Prudential higher on Chinatrust whispers

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The Independent Online

Prudential provided one of the few speculative features in an otherwise lacklustre session yesterday.

The insurance group traded up after a report in the Chinese press suggested it was in the sights of Chinatrust Financial Holding, one of the largest private wealth managers in Taiwan, which was said to be seeking to enter the bancassurance market via a European acquisition.

Although some traders played down the rumours – citing earlier speculation of a possible bid from Ping An, the Chinese insurance giant – others suggested that while Chinatrust may not embark on fully fledged bid, it may acquire a stake given the weakness in the London-listed insurer's share price.

The chatter lifted Prudential, which was up almost 6 per cent, or 20.2p, at 374.25p at the close.

Overall, the FTSE 100 was up 15.74 points at 4,307.61, while the FTSE 250 advanced to 6,659.68, up 98.01 points, at the end of a quiet session as traders awaited details of an overhaul of the US bank rescue programme and a Senate vote on President Obama's stimulus bill.

Barclays advanced more than 10.0 per cent, or 11.4p, to 116.2p, after the bank's full-year results came in as expected – headline figures, including profits, at £6.1bn, in excess of the £5.3bn estimated by City analysts, were well flagged in two updates last month.

Some analysts remained cautious, with Collins Stewart highlighting the grim outlook and saying that "Barclays remains the most weakly capit-alised of the UK banks".

"Guidance is for credit market writedowns to be lower [this year], though we would attach little con-fidence to this," the broker said. Credit Suisse said that although there was enough in the results for the bears to feast on, market attitudes will probably continue to be driven by government measures like the insurance scheme and a possible bad bank to take on the toxic assets straining balance sheets across the sector.

In the wider sector, HSBC, up 1.1 per cent, or 6p, at 555.5p, was firm after UBS reiterated its "buy" stance on the stock.

The broker said that although management is likely to seek to build the capital base through a dividend cut, a rights or possibly through over-funding an acquisition, given the current depressed prices the stock was "compellingly valued" for the "world's premier deposit franchise".

British Land was strong, gaining 10.2 per cent, or 46.5p, to 501p, after confirming the formation of a joint venture for its Meadowhall shopping centre in Sheffield, selling a 50 per cent stake for £587.7m. Credit Suisse, which issued a note on the property group before the sale was confirmed, indicated that the sale of a 50 per cent interest in Meadowhall and the potential sale of a 30 per cent interest in the group's Broadgate development in the City of London may still necessitate a rights issue of around £650m if the company wanted to reduce its loan-to-value figure to around 45 per cent.

On the downside, British Sky Broadcasting eased to 468.25p, down 3.7 per cent, or 17.7p, after Cazenove moved the stock to "in-line".

JP Morgan also weighed in, saying that the market was liable to view the costs associated with the recent acquisition of a fifth Premier League rights package as too high. "We do not think the additional revenue benefit of a fifth package is clear in justifying a £103m per annum step up in the cost of Premier League football rights," the broker said, reiterating its "underweight" stance.

Fellow broadcaster ITV, on the other hand, moved up by more than 5 per cent, or 1.5p, to 31p, after reports that it was looking to offload or reduce its stake in ITN, the producer of Channel 4 News among other programmes.

Additional support came from Goldman Sachs, which removed ITV from its "conviction sell" list, citing the recent underperformance in the share price.

The broker, which maintains a "sell" rating on the stock, said that the group remains at risk owing to potential funding issues next year, a "demanding" valuation and downside risks to consensus estimates.

Goldman also made changes to its rating on ARM Holdings, the chip maker that fell prey to a round of profit-taking, losing 4.5 per cent, or 4.5p, to 95.25p after the broker removed it from its "conviction buy" list. The broker kept the stock at "buy", saying that, for the moment, it saw greater potential upside elsewhere in its coverage.

DSG International retreated to 25.5p, down 3.7 per cent or 1p on speculation – sparked by weekend press reports – that it was drawing up plans for a possible rights issue.

Pali International said the news "will crush the hopes of those who thought [the retail group] could stay out of financial trouble by just selling off the freehold of its Swedish warehouse for £40m-£50m".

Elsewhere, the engineering group Renishaw climbed to 349.25p, up almost 5 per cent, or 16.2p, after announcing the settlement of a patent case currently pending in an American court.

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