Market Report: Bid rumours squelched as market treads water

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The Independent Online

City scribblers were clearly feeling in the mood to be spoilsports yesterday, as some of the punters' favourite bid tales found themselves drenched in cold water.

Among them was the idea that CSR could be snapped up, with frequent speculation in the past mentioning Intel as one potential aggressor for the mid-tier microchip maker. Last night, however, it closed 5.53 per cent behind at 188p after UBS said the group's recent completion of its merger with US peer Zoran had severely diminished its takeover potential.

"We have argued previously that CSR's technology in Bluetooth and GPS made it a good candidate as an acquisition," said the broker's analysts, who went on to add that they believed this was less likely now it was more diverse. They also cut their advice on the Cambridge-based company to "neutral", saying that the acquisition meant that the business had become "exposed to less attractive markets and a higher fixed-cost base."

Elsewhere, Nomura was downplaying hopes of an imminent break-up for Smiths Group, prompting the engineer 11.5p lower to 938.5p. Persistent chatter has suggested the company could soon dispose of one or more of its five divisions, but Nomura's Juho Lahdenpera argued such a move would not happen within the next 12 months.

Downgrading its rating to "neutral", Mr Lahdenpera warned that corporate suitors could be dissuaded from making a move because of Smith's rejection earlier in the year of a £2.45bn approach for its medical unit and added that private equity would find it difficult to get the necessary funding for a deal.

Investors who had piled in to SABMiller on Thursday due to vague talk of a merger with Budweiser's owner, Anheuser-Busch InBev, were also having their bid dreams dashed. Citigroup's Adam Spielman was not impressed with the story, saying that it was "simply the wrong time for a deal", and the Grolsch brewer dipped 25p to 2,222.5p.

Although strong employment figures from the US prompted a brief surge in the middle of the session, it was generally a quiet end to a volatile week for the FTSE 100. Nonetheless, it still managed to ease ahead 12.14 points to 5,303.4, stretching a three-day run that has seen it add nearly 360 points since reaching a 15-month-low on Tuesday. One trader called the rally "amazing", before adding, with his tongue firmly in his cheek, that "clearly the problems have all gone away."

The data from the United States gave a boost to Wolseley, with the building supplies group – which gets 40 per cent of its revenues from the country – driven up 67p to 1,721p.

The gossips were also focused on goings-on across the Atlantic, where vague rumours were doing the rounds that Wells Fargo could make a move for Morgan Stanley. However, the bid speculation failed to make a splash as the investment bank slipped back in early trading on Wall Street.

Royal Bank of Scotland and Lloyds took the bottom two spots on the benchmark index, declining 0.74p to 23.62p and 1.21p to 34.66p respectively, after Moody's decided to cut its ratings for the semi-nationalised banks.

Meanwhile, Evolution Securities' Ian Gordon turned his attention to Standard Chartered, as the influential analyst upgraded his rating on the bank to "buy". He said that despite the recent issues in the sector, "little has changed to dampen our view of Standard Chartered's bright long-term outlook". It climbed 2p to 1,327p.

Alarming whispers that the IT outsourcer could be about to issue a profits warning knocked Logica to a low of 78.75p. The group – which lost nearly 14 per cent of its share price when it last updated the market in August – managed a slight recovery, but still ended 1.75p worse off at 79.75p.

There was an actual profits warning from Premier Foods, and the UK's largest food manufacturer plummeted 42 per cent to 5.8p after admitting it was in talks with its banks over refinancing plans.

It certainly did not help its blue-chip rivals Associated British Foods and Unilever, which slid back 8p to 1,091p and 30p to 2,020p respectively. They were further damaged by mutterings claiming the Swiss giant Nestle has been lowering expectations ahead of its upcoming figures.

Back on the mid-tier index, Talvivaara lost over a fifth of its value after a flood of bad news from the Finnish miner, with the nickel and zinc producer cutting its production target and announcing the upcoming retirement of its chief executive Pekka Per.

Down on the Alternative Investment Market, Solo Oil spurted up 0.06p to 0.77p, thanks to a ramp-up in the production at its Canadian operations because of the installation of a new pump.

However, that was only a minor move compared to the rise of its fellow minnow, PipeHawk. The land mine detection company shifted a huge 117 per cent to 3.25p after revealing it had won two major new contracts.

FTSE 100 Risers

Vedanta Resources 1,160p (up 47p, 4.22 per cent)

Miner takes the top spot despite revealing a sharp fall in its iron ore output.

Man Group 167.2p (up 4.6p, 2.83 per cent)

Hedge fund manager has its Baa2 credit rating affirmed by Moody's.

Burberry 1,240p (up 34p, 2.82 per cent)

Upmarket brand ends the week on a high ahead of the release of its trading update next Wednesday.

FTSE 100 Fallers

B Sky B 675p (down 14.5p, 2.1 per cent)

Broadcaster knocked back on profit-taking following strong rises over previous two sessions.

Admiral 1,238p (down 21p, 1.67 per cent)

Car insurer continues to fall after being given an "underperform" rating by Exane BNP Paribas on Thursday.

Inmarsat 461.6p (down 7.5p, 1.6 per cent)

Mobile satellites group has retreated more than 6 per cent in the last week.

FTSE 250 Risers

Thomas Cook 44p (up 3.35p, 8.24 per cent)

Tour operator rises despite Espirito Santo starting coverage with a "sell" recommendation.

Booker 75.7p (up 3.1p, 4.27 per cent)

Cash and carry wholesaler has its price target raised by JP Morgan Cazenove to 79.4p from 73p.

Supergroup 727p (up 18p, 2.54 per cent)

Retailer still struggling to mount a major rebound following Wednesday's profit warning.

FTSE 250 Fallers

Grainger 87p (down 2.65p, 2.96 per cent)

Investors choose to take profits after property developer's 16 per cent gains over previous two days.

Michael Page 363.7p (down 7.6p, 2.05 per cent)

Recruitment company slides ahead of its third-quarter results on Monday.

Domino Printing 439.5p (down 5.2p, 1.17 per cent)

Reveals £1.4m acquisition of Norwegian software group Kameleon Source Codes.

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