaction, Bruce Packard at Seymour Pierce stuck to his "hold" view, noting that while Standard Chartered was "a good bank with a good track record" and had benefited from its exposure to growing economies, "trying to work out how much of this is reflected in the premium rating is always difficult".

Retailers took a hit after Next, down nearly 8 per cent or 170p at 2,029p, issued a trading statement confirming a "noticeable cooling in retail demand in recent months". With the consumer outlook turning a shade darker, Home Retail Group was 9.3p behind at 235.2p, Marks & Spencer fell by 10.4p to 350.2p and Kingfisher was 7.5p lower at 216.3p. Further afield, smaller peer Carpetright also sounded a note of caution on consumer spending, ending 26p worse off at 740p.

Connaught, the troubled social- housing repairs group, fell by 1.36p to 32p following a report that Barclays had sold on its loans to the company. The lender was reported to have disposed of the loans at prices well below face value. "This causes us some additional concern since we assume that the banks have had access to more financial and trading information than the equity markets," Altium said.

The chemicals group Croda International was also held back last night, closing at 1,283p, down 20p, after Citigroup warned on the valuation. Though anticipating higher earnings, the broker said that, with the stock up strongly in the year to date, the market appeared to be alive to the positives in the investment case. "We see few reasons for momentum to reverse in the near term, given a good growth outlook, prospects of buybacks in 2011 and an investor day in September," Citi said, moving the stock to "hold" from "buy", albeit with a revised 1,400p target price. "That said, the shares now reflect this strong outlook."

The house-builder Redrow was 5p better off at 115.7p after the Halifax reported a rise in UK house prices during July. The stock was also boosted by renewed bid talk, with late rumours mooting the possibility of a proposal from a bigger UK peer.

888 holdings, the online gaming group, was caught by the downdraft, ending 0.75p behind at 47.75p despite Deutsche Bank doing its best to stoke deal hopes. Following on from the merger agreement between Partygaming, down 7.8p at 301.1p, and Austria's Bwin, Deutsche said that while 888's valuation is "undoubtedly full", the likelihood of deal activity argued in favour of the shares. "We believe investors are likely to increasingly look through headline valuation metrics," the broker said, revising its view to "buy" from "hold".

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