Market Report: Prudential driven up on Chinese bid chatter

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The Independent Online

The market was buoyed by a raft of bid rumours yesterday, and Prudential, the UK life insurance provider, featured prominently in the talk of the town.

The chatter was sparked by news that Ping An, the Chinese insurance group which was touted as a likely bidder for Prudential in January, had won shareholder approval to raise fresh funds of up to $17bn (£8.5bn).

According to reports out of China, Ping An is expected to employ some of the new money to expand, leading investors and traders to revisit the prospect of a possible bid for the UK insurer, whose shares gained 41p, or 6.8 per cent, to 643.5p, claiming second place on the FTSE 100 leader board.

Aviva, another UK insurer which was mooted as an alternative target for Ping An, was also up, climbing 22p, or 3.79 per cent, to 602p.

The FTSE 100 index finally changed course after five days of losses, closing up 85.8 at 5,853.5.

The property sector, which rallied after The Independent reported that Liberty International may merge with a larger foreign peer to form the world's largest shopping mall group, was the highlight of the day. Liberty claimed first place on the leader board, gaining 87p, or 9.23 per cent, to 1,030p, while Hammerson, which climbed 61p to 1,134p, and British Land, which was 52p heavier at 988p, claimed ninth and tenth place respectively.

Elsewhere, the market was dragged down after a number of companies went ex-dividend. The list included Royal Bank of Scotland, which lost 12.25p to 355p, Barclays, 9.25p lower at 447.5p, British American Tobacco, which shed 58p to 1,848p, and British Energy, 10.5p lighter at 547p.

On the FTSE 250, which gained 199.6, or more than 2 per cent, to close at 10,144.1, bid talk surrounded Inmarsat, the mobile satellite services company.

Early-morning rumours suggested that Harbinger Capital Partners, the American hedge fund manager which already has a significant stake in Inmarsat, was mulling an offer of up to 550p per share. The news gave a slight boost to the company's stock, which closed up 7.75p at 492p.

Shaftesbury, the property company which owns large swathes of London's West End, was lifted by vague talk suggesting a possible bid. Few details were forthcoming and the company's shares closed up 26p at 579p.

Positive broker sentiment gave a boost to Telecity, the pan-European data centre provider, which was initiated with a "buy" rating at UBS.

Analysts at the bank noted that the company was the market leader in its sector, at a time when "data-intensive internet traffic is driving significant growth in demand for data centre space, while supply is constrained by both a lack of suitable locations and limited power capacity."

The recommendation helped Telecity climb by 13.25p, or 5.82 per cent, to 241p.

Among the small caps, Nestor Healthcare was up on the back of some bid speculation.

Trader talk suggested that the company, which last week said that it was in talks with a number of interested parties, was about to be subject to an offer from Cinven, the continental private equity firm.

Cinven, which touts itself as an "experienced healthcare investor", acquired Bupa's hospital operations and assets for £1.44bn last year and was said to have replaced 3i, the British private equity group which was rumoured to have dropped out of the race to acquire Nestor on Friday, as the most likely bidder. And while no firm indication of the likely offer price was forthcoming, some speculators suggested that the company may attract a premium price of up to 70 per share.

The chatter led many investors back into the stock, which rose by 5.25p, or 10.82 per cent, to 53.75p.

Oxford Biomedica's shares climbed by 3.25p, or almost 13 per cent, to 28.5p after late rumours suggested that the company, which is due to publish its full-year results on Monday, was set to issue a positive update on ProSavin, its gene-based therapy for Parkinson's disease.

On AIM, Cyberview Technology, which specialises in providing server-based downloadable gaming systems, saw its shares climb 45p, or 33.33 per cent, to 180p after saying that it has commenced merger talks with International Game Technology, which may take over the company.

Cyberview said that, while the discussions remained "preliminary", the two companies had entered into an exclusive negotiating period which could see IGT acquiring it for up to $70m.

Corvus Capital, on the other hand, was down after selling its entire stake in Upstream Marketing. The company's shares fell by 0.75p, or 17.14 per cent, to 3.625p.