Standard Chartered outshone its peers as the rumour-mongers touted bid theories last night.
The bank rose by 38.5p to end the day at 1,908.5p amid talk of interest from JP Morgan Chase, the Wall Street giant which scooped up the Bear Stearns investment bank as the financial crisis gathered pace in early 2008. The American group was said to be keen on expanding its reach in fast-growing markets across Asia, Africa and South America, with speculators highlighting Standard Chartered, which has extensive operations across emerging economies, as a likely target.
Aided by the chatter, the bank closed at second place on the benchmark index. Lloyds went the other way, falling by 1.15p to 72.65p, while Barclays lost 3.55p to 294.75p against the backdrop of a waning appetite for risk. HSBC and Royal Bank of Scotland proved more resilient, but failed to make much headway, ending the session at 663.2p, up 1.3p, and 47.6p, up 0.1p, respectively.
Overall, the markets were weak as traders awaited the release of the minutes of the last US Federal Reserve interest rates meeting. The FTSE 100 touched a session low of 5,597.46 before recovering to 5,661.59, down 10.81 points, by the close, while the FTSE 250 lost 51.28 points to 10,753.56. Autonomy, hit by a Deutsche Bank downgrade on Monday, was once again lodged at the bottom of the benchmark index, losing 41p to 1,444p.
The mining sector proved a drag, with leading stocks losing ground as metals prices fell in the face of a stronger US dollar. As a result, Xstrata fell to 1,245p, down 33.5p, and Lonmin lost 38p to 1,770p. Kazakhmys, down 31p at 1,375p, was in focus as its finance director, Matthew Hird, said the mining group was considering spinning off, selling or seeking a partner for its petroleum division once it had collected enough exploration data over the coming 12-15 months.
Strength in the dollar also weighed on oil prices, which in turn dampened the mood around the likes of BP, down 3.2p at 429.15p, and Royal Dutch Shell, which lost 13p to 1,959p. The weakness came against the backdrop of some cautious comments from Nobuo Tanaka, the head of the International Energy Agency, who expressed concern about the possibility of delays to new offshore deepwater oil and gas drilling projects, and its impact on the oil market. "If there is a delay globally, the impact could be huge," he said on the sidelines of an oil conference.
Elsewhere, the security services group G4S was firm – and in the early part of the session, was one of the few stocks to book any meaningful gains – after Exane BNP Paribas initiated coverage with an "outperform" stance. The broker named G4S, which gained 2.7p to 256.6p, its top pick in the sector, arguing that market concerns about the company's public-sector exposure had been "overdone".
Exane said the company stood out for its exposure to niche sectors such as energy and aviation, which accounted for more than 40 per cent of sales against around 20 per cent for peers, and its reach across developing markets, which make up 26 per cent of sales against just 3 per cent for rival group Securitas.
Further afield, HSBC weighed in on water companies. The broker boosted Severn Trent, which rose by 13p to 1,345p after HSBC switched its stance to "neutral" from "underweight". United Utilities was less successful, easing by 0.5p to 586.5p despite the broker upgrading the stock to "overweight" from "neutral".
On the second tier, Pennon rose by 12.5p to 599.5p after HSBC moved it to "overweight". "Pennon offers real dividend growth of 4 per cent, underpinned by regulated and unregulated earnings. That is the highest of the UK-listed water stock," the broker said, raising its target price for the stock to 670p from 620p.
The oil prospector Soco International slumped, shedding 18.8 per cent or 85.3p to 369.4p, after saying that its TGD-2X appraisal well offshore Vietnam had failed to flow oil and gas at commercial rates, and would be plugged and abandoned. Evolution Securities said the failure was "likely to leave the company with few options to drive the share price in the near future".
The precious metals miner Hochschild Mining outperformed its blue-chip peers, gaining 81.p to 473.1p. On the commodity markets, gold prices were pressured by a recovering dollar, though those hoping for further gains received a boost from Goldman Sachs, whose analysts upped their gold price estimates. Highlighting the prospect of another round of quantitative easing in the US, Goldman moved its forecasts to $1,400, $1,525 and $1,650 per troy ounce on a three, six and 12-month view respectively.
Housing stocks were in focus, with Barratt Developments easing by 2.65p to 90.8p and Bellway shedding 13.5 to 579.5p, after the Royal Institution of Chartered Surveyors reported a worse than expected decline in its house price index for September.
This was offset by some support from Deutsche Bank, whose analysts said that while there had been no seasonal pick-up in sales over September, market expectation for sector pre-tax profits remained too low.