Market update - 6 August

The FTSE 100 was down 4.1 points 5450.4 and the FTSE 250 was up 15.4 points at 9091.1 at 12:09 pm on Wednesday. Lonmin dominated the London benchmark, up almost 47 per cent or 1089p at 3408p, after Xstrata unveiled a £5bn offer for the platinum miner. Lonmin rebuffed the 3300p per share proposal – the South African group called the move “opportunistic and entirely unwelcome”. Market sources said the response was not unexpected.





“There are probably enough Lonmin shareholders who want to sell out and invest in other mining plays. The rejection does not mean that we won’t see a takeover,” said one trader, who highlighted Xstrata’s acquisitive past.

Michael Rawlinson, the widely followed mining analyst at Liberum Capital, also expects the bid to succeed.

“We see the bid as opportunistic, synergy driven and likely to succeed,” he said, adding: “We see very little chance of a counter bid and it is a case of who blinks first between Xstrata and the Lonmin shareholders.”

Mr Rawlinson pointed out that Xstrata has already snapped up 8 per cent of its target and is in the market buying more. “Lonmin shareholders are rightly fed up with incumbent management and we feel they will definitely not back a go it alone strategy and will want to lose this offer,” he said,

“When managements are this unloved, [platinum group metals] prices are weak and interloper risk is low, Xstrata have a fair chance of taking this home at the offer price.”



Moving up?



The news in Lonmin excited the broader the mining sector, which has been hurt by the recent fall in commodities prices. Vedanta Resources was up 79p at 1853p and the Eurasian Natural Resources Corporation, which issues a positive production report this morning, climbed to 985.5p, up 35.5p.

Aquarius Platinum, Lonmin’s peer in the platinum mining space, was the strongest and gained more than 17 per cent or 66.75p to 451.75p.

Johnston Press bucked the media sector trend and advanced to 59.5p, up 10.19 per cent or 5.5p, following vague talk about a bid. Firmer support came from Kaupthing, whose analysts advised investors to buy the stock ahead of interim results at the end of this month.

“We believe there is a good chance that Johnston Press will announce a specific costs target or signal a significant exercise is under way to improve efficiency,” the broker said.

Debenhams remained strong as bid rumours pushed more short sellers to abandon downside bets. The retailer was up more than 10 per cent or 5.25p at 55p as traders anticipated a 70p per share bid from Baugur, the Icelandic retail group behind the House of Fraser department stores.



Moving down?



ITV was the worst off on the London benchmark, down 8.21 per cent or 3.8p at 42.5p, after issuing a disappointing set of interim results – ITV swung to a loss from a profit in the same period last year, and halved its dividend in the face of a deteriorating advertising market. Brokers soon weighed in, and Investec said that the while the figures were ok, the outlook is “really very poor”.

The wider media sector was also hit by fears about a sharper-than-expected advertising slowdown and Trinity Mirror lost 16.75p to 117.5p. Mecom group was weaker by 2p at 20.25p.

Elsewhere, DSG International lost 3p to 50p after UBS switched its stance on the stock to “neutral” from “buy”. The broker also reduced its target price for DSG to 50p from 55p.

“We retain a pre-tax profit forecast of £115m (consensus £135m). This is based on -4.5 per cent like-for-likes in the UK and -2 per cent in the Nordic region. Gross margins could fall again from mix and lower credit commissions, although PC World margins comparatives are easier. The next trading update is due on the 3 September. The group like-for-like comparative is a +6 per cent,” the broker said.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?