Market Report: Chemring jumps after bid rumours

Punters are backing Chemring for a bid. The defence and aerospace manufacturer jumped 13p to 233.25p as whispers circulated yesterday that the business could be a target. US private equity house KKR was mentioned as a potential interested party, while others said BAE Systems, up 8p at 522.5p, was looking. An offer price of 400p a share was touted.

Elsewhere, Drax rocketed 22.7p to 412.6p after rumours emerged that RWE or GDF Suez could be interested in a bid for the power station operator.

Marks & Spencer climbed 23.2p to 498.7p after RBC Capital Markets said the retailer looks likely to perform better than the City expects, thanks to improving online sales and margin gains.

Royal Mail collapsed 22.3p to 432.2p as JPMorgan joined the chorus of postie pessimists. The bank warned of declining letter volumes and increased competition from Whistl.

InterContinental Hotels Group rose 55p to 2665p with chatter in the market that a big special dividend could be on the way.

Defence engineering giant Babcock climbed 26p to 1,054p thanks to what Jefferies called a “reassuring update”. The company is on track to meet forecasts for the year, but warned low oil prices could affect its oil and gas business this year.

The FTSE 100 dipped 8.03 points to 6,829.12.

Anite, which tests handsets and telecoms networks, jumped 6.5p to 88p after announcing that third-quarter trading was ahead of expectations. Management said business was boosted by Xceed, the US wireless network data analytics company it acquired in October.

An upgrade from Citi helped Micro Focus International improve 50p to 1,152p. The bank thinks the recent merger with Attachmate represents a “step change” for Micro Focus, which helps companies upgrade their computer systems.

Hope of a blockbuster sell-off of Quindell’s legal arm is losing momentum. Slater & Gordon, the Australian law firm in exclusive talks with the division, announced yesterday that talks were on-going, but the potential transaction has now been scaled back. Quindell slid 2.25p to 71.75p.