Market Report: British Energy fired up by hopes of EDF bid

Bid speculation was evident around British Energy, which remained firm in the face of a weak market yesterday.

Market sources cited speculation that the French utility EDF had received funding assurances of more than £11bn for its proposed takeover of the British group.

BNP Paribas, Société Générale and HSBC were named as the banks charged with finding the money, and EDF was said to be preparing to table its firm, fully financed, offer in the next week.

News of the offer was pegged to emerge as early as Thursday, when the UK Government is due to host a summit on nuclear plants.

Hopes of a deal took British Energy up by 3p to 735p.

The FTSE 100 closed at 5,906.8, down 88.5, or 1.5 per cent, after yet more evidence of an economic storm came to the fore in the United States.

The US Labour Department said that the American economy lost 49,000 non-farm jobs in May, pushing the country's unemployment rate to 5.5 per cent last month from 5 per cent in April, the fastest growth in the numbers in more than two decades. The news struck Wall Street, which swiftly sunk in to the red, and in turn offset the strength among miners and oil stocks on the London benchmark. Fears of a sharper than expected economic slowdown also hit the FTSE 250, which lost 175.9, or 1.8 per cent, to 9,8343.3.

On the FTSE 100, oil stocks, bolstered by renewed strength in the price of oil, dominated the leader board. A note from Morgan Stanley, which was published earlier in the week and which predicts a spike to $150 per barrel in the price of crude by 4 July, also drove investors into the sector. Cairn Energy, the India-focused oil and gas exploration and production group, swung to second place on the blue-chip leader board, up 145p at 4,107p.

BG gained 29p to 1,256p and Royal Dutch Shell rose by 5p to 2,097p.

A similar story played out in the mining sector as firmer metals prices drove leading stocks. Xstrata, which drew additional support from some positive comment by Merrill Lynch, led the way and claimed first place on the FTSE 100, gaining 145p to 4,107p.

"The (re-)emergence of coal as a major profit source for Xstrata is quite exciting," the broker said, increasing its target price for the stock to 5,300p.

Merrill added that, despite the breakdown of takeover talks with Vale, sector consolidation will continue and "Xstrata will play an important role".

Merrill also gave a boost to Carphone Warehouse, which rose 6p to 243p. The broker said the expected launch of the new Apple iPhone on Monday "could be seen as a positive catalyst" and added Carphone to its list of most preferred European telecoms stocks.

"With the 2G stock pipeline now cleaned out, the market is clear for a launch. We believe the launch will be announced by Steve Jobs at his keynote speech on June 9 at the Worldwide Developer Conference in the US," added Merrill.

Standard Life was among the worst performers, losing almost 6 per cent or 15.5p to 246.75p after Deutsche Bank moved the stock to "sell" from "hold".

"The immediate outlook for the UK life [insurance] market is weak, already under volume pressure in 2008, and with a deteriorating economy potentially weighed down further by rising inflation," the broker said. "Though well positioned longer term, Standard Life is in our view one of the most exposed to a tougher UK sales environment near term, particularly in view of the sensitivity of its margins to volumes. On the back of this, we lower our new business profit forecast for 2009 by 8 per cent."

On the FTSE 250, the oil price rise hit Easyjet, which was parked at third place on the mid-cap loser board despite posting encouraging traffic figures for May. The stock closed down 7.73 per cent or 25.75p to 307.5p.

Moneysupermarket.com firmed 2p to 128.25p. The stock was boosted by positive comment from Citigroup, whose analysts said Google, which is reportedly planning on expanding its presence in the price-comparison arena, will be a "credible competitor", but Moneysupermarket's "scale, product reach and brand name position it relatively well [versus] its smaller competitors".

On AIM, OPG, the Indian power company which made its market debut last week, gained6.5p to 80.5p following rumours of a deal with the Tata Group. OPG has already entered into a memorandum of understanding with the Tata Power Trading Company to supply up to 49 per cent of the power generated from two if its projects.

Also on AIM, Indus Gas, an India-based oil and gas exploration and development company, made its market debut. The company raised £25m via a placing of 15.2 million shares at 164p apiece by Arden Partners. By the close, Indus had gained 39.5p. to 203.5p.

Suggested Topics
PROMOTED VIDEO
News
peopleGerman paper published pictures of 18-month-old daughter
Arts and Entertainment
'A voice untroubled by time': Kate Bush
musicKate Bush set to re-enter album charts after first conerts in 35 years
Life and Style
tech
Arts and Entertainment
Robin Williams' life story will be told in a biography written by a New York Times reporter
arts + ents
News
i100
Life and Style
food + drink
Life and Style
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
voices
Sport
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
News
peopleJustin Bieber accuses paparazzi of acting 'recklessly' after car crash
News
people
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client Services Executive / Account Executive - SW London

£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

PA to CEO / Executive Secretary

£36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...

Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

Senior C# Developer (.NET, C#, JMS, TDD, Web API, MVC, integrat

£45000 - £75000 per annum + benefits+bonus+package: Harrington Starr: Senior C...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis