Market Report: Sainsbury's soars on hopes of Qatari approach

Late rumours propelled J Sainsbury to pole position on the FTSE 100 yesterday, boosting the stock by almost 8 per cent or 25.25p to 344p in the final hours of trading.

The speculation suggested that the supermarket may soon be the subject of a 500p per share bid but bore no clues about the identity of the suitor. "It's a vague rumour but it's picked up steam since it follows earlier suggestions that the Qataris may try and take over again," said one market source, referring to earlier rumours of bid interest from the Middle Eastern investors who attempted to acquire the company last year.

Sceptics said that while the rumours may have pushed the stock ahead of its peers, much of the strength was probably down to better-than-expected US GDP figures.

Economic data from the Commerce Department revealed that US gross domestic product expanded at an annual pace of 3.3 per cent in the second quarter, up from a 1.9 per cent estimate made last month. The news energised the wider market as investors, fearful of a sharp slowdown, expressed relief at the resilience of the crucial American economy.

Marks & Spencer, which gained almost 4 per cent or 9.5p to 255.25p, and Next, which gained 4.14 per cent 42p to 1057p, were among the other high street names which drew strength from the buoyant sentiment.

Anthony Grech, market strategist at IG Index, said the US data had put "a rocket under prices".

"The GDP figures were better than expected, helping to put fears of recession on the back burner for at least the short term – and this positive sentiment spilled over into London trading," he said.

As a result, the FTSE 100 swung past the 5600 point mark, up 73.1 points at 5601.2. The FTSE 250 was also strong and gained 134.6 points to 9271.7.

Barclays was among the brightest features in the banking sector, up 5.83 per cent or 19.25p at 349.5p, after Societe Generale said the stock was best positioned for a recovery from current lows, setting a 530p "recovery target price".

The wider sector was also on a firm footing as leading stocks capitalised on better than feared results from Credit Agricole and the news from America. At close, HBOS was up 12.25p at 305.5p while Lloyds TSB was 10p firmer at 305.5p.

RSA Insurance advanced to 154.1p, up 5.69 per cent or 8.3p, followed renewed rumours of bid interest from Zurich Financial Services.

Takeover talk was also evident around BT, which gained 4.36 per cent or 7.2p to 172.5p. Firmer support, however, came from Goldman Sachs, which added the stock to its "buy" list for the first time since October 2000.

On the downside, Severn Trent, down 30p to 1375p, and United Utilities, down 3.5p at 717.5p, missed out on the market rally after Goldman Sachs, mindful of regulatory risks, lower earnings and the impact of tighter credit markets on a possible bid, issued a "sell" note on the two water companies.

The broker said that, given the problems in the credit markets over the last six months, the premium to regulated asset value (RAV) at which a potential bid for a UK water utility is likely to be pitched has fallen, to 10 per cent from 22.5 per cent on its estimates. At the same time, a likely cut in the allowed rate of return for water companies when Ofwat, the water regulator, concludes it five-yearly price review in 2009, is set to impact earnings, Goldman added.

Based on its assumption of a cut in the allowed rate of return to 4.3 per cent for 2010-2015 from the 5.1 per cent for 2005-2010, the broker expects earnings per share for 2011 to fall by 23 per cent at United Utilities and 18 per cent at Severn Trent, posing a threat to dividends at both in 2010-2015 period.

Elsewhere, traders said that better-than-expected results from property investor Capital & Regional, which gained 17.53 per cent or 27p to 181p, and estate agent Savills, which added 17.01 per cent or 41.25p to 283.75p, had kicked off another round of short covering among housebuilders.

Taylor Wimpey gained the most, up 10.36 per cent or 5p at 53.25p as more bears moved out. According to the latest figures from Data Explorers, the amount of Taylor Wimpey stock out on loan has come down to 15.8 per cent from 17.3 per cent on the 12 August.

Among smaller companies, Asterand gained another 11.63 per cent or 1.12p to 10.75p after Daniel Stewart issued a "buy" note following the company's recent interim results.

"Asterand continues to exceed market expectations. The company not only achieved EBITDA (earnings before interest, tax, depreciation and amortisation) ahead of schedule, but it also closed a surprise licensing deal with a major biotech company," said the broker, setting a 22p target price on the stock.

Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Life and Style
fashionThe supermodel on her career, motherhood and Cara Delevingne
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Arts and Entertainment
Rachel, Chandler and Ross try to get Ross's sofa up the stairs in the famous 'Pivot!' scene
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

COO / Chief Operating Officer

£80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments