Market Report: Miners step back into the takeover spotlight

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The Independent Online

With the top-tier index reaching its highest level for over two months, the miners led the way as market gossips reheated speculation they could be considering potential acquisitions across the Atlantic. Anglo American and BHP Billiton were both once again the subject of vague talk they may be interested in a move for US coal producer Walter Energy, with the rumours suggesting competition could come from the Brazilian companies Vale and CSN.

A number of deals, plus the global fall in mining stocks, has resulted in a rush of recent bid chatter around the coking-coal industry, and a lot of it focused on Walter, whose share price has been cut in half since April.

Although the names mentioned in the latest whispers have been linked with a possible approach before, this time there was also vague speculation that JP Morgan and Goldman Sachs may have been called in as advisers to potential bidders.

The rumours re-emerged despite attempts last month by Anglo's chief executive Cynthia Carroll to pour cold water on talk it is looking for deals, and – with claims an offer may be in the region of $120 (£76) a pop – Walter put on over 5 per cent in early trading on Wall Street.

Analysts were playing it down, however, arguing that potential predators may be less interested in groups in the US and instead want assets situated closer to China.

Anglo and BHP were driven up 29p and 52.5p, to 2,420p and 1,964.5p respectively, in a strong session for the miners, despite Credit Suisse cutting its advice on the sector to "benchmark". They were helped by a jump in copper prices following the news that stocks of the metal near China have been falling, while Antofagasta was lifted 74p to 1,151p.

Eurasian Natural Resources was the top blue-chip riser, jumping up 46.5p to 671.5p, after Deutsche Bank said its deal to take control of Kazakhstan's Shubarkol Komir was "positive" and "fairly valued".

Although the decision late on Tuesday by the Slovakian parliament to reject changes to the eurozone bailout fund prompted the benchmark index to edge down in early trading, it quickly reversed its losses. With optimism high that the country will vote again swiftly, the FTSE 100 shot up 46.1 points to 5,441.8 despite figures showing employment reaching its highest level for 17 years.

The banks were strong, especially Barclays which advanced 11.3p to 187p despite vague rumours, played down by traders, of a possible placing. Elsewhere, Royal Bank of Scotland climbed 0.51p to 25.81p but Lloyds Banking Group eased 0.04p to 36.25p after Canaccord Genuity downgraded its advice to "hold".

Man Group fell to its lowest share price since March 2009 as the world's largest listed hedge fund, which shed 25 per cent in one day in response to its update in September, revealed its AHL fund had lost over 5 per cent last week. It dipped 9.9p to 156.3p as Goldman Sachs cut its price target to 230p, with analysts from the broker slashing their estimates for the asset-management sector as a result of the equities' slump over the past three months.



Premier Foods shed nearly a fifth of its share price on the FTSE 250 after Exane BNP Paribas' Jeff Stent calculated a valuation for the Mr Kipling owner of -5.4p a share. The group, which last week announced its second profit warning in three months, was pegged back 0.95p to 3.78p as the analyst cut his price target to 1p, saying that "the only value... is that of optionality".

Lamprell, meanwhile, plummeted 14.96 per cent in the wake of the oil and gas rig specialist's admission it probably needed to make a $14.3m provision thanks to the higher-than-expected costs of a number of wind farm projects. Nonetheless, Brewin Dolphin's Greig Aitken upgraded his rating to "buy", pointing out that Lamprell still believes its net earnings for the full year will meet forecasts.

Kesa powered down 1.2p to 98.65p as hopes the electrical retailer will agree a sale of its struggling Comet chain were dimmed. Analysts at JP Morgan Cazenove said that "given the substantial pension and lease liability, we view a disposal (at least without a substantial dowry) as being unlikely."

Meanwhile, Logica managed to edge up 0.1p to 85.6p despite vague chatter re-emerging claiming the IT group may be about to unveil a profits warning. Still, Evolution Securities argued that with "a hefty warning already priced in, the shares look a trading buy."

Investors pulled the plug on Ceres Power as the company slipped 6p, or 19.2 per cent, to 25.25p on the Alternative Investment Market.

The developer of alternative energy technology revealed that its full-year operating loss had increased to £16.7m, from £13.2m in the previous 12 months.

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