Market Report: Merger speculation sends Helphire higher
Friday 09 October 2009
Helphire Group specialises in providing assistance to those involved in road accidents, mainly through renting vehicles to motorists whose cars are being repaired. Its shares were given a helping hand of their own yesterday amid speculation the company was set for a takeover approach by an unnamed suitor. The shares didn't rise to the 80p gossips had assigned to the bid, but still closed up a healthy 8.6 per cent at 60p. The rise also marks a recovery following Helphire's news of a swing to a full-year £149m loss last week.
The FTSE 100 index opened very strongly, retreated after lunch but still ended in positive territory 45.7 points higher at 5,154.6. The market was buoyed by news that jobless claims in America had dropped by more than the market had expected.
While Burberry Group ended top of the pile, 5.55 per cent higher at 532.5p, the index was propped up by the miners following unexpectedly positive news from the US overnight and a strong update from Vedanta Resources in London. The group posted strong gains for most of its metal production in the three months to the end of the September.
Investors rushed to buy because its boss, Mahendra Mehta, expects improved volumes in all its operations in the second half of the financial year. Liberum Capital was impressed, saying Vedanta had come out "with another impressive production report". The stock closed up 4.04 per cent to 2190p.
The sector was helped by a better-than-expected quarterly announcement from Alcoa in the US as it reported a profit after six consecutive quarters of losses. Kazakhmys was the pick of the sector, up 4.92 per cent at 1152p.
Randgold Resources also benefited as gold prices rose for a fourth day in a row, hitting $1,058 per ounce. Carsten Fritsch, an analyst at Commerzbank, said the falling US dollar was "providing tailwind", adding: "A further gold price increase has to be expected, especially as short-term oriented market participants are likely to be jumping on the bandwagon." Randgold's stock closed up 2.11 per cent to 4653p.
Oil stocks rebounded after profit- taking the previous day. Tullow Oil enjoyed a little help from its friends, as bosses at the group said Exxon buying into its Ghana Jubilee field would boost the project. It showed strength to close 5.04 per cent higher at 1229p.
One of the businesses doing well out of the downturn is Autonomy, which makes systems that track data through emails, telephone conversations and instant messaging. It suffered over the summer, but since mid-August has been on the rise. It hit record levels yesterday as it predicted third-quarter results would beat expectations by up to $10m, at about $193m. Julian Yates, an analyst at Investec, said: "We moved back to being positive after the second quarter share sell-off." But the strength failed to hold, and it slipped by 11p to 1604p.
Down in the dumps was the part- nationalised Lloyds Banking Group after talk that it was considering a £15bn rights issue re-surfaced. While the group is looking at options to avoid being dragged into the Government's asset protection scheme, Lloyds said its position hadn't changed since it last commented on the issue in September, and that it was still mulling its options. It shed 1.41 per cent to close at 94.3p.
The drop dragged Royal Bank of Scotland down with it. The other bank with a huge slug of public money fell 1.41 per cent to close at 48.5p.
Investors in Ladbrokes were cursing Lady Luck yesterday as it confirmed it wanted to raise £275m through a deeply-discounted rights issue to slash debts. The betting group has endured a pretty torrid time during the start of the Premier League season, partly because big teams such as Manchester United and Chelsea, who punters back heavily, have had been raking in the points.
The chief executive, Chris Bell, said it was the worst ever run of results for any sport (unless you're a Chelsea or Manchester United fan, obviously). The group announced that it would also scrap its dividend, a move which surprised the market. Ladbrokes' shares were the worst on the FTSE 350, falling 5.41 per cent to 171.4p. Rival William Hill was sucked down by the current, plunging 2.95 per cent to 171p.
The market liked the smell of Victrex in the morning, as it surged by 5.67 per cent to 791.5p. The company makes high-tech plastics for use in aircraft, car parts and surgical instruments and sales are flying given yesterday's bullish update. The company was buoyed by support by KBC Peel Hunt, which reaffirmed its "buy" rating. Also up was WHSmith, after backing from Credit Suisse. The Swiss broker expects further developments in the group's travel retail division. It has raised the target price to 620p from 480p and has an "outperform" rating on it, with the shares rising 3.2 per cent to 473.5p
Halfords was among the top performers on the 250, rising after what David Buik of BGC Partners called a "blinding" update. The group said it was benefiting from the "staycation" trend; selling premium bikes and car accessories particularly.
The chief executive, David Wild, said the group had a "solid foundation and we are confident that we'll deliver earnings growth again in the second half". That Mr Wild added "we're a little bit nervous about the second half of the year" didn't stop the buyers and Halfords rose 7.05 per cent to 390p.
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