Market Report: Kingfisher soars on bid talk as shares recover

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The Independent Online

As investors strapped in for a bumpy ride on the markets, few were amusing themselves with tales of takeovers.

Kingfisher managed to soar above the mire, as vague chat bubbled up of a potential break-up of the group. One trader said he had heard loose talk about the potential move, but with very few details attached. "That is why the stock managed to stay strong for most of the day," he said. The retailer, which owns B&Q, closed up 12.2p at 141.9p.

Yesterday's session was never going to be for the faint-hearted. The FTSE 100 plunged 239.5 points at the opening, taking its lead from the mass sell-off in Asia, and compounding the previous day's carnage.

It rallied on rumours that the US Federal Reserve was set to make an emergency rate cut, which was subsequently confirmed, with rates lowered 75 basis points. A day of extreme volatility followed, with all eyes on the US opening. As the losses on Wall Street stabilised, confidence grew in London, and the top tier closed up 161.9 points at 5,740.1. One trader said: "The volatility today was just ludicrous."

The housebuilder Taylor Wimpey had proved remarkably resilient in Monday's sell-off and was up again yesterday, 6.15 per cent stronger to 195p. Traders argued over wheth-er the stock had been driven up by bargain hunters, or short sellers covering their positions.

Elsewhere in the property sector, there was a solid performance from the real estate investment trust Land Securities Group. It stormed 7.93 per cent higher to 1,620p after investors backed its third-quarter performance. The company added it was "well placed to run through the current challenging environment".

The publisher Pearson was up on an update of its own. It rose 8.14 per cent to 671p after announcing trading momentum had carried into the fourth quarter, "and we will produce record profits for 2007".

Despite heavy falls in the morning, even the miners escaped a sell-off as the market rallied, leaving only seven stocks in negative territory. The profit-takers had piled into the defensive tobacco stocks. Worst performer was Imperial Tob-acco, which gave up 4.09 per cent to 2,300p. This came on the day its bumper offer for Altadis became unconditional, as it revealed it had received 93.5 per cent of the total issued shares.

On the mid tier, the ship-building and support services company Babcock International Group sailed higher after announcing a forthcoming deal. It steamed up 10.83 per cent to 540p after agreeing to buy International Nuclear Solutions' Innovations business. The acquisition, which is expected to complete in March, means INS will cease to operate and will delist its shares.

After a terrible six months for listed mid-tier fund managers, Bluebay Asset Management rallied on backing from Credit Suisse. The Swiss broker labelled Bluebay one of its two sector picks. Bluebay rose 8.6 per cent to 271.5p. New Star Asset Management did not fare so well, falling 0.94 per cent to 105.75p, as the broker slashed its price target on the stock from 575p to an eye-watering 175p.

Pub group JD Wetherspoon has had little to smile about over the past 12 months, sinking from 760p to just over 300p. Yet despite a cautious update, it rose 5.3 per cent yesterday to 308p. This was explained by a note from Blue Oar which picked the stock as a prime candidate to be taken private.

Spiralling to the foot of the second line late in the day was Close Brothers Group after Cenkos Securities and Landsbanki pulled their takeover bid. Despite the broker insisting it was in discussions with other parties, the selling intensified, sending it down 19.09 per cent to 750p.

The market hates surp-rise resignations, especially from the crucial role of fin-ancial director. Southern Cross Healthcare was stung yesterday after announcing Graham Sizer was to step down as FD. The stock nosedived 76.75p in the morning, although rallied to close 16.75p down at 410.75p. No reasons were given for Mr Sizer's departure.

Top of the small caps was the fabric supplier Fiberweb as the market continued to digest its approach from rival Avgol. While traders were coming round to the idea, they remained cautious over the 100p-per-share offer. The stock rose 30.4 per cent to 60p.

Another company that had traders scratching their heads after confirming a bid approach was Entertainment Rights. The media group announced the talks late on Monday, sending the shares up 13 per cent. It rose a further 5 per cent yesterday before closing flat.

EBTM suffered as it revealed that its full-year results would be "materially short of our previous expectations" after problems with its e-commerce platform and the cautious outlook for high street retail and consumer spending. It closed down 35.3 per cent at 2.75p.