Bid speculation sparked a rally in the Central African Mining and Exploration Company (Camec), yesterday.
The Democratic Republic of Congo-focused copper and cobalt miner rose 5.73 per cent, or 3.25p, to 60p after rumours of interest from Glencore, the Swiss commodities trader, which owns around 35 per cent of Xstrata, up 197p to 4,232p.
The rumours suggested that Glencore had approached Dan Gertler, who owns around 30 per cent of Camec through his Prairie International Limited vehicle, for his stake, but had been spurned for offering too little.
The commodities trader was said to be preparing a higher bid – according to market sources, the rumours suggested Glencore may return with a proposal offering more than 100p per Camec share.
"Camec is a great niche business and it would be a good fit if someone can raise the money," said Nick Brown, a trader at Evolution Securities.
Elsewhere, HBOS was the best performing stock on the benchmark index. The bank, which fell below its 275p rights issue offer price on Wednesday, rose almost 10 per cent, or 25p, to 283p.
Other banks also bounced back from Wednesday's sell-off and Royal Bank of Scotland was up at second place on the leader board, 16.75p stronger at 229p.
Standard Chartered, at fourth place, was up 105p at 1,630p; Lloyds TSB, at fifth place, rose 20.75p to 353.5p, and Barclays climbed 8.25p to 314.75p.
Alliance & Leicester, which is set to move down to the FTSE 250 later this month, was weak and closed down 13.25p at 305.5p.
Strength among the banks and in the mining sector drove the FTSE 100 up 67.2 points to 5,790.5. The FTSE 250 also recovered, adding 131.1 points to close at 9,554.2 as housebuilders mounted a recovery.
On the FTSE 100, retailers remained depressed. Carphone Warehouse was the worst off, losing 25.25p to 202.5p after publishing a cautious outlook statement with its final results.
A first-quarter update from Home Retail Group also sullied sentiment – the company revealed lower- than-forecast sales figures for Homebase and fell by 8.75p to 215p.
Reacting to the news, Citigroup reiterated its "sell" recommendation on the stock.
"Given the UK consumer has not yet fully capitulated, though, we fear for weaker trends as we progress through the year and into 2009," Citi said.
The updates proved a drag on the wider sector and Kingfisher was down 5.3p at 118.9p.
On the FTSE 250, Barratt Developments, which was among the worst performers in recent days, gained 3.75p to 76.25p, after some words of support from Panmure Gordon.
The broker said the share price weakness had been overdone and stuck with its "buy" rating for the stock.
"Barratt's share price fell by 70 per cent from 1,200p to 257p between the start of 2007 and May 2007, and at that point we felt that the shares had fallen far enough," Panmure said. It added: "Disappointingly since then, the shares have ignored any valuation logic and sentiment ..."
Cazenove also weighed in: the blue-blooded broker said that although the company's statement to the market on Wednesday was not a "line in the sand", it will provide some short-term cover. Cazenove, which maintains an "in-line" rating on Barratt, added that "selling the shares short is no longer a one way bet".
The remainder of the housebuilding sector also came off lows and Taylor Wimpey was up more than 16 per cent or 8.5p at 61p. Redrow was 6.75p stronger at 141p, and Bovis Homes climbed 31p to close at 348p.
Easyjet, meanwhile, encountered turbulence despite some weakness in the price of oil. The low-cost airline lost 4.75p to 295.25p after Collins Stewart advised investors to "sell".
"With the economic cycle turning negative, air-travel demand will naturally weaken. This is coming to a point when the increased oil price has made all carriers structurally unprofitable," the broker said. Collins Stewart added that raising fares to mitigate the impact of rising costs is only likely to exacerbate the downturn in demand.
The video games retailer Game Group was down 8.75p at 265.25p after Investec re-initiated coverage on the stock with a "sell" rating and a price target of 233p.
"Game has been trading at a premium to the retail sector for the past 18 months," the broker noted. It added: "Yet the company's earnings growth and performance are strongly linked to the video games industry product cycles.
"In the absence of any major hardware releases until 2010, we believe that the video games market is poised for a downturn."Reuse content