Market Report: Xstrata lifted by Vale approach speculation

There was more talk in the mining sector as the Xstrata saga continued to advance yesterday.

Reports from Brazil surfaced in the afternoon, indicating that Vale was finally ready to mount a bid for Mike Davis's company. Vale, which was reported to have won funding commitments from HSBC and Lehman Brothers earlier in the week, is supposed to have completed the preparatory paperwork and is believed to have raised as much as $50bn (£25bn) in financing for its approach. The news lifted Xstrata, which had begun to slip after spending the morning amongst the FTSE 100's top stocks, and the company's share price closed up almost 3 per cent (109p) at 3827p.

Merger talk also gave a boost to Carphone Warehouse and BG Group.

Late-afternoon rumours suggested that someone may be preparing to make a £4-a-share offer for Carphone Warehouse.

BestBuy, which has been linked to the company before, was soon touted as the most likely suitor and the news sent the UK retailer's shares to the top of the leader board. Carphone closed up more than 8 per cent (24.50p) at 328.50p.

As for BG Group, mid-morning whispers said that the natural gas company may soon be subject to a bid from the continent. While the identity of the potential suitor remained unknown, the chatter took BG's share price to 1100p, up 5.26 per cent, winning it second place in the roster of top stocks.

The FTSE 100 index, which spent most of the day in the red (down 150 points or 2 per cent at one point), ended the month with a gain as these rumours sparked a late rally. The index, which has lost around 9 per cent since the start of the year, was up 42.50 points at 5879.80.

On the downside, banking and finance shares were hit as investors and traders continued to worry about the prospect of yet more bad news from the sector. Speculation about a possible profit warning from Germany's Deutsche Bank did not help sentiment, nor did a note from Panmure Gordon, which said that "bells were ringing" in the sector. One trader, while hopeful that all the skeletons from the sub-prime closet would be out by the end of this month, said that the tap of bad news was "still dripping".

By the close, HSBC was down 0.46 per cent (3.5p) to 751.50p while the Royal Bank of Scotland was 0.84 per cent (3.25p) lighter at 382p. HBOS slid to 694.5p, down 8.5p.

Barclays, which was depressed by trader talk suggesting a cut in the company's dividend, was down by 1.78 per cent (8.50p) to 470p.

The housing sector also had another unfortunate day. Persimmon ended 3.93 per cent (31.50p) down at 771p while Bellway was down 4.34 per cent (36p) to 793p.

Wolseley, the construction supplies company which does most of its business across the pond, in the United States, was down 11.50p to 686p.

Elsewhere, Rio Tinto and BHP Billiton continued their rally in advance of the takeover panel's 6 February "put-up or shut-up" deadline. After earlier reports indicated that BHP may inflate its offer to 4.25-for-one, the latest rumour suggested that it may only go as far as 3.5-for-one.

Rio's shares were up 2.84 per cent to 4956p on the back of the talk. BHP also closed up, gaining 2.14 per cent to 1477p.

On the FTSE 250, which closed down 0.27 per cent at 9,881.80, Southern Cross Healthcare rallied after some investors thought it had been oversold earlier in the week. The stock closed up 5.57 per cent at 350.50p. Autonomy, on the other hand, ended its two day rally and closed down 3.71 per cent (35p) at 908.50p.

Cookson Group also closed down, hit by a note from Panmure Gordon in which analysts slashed their target price to 600p from 750p. The shares were 3p lighter at 551.50p by the end of play.

Panmure also dealt a blow to Bradford & Bingley, reiterating its "sell" rating on the stock and sending it down 2.47 per cent (6.25p) to 246.75p by close.

Negative broker sentiment did not hurt Kesa, however, as it closed up 3.35 per cent at 239p. Earlier, Dresdner Kleinwort lowered its recommendation for the stock, to "hold" from "add".

On AIM, Carpathian Resources, the Australian oil and gas explorer and producer, edged up a bit after appointing a new non-executive director.

One market source said that the new man, who will help develop funding for the business, was appointed in reaction to some activist shareholders who want to remove two other directors, including the company's executive chairman. The shares closed up almost 6 per cent (0.25p) at 4.50p.

Also on AIM, Oakdene Homes was the lone bright spark among house-builders. Its shares rallied after the previous day's profit warning, up 12.12 per cent, or 8p, to 74p.

Suggested Topics
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Accounts Payable

£12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...

Technical BA - Banking - Bristol - £400pd

£400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

Account Management Strategy Manager

£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice