Market Report: Chinese whispers revive bid speculation for Aviva
Will a bid for Aviva finally emerge this year? Never far from the takeover spotlight, the insurer was again getting market gossips excited yesterday amid revived speculation that an approach could materialise from the Far East.
The vague rumours being spread around the Square Mile saw Ping An Insurance become the latest name to be talked about as a possible suitor for Aviva.
According to the tale, the Chinese insurance giant, which has been previously linked in takeover speculation with Prudential (up 16p to 652p), may be interested in breaking up Aviva. European firms Zurich Insurance and Allianz were put forward as potential buyers of the group's parts, unsurprising considering both have been discussed as possible bidders before.
With the talk suggesting a potential bid could be worth 500p a share, Aviva ticked up 8p to 307p. Yet this was not enough to put it among the Footsie's biggest risers, however, as traders played down the speculation, noting the frequency with which it emerges.
Shore Capital's Eamonn Flanagan was more optimistic over the group's takeover chances, calling it a "sitting duck given its valuation" which he blamed on "overdone" fears regarding its exposure to Europe. "It therefore comes as no surprise to us that these bid rumours emerge from time to time," he added.
Overall, the FTSE 100 enjoyed a positive day with remarkably little drama, climbing steadily before closing 84.44 points better off at 5,696.7. China's fortunes were again in focus amid persistent speculation it could be about to introduce some form of stimulant to its economy.
This, along with decent figures from US aluminium giant Alcoa, helped the heavyweight diggers. Kazakhmys and Antofagasta powered up 58p to 1,037p and 62p to 1,296p as copper prices rose on the news that China imported a record amount of the metal last month.
Fitch's promise that it would not downgrade France's debt this year, despite recent rumours over the safety of the country's triple-A credit rating, provided some respite for the banks. Barclays, 10.2p higher at 188.3p, and Royal Bank of Scotland, 1.06p better at 21.13p, bounced despite UBS analyst John-Paul Crutchley cutting their target prices.
By the time the bell rang there were just seven blue-chip stocks in the red, including grocery giant Tesco. The world's third-largest retailer was hit by yet more caution ahead of its Christmas trading update tomorrow, as Bank of America Merrill Lynch's John Kershaw not only removed his buy rating but also took it off the broker's Europe 1 list of recommended stocks.
Claiming Tesco's Big Price Drop campaign has been "seemingly underwhelming", the analyst warned it would "struggle to revitalise sales" before its full-year results in April, and in response the group eased back 0.45p to 390p.
It is good to see City scribblers stick by their convictions. Deutsche Bank's Harold Thompson yesterday pointed out he has been a buyer of Reckitt Benckiser since 1999, and, noting that "analysts are often seen to be short term in their thinking", he confidently predicted the consumer goods behemoth was heading for "another decade of success". The Durex-maker was not hugely moved by the vote of confidence, however, as it shifted up a modest 48p to 3,355p.
Centamin was shining on the FTSE 250, with the gold digger sparking up 6.9p to 87.8p. The miner was knocked last year by local restrictions limiting output at its Sukari project in Egypt, but it announced yesterday that it had managed to produce nearly 60,000 ounces of the yellow metal over the past three months, an increase of 10 per cent.
Still, it failed to beat Debenhams as the department store surged 8.96 per cent to 62p after a forecast-beating Christmas trading statement.
Horizonte Minerals was dancing the samba following a major upgrade to its resource estimate for its Araguaia project in Brazil, but investors were in less of a carnival mood. Despite the AIM-listed miner saying it now believes the site has over 100 million tonnes of nickel, prompting claims it is one of the world's biggest projects of its kind, the group still ended up 0.12p weaker at 11.88p.
Keeping with the South American theme, confirmation that Mobile Streams is big in Argentina saw it shoot up over a third. The seller of mobile content announced it now has one million active subscribers in the country, which lifted it 3.5p to 12.88p.
Elsewhere, bid speculation around Gulf Keystone Petroleum was gaining pace. Chatter around the Kurdistan oil explorer has been persistent for a while now, but yesterday it spurted 20.7 per cent to 266.75p, an all-time high, as a result.
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