Market update

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The FTSE 100 was up 5 points at 6092.3 at 11:34 am on Tuesday – bid speculation among brewers and resurgent mining stocks kept the London benchmark firm. SABMiller rose the most, gaining 7.11 per cent or 87p to 1311p, following reports of interest from Inbev, the Belgian brewer. Last week, Inbev was said to be eyeing Anheuser Busch, the company which makes the Budweiser branded beer. Weekend reports, however, suggested that if Inbev failed to win over Anheuser’s board, it may attempt to consolidate its position in the global beer market by turning to SABMiller.

"The business case for such a combination is mainly based on regional scale and reduced regional competition," said Merrill Lynch.

The broker added: "On paper [the deal] poses limited anti-competitive issues and offers regional scale synergies, but seems largely hypothetical. A debt financed deal enhances [earnings per share] by 30% in year 3. Inbev would however likely have to use equity financing, resulting in neutral EPS impact in year 1, rising to approximately 10-15% EPS accretion thereafter (pre-synergies)."

Moving up

On the FTSE 250, bid speculation was evident around Yell, the directories group which rose by 3.5p to 129.25p, claiming third place on the mid-cap leader board. Market rumours suggested that Microsoft was interested in acquiring the company and may offer as much as 220p per share.

Back on the FTSE 100, the miners regained strength after a bout of profit taking depressed the sector at the end of last week. Kazakhmys was up 24p at 1702p, Lonmin added 45p to 3332p and Vedanta Resources was up 27p at 2604p.

Vodafone was flat at 163.3p after positing in-line results. The company also announced the departure of chief executive Arun Sarin, who will step from the helm at Vodafone’s annual general meeting in July. Mr. Sarin, who has led the company for five years, will be replaced by his deputy, Vittorio Colao.

"News that CEO Arun Sarin is retiring after five years at the helm, handing over to deputy CEO Vittorio Colao, is surprising only by its timing – perhaps a little earlier than many had anticipated. But aside from timing, both his departure and the identity of his successor had been widely anticipated for some time. Key tasks for the new CEO are no different from those of the old one, i.e. resolving the Verizon wireless dividend issue; pursuing growth in emerging markets and cutting costs in developed markets," said Collins Stewart.

Moving down

Marks & Spencer lost 4.25p to 389.25p after Citigroup was cut its target price for the stock to 450p from 500p.

On the FTSE 250, Barratt Developments was weak, losing 8.64 per cent or 19p to 201p after Citigroup placed around 7 million shares at 208p each. Traders were unable to identify the vendor.

The wider sector was also weak, thanks to fresh concern for the housing market. Persimmon was at the bottom of the FTSE 100, down 20.75p at 493.25p Taylor Wimpey lost 4.5p to 92p and Bovis Homes was down 14.75p at 446.25p.