Market Report: Morgan Stanley raises prospect of cash return for Man Group's shareholders

Man Group’s shareholders could be about to get a $220m (£146m) surprise, as Morgan Stanley raised the prospect of a cash return yesterday. It hiked its target price for the hedge fund and said its management fees could be as much as 30 per cent higher than the City expects, thanks to the strong performance of its flagship AHL fund. The prospect of a pay-out helped spur Man Group to a near four-and-a-half year high, up 10.6p at 172.1p.

The FTSE 100 surged to a seven-week high amid a wave of optimism about European Central Bank boss Mario Draghi’s speech today. The blue-chip index extended its run of gains to a fifth day, buoyed 107.94 points to 6,728.04 by positive UK unemployment figures and expectations that the ECB will launch a blockbuster bond-buying programme of €50bn a month. CMC Markets’ Jasper Lawler said: “Even Super Mario the plumber couldn’t prevent leaks from the ECB this week.”

Pearson was the best performer on the blue-chip index, rising 60p to 1,296p. Boss John Fallon has promised a return to growth in 2015 after two years of restructuring.

BG Group climbed 36.6p to 885.9p with some punters pushing rumours that the oil explorer could be subject to a £12-a-share break-up bid from Exxon Mobil or Brazil’s Petrobas.

Cheaper fuel prices mean Americans are opting to drive themselves rather than take Greyhound buses, which is bad news for operator FirstGroup. But Liberum said: “It is more important that the turnaround at the biggest divisions [Student and UK Bus] appears to remain on track.” FirstGroup rose 7.1p to 109.1p.

Allied Minds rose 18.9p to 420p amid chatter that big US funds could be interested in taking a stake. The company, which funds tech start-ups, is backed by star fund manager Neil Woodford.

Things are going from bad to worse for Afren; the under-pressure oil and gas explorer, which may or may not be taken over by Nigeria’s Seplat, tumbled 4.79p to 21p amid fears it could go under. Afren said in a statement it was reviewing its balance-sheet and seeking to defer a $50m payment, due at the end of January.