Market Report: Return of Qatar bid talk moves Sainsbury's up

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Market gossips were getting excited about the return of an old favourite yesterday, as rumours re-emerged that J Sainsbury could be the subject of a bid from the Qatar Investment Authority.

The sovereign fund made a failed £10.6bn attempt to buy the grocer in 2007, but this time the talk was of a bid between 425p and 450p a share. The speculation was enough to bump up the supermarket 15.3p to 372.8p, despite analysts' scepticism about the idea.

"It is a rumour that seems to crop up every three months like clockwork and nothing ever seems to materialise," said Charles Stanley's retail analyst, Sam Hart. "Although it is obviously very dangerous to rule something completely out, I think it is pretty unlikely they will come forward with another bid."

As well as the takeover rumours, Sainsbury's was also helped by a largely encouraging third-quarter sales update from Tesco. The group saw a 1.5 per cent growth in UK like-for-like sales, but – as expected – it was the figures from overseas that were the most impressive, with a 23.4 per cent sales rise in its Asian markets.

Analysts from Shore Capital, which has the retailer on a "buy" recommendation, said the results from the festive season will be important but that they are "encouraged by sentiment and momentum". Altium Securities, which described the update as "marginally better than expected", reiterated its own "buy" advice on Tesco, as it ended up being lifted 10p to 430p.

Another food retailer doing well was Wm Morrison, which shifted up 2.5p to 272.8p, as the sector was boosted by the British Retail Consortium's latest survey. The BRC found that total sales growth rose by 2.8 per cent in November, up from 2.4 per cent the month before. However, non-food sales were rather more disappointing, leading Investec "to advocate taking weightings down in the UK general retail sector".

Overall, the FTSE 100 added 38.17 points to 5,808.45 to reach its highest price for more than three weeks. It was helped by Wall Street as investors in the States reacted positively to President Obama's plan to extend controversial tax cuts.

With metal prices rising, African Barrick Gold topped the blue-chip leaderboard by booking gains of 34.5p to close on 600p as the mining sector shrugged off a report from a Chinese state newspaper that the country could raise interest rates in the next few days.

Unilever was up among the miners as the consumer-goods giant soared 53p to 1,906p following a double upgrade from Morgan Stanley. Saying it sees "the risk/reward profile for the shares as more attractive now than at any point in the past 3 years", the broker changed its advice on the maker of Marmite to "overweight".

Other risers on the top-tier index included Wolseley, which jumped up 50p to 1,880p after revealing its first-quarter trading profit had risen nearly 40 per cent, and Standard Life, boosted 1.7p to 205.9p by the news that it had struck a $66m (£42m) agreement for the software group Focus Solutions.

Although Cobham made 1.4p to 195.9p, it looks set to be demoted in the latest quarterly review of the indices, announced today. The decision is based on yesterday's closing prices, and Betfair and Exillon Energy are among those likely to move up to the FTSE 250.

The mid-tier index was dominated by the housebuilders, and it was all thanks to Bellway. The company, which is the country's fifth-largest housebuilder, released a bullish interim management statement yesterday in which it forecasted a rise in first-half profits of as much as 20 per cent.

Bellway said its positive expectations were due to operating in parts of the UK where house prices are more expensive. While it shifted up 54.5p to 612.5p, its peers kept close as Taylor Wimpey made 1.77p to 29p while Barratt Development managed to gain 7.5p to 86.3p.

SuperGroup has enjoyed a relatively steady rise since it floated at the end of April. With its shares initially issued at 500p, and now it is being traded at more than triple that, it has been denounced as "overvalued" by Execution Noble. The broker initiated coverage on the owner of the Superdry brand with a "sell" rating, saying that its current price "is factoring in flawless execution into the medium term and none of the risks associated with a rapidly evolving young fashion brand." Despite the reality check, however, SuperGroup advanced 2p to 1,583p.

On the Alternative Investment Market, Datong – which provides tracking systems to governments – reached its highest point for more than two years as it soared 8.5p to 63.5p. The catalyst for the Leeds-based company's advance was its full-year results which included profits of £0.82m, following a £1.14m loss the year before.

Meanwhile things were still looking bad for Desire Petroleum, as it shed 6.25p to 61p. Its price has now fallen by more than 50 per cent since its embarrassing backtrack on Monday when it revealed – contrary to its claim last week – that it had not found oil off the Falkland Islands.