Market Report: Diageo rises on talk of deal with tequila maker

It's been a while since City traders have had an excuse to crack open the tequila. But yesterday that all changed. Well, almost. Not because there's a reason to be cheerful about the markets – far from it, it was a particularly nervy day after Monday's falls, with a sudden sell-off after lunch requiring some fancy footwork by the Square Mile's practitioners. No, it was about Diageo, which was said to be close to knocking back a stake in Jose Cuervo, a $3bn (£1.9bn) business which, as any hellraiser will tell you, is the world's biggest tequila brand.

Talk last night was that Diageo has made a breakthrough in discussions with the Beckmanns, heirs to the Cuervo family which set up the business 1795.

If the speculation is true Diageo boss Paul Walsh, famed for his love of big game hunting, will have bagged himself a prize he's been stalking for the best part of a year. He knows Cuervo well – professionally at least – as Diageo is its main distributor outside Mexico.

Traders bolted down the news with a lick of salt and slice of lemon, marking Diageo's shares up 8p at 1553p. Brokers pointed out a big potential for profit growth at Cuervo under Diageo's experienced hand, particularly in the US.

To other news: What does the billionaire do when all the other rich kids are spreading nasty rumours about his profitability? Pick on someone else and pour doubt on their rich list position. That's what JPMorgan did yesterday, downgrading International Airlines Group, owner of British Airways, perhaps to get the City talking about the airline business instead of its own $2bn tale of Jamie and the whale.

The US bank slashed its rating of IAG from overweight to neutral, sending IAG's share price plunging to the bottom of the benchmark index. Already the airlines group, which also owns Spain's Iberia, was under pressure after warning on Friday that it will only break even this year. JP Morgan's downbeat assessment only added to its problems. "We see headwinds from weaker Spanish trading, coupled with higher than expected bmi losses, and an overhang from Banki [the bank that is very exposed to Spain's property crash and IAG's biggest shareholder]." IAG shares landed 9.5p or 6 per cent lower at 149.9p.

The deflection tactic didn't work: JPMorgan was still the talk of the City. "But only because there's nothing else happening," said one bored trader. "It's Groundhog Day. Again. Every day it's the same: Europe. You think Greece is sorted, then Spain and Portugal come to the fore. Then Greece is back, and they take a back seat. It's boring. The phones aren't ringing, people are too scared to do anything."

Little wonder there was no sign of a rally yesterday following the FTSE 100's 2012 low on Monday. The index fell 27.9 to 5437.62 by the close. "Shares are going cheap, surely bargain hunters will come out soon," said one trader, with more than a touch of desperation in his voice. The reason for his angst wasn't exactly concern for the global economy. "The only thing in my bonus pot is cobwebs," he complained.

The miners – who sway whichever way the latest economic indicator blows – lost early gains on the grim news from Europe and China. Kazakhmys fell 30p to 707p, Vedanta lost 40p to 1013p and Rio Tinto took an 89.5p bath at 2953.5p.

But it wasn't all bleak. Investors are still waking up to the typical overselling of the cruise line operator Carnival, whose shares fell so sharply after the sinking of its Concordia liner. Carnival was full steam ahead to the top of the Footsie leaderboard, gaining 67p to 2034p.

G4S was the biggest riser thanks to strong Olympic-fuelled revenue growth: shares picked up 8.4p to 275.2p.

Elsewhere, Renishaw was having a good day. The precision tool maker's trading update showing a steady three months' business and signs of an upturn in the electronics market prompted analysts at Numis to lift their rating on the stock from reduce to hold. Shares jumped 9 per cent, or 126p, to 1467p.

Among the tiddlers, philatelists usually focus on the Strand's stamps and coins dealer Stanley Gibbons, but it's not the only one doing well out of the flock to alternative investments. AIM-listed Noble Investments, which handles collectors' rare coins from Ancient Greek, Roman and Byzantine civilisations onwards, told the market of its 59 per cent leap in pre-tax profit thanks to stonking demand from India, China and the Middle East. Shares put on 3p to 197p.

But the Greek uncertainty was still leaving financial stocks wobbly. Banks have fallen have 9 per cent in the last three months, and continued that trend today. Barclays was off nearly 4p or 2 per cent at 186.1p, while Lloyds Banking Group was 0.5p cheaper at 28.9p.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones