Market Report: Footsie fails to join in the Irish jig

Derek Pain
Sunday 23 October 2011 08:02

THE IRISH enlivened the stock market: a proposed banking/insurance merger - the type of deal which has been mooted in London - sent tremors of excitement racing through money shares.

Irish Life, an insurer, jumped 64.5p to 529.5p after confirming talks with Irish Permanent, 105p higher at 882.5p. Abbey National, which nurses hopes of buying Irish Permanent, firmed 6p to 1,140p.

Abbey has 8.7 per cent of the Irish mortgage bank and made no secret of its desire to barge into the Emerald market. It was expected to bid next year when Irish Permanent's takeover immunity ends.

Champagne corks were popping among Irish banking shares. Allied Irish Bank gained 14.5p to 829.5p and Bank of Ireland 22p to 1,063.5p.

Other banking shares responded to the Emerald initiative. Barclays, down to 838p earlier this month, rose 38p to 1,298p and, National Westminster Bank added 13p to 963p. But Royal Bank of Scotland was ruffled by thoughts that Tiger Management, the hedge fund, was trying to sell its 6 per cent shareholding and fell back 11p to 770p. HSBC slipped 21p to 1,377p after the former colony's government confirmed an 8.8 per cent stake, part of a defensive build-up as speculators targeted Hong Kong.

After an early spurt the market took on a subdued appearance. Footsie, a few minutes after the opening bell, was riding 111 points higher. But the jump, which took most by surprise, lacked substance. Prices were soon rolling off their best levels and Footsie at the close was clinging unconvincingly to a 14.4-point gain at 5,231.5. Supporting shares showed a little more determination, but in the main it was a featureless, lacklustre session with most investors prepared to play a waiting game.

Scottish & Newcastle was unsettled by renewed stories that it was trying to sell its Center Parcs holiday centres. The shares jumped 38p before falling back as the rumour was denied. They closed 11p off at 746p. The market has for long taken the view that Scottish would be better off without its holiday encumbrance. Scottish's Richard Gibb said: "Center Parcs has not been put up for sale. We have identified areas that need correction and are investing money." Center Parcs has been a disappointing investment for the brewing and pubs group. It would, it is thought, command a pounds 1bn price tag.

Ahead of today's figures, Allied Domecq hardened 4p to 471p but Whitbread, reporting tomorrow, slipped 12p to 798p. Bass was lowered 33p to 712p.

Glaxo Wellcome firmed 12p to 1,799p as Salomon Smith Barney hoisted its target price from 1,775p to 2,200p.

Asda, still seen in some quarters as an obvious target for European-bound Wal-Mart, the US group which ranks as the world's largest retailer, hardened 1.25p to 166.5p.

Insurances took in their stride suggestions that weekend floods will cost the industry around pounds 400m.

Downgradings still flowed. Henderson Crosthwaite sharply cut its estimates for Boots, although the shares firmed to 862p. GRE, the insurance group, received the downgrading treatment from SG Securities and fell 1.5p to 273.5p and HSBC cut Ladbroke, off 13p to 222.5p. Chemical group W Cannings put on 21.5p to 290p on the 300p-a-share agreed offer from Macdermid, a US group.

Allied Carpets, the hard-pressed retailer, fell 10.5p to 42p on stories that takeover talks had broken down. Kingfisher and entrepreneur Luke Johnson are among the parties rumoured to be keen.

Engineer Richardson Westgarth fell 10.5p to 25.5p after a profits warning, but the day's weakest display came from Therapeutic Antibodies, which made a pounds 11.5m cash call; the shares plunged 30p to 55p. In 1996 they touched 531p.

Ionica, the telecoms group, rose 3p to 17.5p and was promptly suspended. There are hopes it is near to clinching a much-needed refinancing. Chairman Tony Coleman said on Friday there was only enough cash in the kitty for the company to survive until January. He expressed confidence that a "rescue partnership" would be in place before the end of the year.

Money broker Exco came back to market at 26p. The shares were suspended at 23p while the reverse take over of InterCapital went through. Wiggins, the property group with airport aspirations, gained 0.75p to 11.25p as Harlaquin, the vehicle of chief executive Oliver Iny, picked up 8.6 million shares, lifting its stake to 12.42 per cent.

Danka Business Systems had another torrid session. Fears that the refinancing will dilute shareholders hit the price 21.5p to 60p.

Booker, where takeover hopes still linger, firmed 1.5p to 125.5p. It is selling off its processed fish side for about pounds 50m. A German bid or an entrepreneurial break-up strike is the current speculation. The shares were 479p five years ago.

SEAQ VOLUME: 741.8 million


GILT INDEX: 109.97 +0.71

SHARES IN Rank, the leisure group, weakened to 233p ahead of third- quarter figures on Thursday. There are fears that the market will have to contend with yet another depressing statement.

Institutional investors are known to be anxious about the group's performance, and unless chief executive Andrew Teare can lighten the gloom, calls for management changes will resurface. Rank shares were 410p in the spring.

THE CHANNEL Islands Stock Exchange, based in Guernsey, starts trading today. It looks like being a low-key launch, but a steady stream of companies are expected to seek quotes.

The first arrival will be an investment group, and Channel Island companies with London quotes are expected to join soon. Early CISE members include stockbroker Collins Stewart and Winterflood Securities, the small companies market maker.

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