Market Report: Antofagasta up sharply on back of bid rumours

It has long been rumoured that the Chile-based Antofagasta is in the sights of a number of the industry's big beasts. Xstrata, which not so long ago lost the battle for the Australian miner WMC, is said to be among those interested, as is Anglo American, for which a tie-up would make good sense, given that it already has extensive assets in Chile.

Mr Luksic, who chaired Antofagasta from 1982 to 2004, controlled 65 per cent of the company and was the driving force behind its success. Now a decision about its future is in the hands of the Chilean tycoon's family, led by his son Jean-Paul Luksic. Jean-Paul is the chairman of Antofagasta but analysts say he is unlikely to be in a rush to sell the company. They believe that if the Luksic family decides to sell-off assets it is more likely to divest other parts of its wealth. The Luksic business empire goes way beyond copper mining and includes interests in banking, food production and brewing.

The wider mining sector was relatively subdued. Xstrata rose 7p to 1,331p, Rio Tinto fell 13p to 2,036p while Anglo American dropped 6p to 1,412p. The FTSE 100 closed 18 points weaker at 5,300 after an uninspiring start to trading on Wall Street, where the Dow and the tech-laden Nasdaq lost ground.

British Airways gave up 4.5p to 285.5p as Citigroup lowered its earnings forecasts for this year to take account of the disruption to the business of the 24-hour closure this month. The US broker estimates that the whole affair has cost BA £40m and fears that further disruption at the airline is a possibility. Citigroup said: "We are concerned that the underlying causes of the strike at the catering supplier Gate Gourmet remain unresolved."

Rentokil Initial was also in retreat, falling 2.25p to 164.25p, as a series of brokers took the view that a takeover of the company is far from guaranteed. Among them was ING, which pointed out that Rentokil is a deeply troubled business with a substantial pension liabilities and is facing tough market conditions.

Premier Oil dropped 3.5p to 789.5p after warning that its Sotto-1 well in Mauritania had failed to find any oil or gas and had therefore been abandoned. Following the news, Numis Securities said: "Much is expected of this year's drilling campaign in Mauritania, so the apparent failure of Sotto to find commercial oil will come as a blow. However, this was also always likely to be a high-risk well, and although disappointing, we remain optimistic about the remainder of the drilling programme."

News that Wal-Mart plans to raise more than £1bn via the issue of a 30-year bond reignited rumours that the world's largest retailer might be about to launch an offer for Matalan, up 1.5p to 199.5p. Gossips pointed out that the cash raised would give Wal-Mart enough money to pay 275p a share. But not all took the view that Wal-Mart's move increases its chances of acquiring Matalan. Sceptics pointed out that it does not need to raise fresh funds to buy Matalan. Given its size, it could swallow the discount retailer whenever it wished, they say. Elsewhere in the retail arena, takeover rumours also surrounded Peacocks, 9p better at 284p. According to the speculation, private-equity players have been circling the group for some months and one may soon pounce.

Lower down the pecking order, United Clearing fell 12.5p to 122p as yet more directors at the group sold down their shareholdings. Yesterday, it was disclosed that Atul Devani, the chief executive, and Kirit Ruparelia, a fellow executive, had each disposed of 1 million shares at 110p. Domino Pizza put on 3p to 332.5p on word of strong trading at the pizza delivery company.

Expomedia dropped 1.5p to 125p. Credit Lyonnais has been selling down its stake in the exhibitions group in recent months but this is believed to have finished. Expomedia has a partners ship with De Telegraaf Media Group over a venue in the Netherlands and there were rumours yesterday that the Dutch group may help fund Expomedia's expansion in central eastern Europe.

Finally, Oxford BioMedica added 1p to 39.25p after Evolution Securities upgraded its rating on the biotech all the way to "add" from "reduce" and told investors to expect upcoming news from the company to drive its shares higher.