Market Report: Sainsbury's in focus as QIA rumours swirl

The supermarket group J Sainsbury saw its shares jump by nearly 20 per cent at one point yesterday as unconfirmed rumours of bid interest from the Qatar Investment Authority, the Qatari sovereign wealth fund whose Delta Two fund abandoned a 600p per share bid for the business in 2007, did the rounds of the dealing rooms.

The chatter has been around numerous times before, and, when the rumour first surfaced yesterday, most traders were sceptical. But many soon changed their tune as the stock, which closed at 311.1p on Wednesday, climbed as high as 373p in early afternoon trading. There was no comment from either party, as traders highlighted talk that QIA, which, with a 26 per cent stake, is the supermarket group's single largest shareholder, was prepared to offer up to 420p per share.

Roger Jenkins, the former Barclays executive, was rumoured to be advising the Middle Eastern investors. Amanda Staveley, whose PCP Capital Partners advisory firm acted for Sheikh Mansour bin Zayed al-Nahyan, a member of the Abu Dhabi royal family, when he came in to aid Barclays with a capital injection last year, was also rumoured to be involved.

The chatter died down as the session came to an end, with Sainsbury's closing well off its highs at 342.5p, up 10.1 per cent or 31.4p. The shares did, however, close at first place on the benchmark index. In terms of volume, Sainsbury's was the fourth highest traded blue chip of the day.

Overall, the FTSE 100 was 33.15 points behind at 5,222.95, while the FTSE 250 eased to 9,485.17, down 56.16 points, as investors took the chance to bank profits from Wednesday's gains. Tim Hughes, the head of sales trading at IG Index, said the pullback did not change the overall trend for UK equities, which "remains firmly up".

"The Sainsbury's chatter is one sign that mergers and acquisitions activity can be expected to pick up over the months ahead, and this is the sort of thing that will keep investors keen to buy into any short-term weakness," he said. "Today looks like just a pause in the ongoing strength for shares, and many traders are still looking to the 5350 mark as the next significant Footsie target."

The mining sector, which led the way on the day before, fell back, with Anglo American declining to 2216p, down 4.1 per cent or 95p, after Xstrata, down 21p at 1010p, said it had no intention to make an offer for the group. In the wider mining space, Rio Tinto lost 52p to 2946p and Vedanta Resources retreated to 2369p, down 20p, as MF Global sounded a note of caution, saying the sector rebound "now appears to be ahead of fundamentals".

"We believe an adjustment of up to 20 per cent is overdue and should offer a good buying opportunity looking into next year," MF said. "Investors should start to become selective, focusing on commodities close to their marginal cost. In essence, we are now stepping back from our previous theme of moving up the risk curve."

Elsewhere, the banking sector was also weak, with Barclays easing to 379.9p, down 3.7p, and Lloyds Banking Group edging lower by 1.65p to 91.41p as a round of profit-taking and lacklustre results from Citigroup overshadowed a positive update from Goldman Sachs. Royal Bank of Scotland was 0.17p lighter at 48.16p.

On the upside, Evolution boosted sentiment around 3i, the private equity group, which gained 12p to 308.7p after the broker began covering the stock with a "buy". "While it was tempting to initiate with a 'neutral' recommendation given our fears about near-term market risk, we feel 3i is at levels where investors can access a well-positioned private equity business towards the bottom of the industry and valuation cycles," Evolution said, setting a 375p target on the company's stock.

The luxury goods group Burberry, which jumped ahead after a first-half trading statement earlier in the week, continued to draw steam from the update, rising by 11p to 576.5p. The shares touched a session high of 592.5p as various brokers weighed in, with Deutsche Bank raising its target for the stock to 625p, Evolution upping it to "buy" from "neutral" and JP Morgan revising its target to 540p, compared to 480p previously.

Further afield, Evolution was also responsible for the cheer around Fidessa, the software company, whose shares gained 47p to 1227p after the broker switched its stance to "buy" from "neutral". "Fidessa shares have lagged the sector in the last quarter following no upgrade at the interims, but we suspect underlying capital market conditions have improved this quarter, and any reference to this in the third quarter [update] expected [next week] could be a catalyst," the broker said, revising its target for the stock to 1430p, compared to 1000p previously.

On the downside, the pubs group Punch Taverns, which fell by more than 16 per cent after issuing final results on Wednesday, lost another 6.9 per cent or 6.65p to 90p. Citigroup, which said the results were 3 to 4 per cent below its forecasts, reduced its target price for the stock to 110p from 125p, saying it remained cautious about the fundamentals of tenanted pubcos.

Start your day with The Independent, sign up for daily news emails
News
people
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Sport
Jonatahn Sexton scores a penalty
rugby
News
The dress can be seen in different colours
weird news
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?