Market Report: Reignited bid rumours push Ferrexpo ahead

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The Independent Online

It has been a tough few weeks for Ferrexpo, but last night it was on a high, rising up the mid-tier index as the iron ore producer found itself in the bid spotlight once again.

The Ukrainian miner has frequently been the subject of speculation that it could receive an approach, with Rio Tinto – down 22p to 4,245p – and Brazil's Vale among the names previously mentioned as potential aggressors. Yesterday, however, market gossips returned to another idea, reheating vague talk that Ferrexpo may be in the sights of the world's largest mining company, BHP Billiton.

The mutterings prompted Ferrexpo to surge forwards 21.5p to 457.6p; a welcome rally, given the fact its share price had lost more than 12 per cent since the start of May. Meanwhile, BHP was pegged back from a session high of 2,420p, although – with the FTSE 100 advancing 51.12 points to 5,989.99 – it still closed 13p stronger at 2,403p.

In early trading it looked as if the blue-chip index was going to finish even stronger, and it almost touched 6,010 points during its fifth consecutive day ahead. Market voices noted optimism ahead of today's manufacturing figures from China and rising hopes that negotiations over a new bailout for Greece were nearing a conclusion, although consumer confidence and manufacturing data from the US disappointed.

Pole position was taken by Johnson Matthey, shifting 94p to 2,119p, ahead of the speciality chemicals group's full-year results tomorrow. Royal Bank of Scotland said it expected the company to have seen its "best year so far", citing recent strong figures from its Belgian rival Umicore.

Wolseley was lifted up 67p to 2,058p, following reports the builders and plumbers merchant could sell three of its units, including its Build Center division. Meanwhile, Unilever was 31p higher at 1,971p after vague speculation did the rounds that it could be in line for a break-up. However, traders were highly dismissive, citing the consumer goods giant's recent purchase of Alberto Culver as just one reason for their disbelieving stance.

The outsourcers were busy, with both Serco and Capita announcing acquisitions. The former's was the most lavish as the group revealed a deal that will see it pay up to £385m for the Indian group Intelenet, and it prompted an uptick of 19.5p to 577p.

Its peer Capita rose 12.5p to 736p after agreeing to pay a rather more modest £24m for the healthcare recruiters Team24, although it was not enough to persuade Shore Capital's Robin Speakman to change his "sell" recommendation.

Glencore International finally managed to move above its 530p issue price, gaining 7.4p to 531.1p, despite Nomura initiating coverage on the commodities trader with a "reduce" rating, saying its valuation was too expensive.

Cairn Energy was pegged back 1.2p to 441.1p, as Collins Stewart said its planned sale of a controlling stake in Cairn India to Vedanta Resources – 17p lower at 2,152p – was "unlikely to receive unconditional government approval". The broker subsequently cut its rating to "hold", while further gloom came with the targeting of its controversial Greenland operations by Greenpeace over the weekend.

With rumours it could be a target refusing to disappear, Soco International spurted up the FTSE 250's leaderboard as analysts added to the speculation by talking up its takeover potential. The return of rumours that it could be approached by a Chinese company helped it increase 17.8p to 397.5p, and the idea was supported by Goldman Sachs, which said it was one of the companies whose strategic assets may make it attractive to state-owned firms. Also on the broker's list was Heritage Oil, and it put on 2.5p to close at 241.5p, despite having its price target reduced by 51p to 369p.

There may be no such thing as a sure bet in the gambling world, but Morgan Stanley still claimed it had found one in the casino operator Rank. The broker's analysts estimated the gaming group and owner of Mecca Bingo could pay 150p in special dividends over the next three years, which they pointed out would virtually recover its share price. They also added Rank's low leverage levels meant it could receive another takeover approach after rejecting Guoco's offer last month, and the company pushed forwards 4.1p to 153p.

The decision by Pace to choose Allan Leighton as its new chairman helped the set-top box manufacturer power up 2.9p to 117.8p, and Charles Stanley's Peter McNally welcomed the news, pointing out that the former boss of the Royal Mail also oversaw the growth of Asda into a £6.2bn company.

Down on the Alternative Investment Market, Desire Petroleum – which has lost more than 90 per cent of its share price since October – managed to persuade some in the market to give it another try.

The Falkland Islands-explorer climbed 0.75p to 12.5p after claiming the preliminary results of a seismic data programme had uncovered a number of new prospects.

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