Market Report: Takeover rumours put a shine on Reckitt Benckiser
The blue-chip index may have slumped heavily for the second consecutive session, but that was not enough to stop the rumour-mill turning yesterday. Reckitt Benckiser was swept to the top of the leaderboard as vague rumours of an imminent break-up bid were dusted off once again.
The maker of such household favourites as Cillit Bang, Vanish and Nurofen rose 57p to 3,255p amid reheated speculation suggesting the US titans Johnson & Johnson and Procter & Gamble could both be considering a possible approach.
The tale, which claimed an offer may be priced between 4,500p and 5,000p a share, helped Reckitt advance for the first time since its third-quarter results last week, when it warned it would see a slowdown in growth over the last quarter of the year.
Traders were taking the mutterings with a huge pinch of salt, however, noting its familiarity. Instead, they put the company's advance down to its defensive appeal, pointing out that it often moves the opposite way to the wider market.
There was similar scepticism to wild whispers that Marks & Spencer may be in line for a 550p a pop bid from the Chinese retailer Shanghai Bailian Group. It was certainly not enough to prevent the high street institution from being pegged back 9.9p to 312p as HSBC's Paul Rossington cut his forecasts ahead of the release of its interim results next Tuesday.
There was no fresh start to the new month for the FTSE 100, and the Square Mile was blaming one man - George Papandreou. The Greek prime minister's decision to announce a referendum on the eurozone rescue package left traders seething as the top-chip index plummeted 122.65 points to 5,421.57, meaning last week's gains of over 6 per cent have now been almost wiped out in just two sessions.
The fall came despite encouraging GDP figures, with any optimism created cancelled out by the announcement that the manufacturing sector contracted in October at its fastest rate for more than two-years.
Barclays continued to dive after its third-quarter results on Monday, slipping back 18.55p – or 9.5 per cent – to 176.75p after UBS's John-Paul Crutchley downgraded his advice to "neutral".
Its peers were almost as badly hit, with Royal Bank of Scotland jumping down 1.95p to 22.28p ahead of its update later in the week. The wider financial sector was also full of red, as insurer Legal & General retreated 7.9p to 102.6p while the world's largest listed hedge fund Man Group was driven back 9.27 per cent to 136p – close to a nine-year low. Sensitive as always to the economic health of China, the miners dipped following worrying manufacturing data from the country. Kazakhmys and Xstrata declined 66p to 861.5p and 69.4p to 976.1p respectively as analysts from Citigroup warned the sector was "facing a perfect storm" of falling commodity prices and rising costs.
The prospect of winning big in Las Vegas saw punters take a flutter on bwin.party. The online gaming group was by far the top FTSE 250 riser after it unveiled a joint venture with Sin City big shots MGM Resorts and Boyd Gaming, which will see the three start a new internet poker company if and when online gaming is legalised in the US.
Evolution Securities' James Hollins praised the move, saying it could "drive massive potential revenue upside". In response the group shot up 13.6p, or 12.4 per cent, to 123.3p, helped by its small-cap peer 888 (2.25p higher at 35.25p) announcing a 42 per cent jump in its third-quarter revenues.
Also among the stocks on the mid-tier index managing to rise was Devro, as the sausage skin maker bumped up 8p to 254p. City voices said the fact that bangers were such a staple meant the group was benefiting from being seen as a strong defensive option.
The bid potential of Logica took a knock, despite the IT outsourcer frequently being the subject of takeover chatter. It slid back 4.4p to 89.5p after Canaccord Genuity's analysts said they questioned "the attractiveness of the group in a merger and acquisition environment", while they also cut their recommendation to "sell", claiming Logica was "poorly positioned in a number of ways".
Soco International disappointed investors by admitting that a jump in production at its Vietnamese Te Giac Trang field would now not be achieved until next year, leaving the oil explorer 11.3p worse off at 318.9p.
The announcement that it had started drilling at its NK-9 well in Kazakhstan prompted Roxi Petroleum to spurt up more than 70 per cent in early trading, and although the Alternative Investment Market-listed oil group ended up being pegged back slightly, it still closed 1p, or 34.78 per cent, stronger at 3.88p.
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