Market Report: City talks up prospects of fresh Glencore-Rio Tinto merger talks

When are Glencore and Rio Tinto going to merge? Talks between the two came to nothing last October, kickstarting a six-month cooling-off period that ended yesterday.

Like an impatient mother pushing for matrimony, the City immediately began to talk up prospects of fresh merger talks. “Will they or won’t they?” asked Shore Capital’s Yuen Low. Mr Low reckons price could be a sticking point given Rio’s recent strong performance but seems optimistic a deal could be done in the long term. Meanwhile, reacting to news that Rio has increased the size of its share buyback scheme, David Madden, IG’s market analyst, said: “I suspect the mining company is keeping shareholders onside since Glencore is now able to make another offer.” Rio Tinto advanced 111p to 2,862p, while Glencore climbed 9.9p to 290.65p.

Revived talk of a merger between Virgin Media-owner Liberty Global and Vodafone, up 3.2p at 225.4p, was also swirling, along with the age-old tale that the Qataris are on the verge of taking full ownership of J Sainsbury, up 9p at 269.4p. Royal Mail climbed 5.6p to 448p on hopes of further consolidation in the wake of FedEx’s swoop for TNT Express.

Perhaps the biggest story of the day was oil. A 5 per cent spike in the price of Brent on Monday sent producers surging on the first day of trade after the Easter break. BG Group topped the Footsie, up 57.5p at 910.4p, while Shell welled up 82p to 2,208.5p and BP gushed 12p higher to 454.85p. On the mid-cap index Premier Oil leapt 17.3p to 150.8p, Soco International put on 12.9p to 172.6p, Ophir Energy improved 9.4p to 145.6p and Cairn Energy rose 10.6p to 170p.

All this optimism spurred the FTSE 100 128.31 points higher to 6,961.77.

Shire improved 225p to 5,385p as it announced plans to submit a hyperactivity drug for clearance with US regulators. Eastern European budget carrier Wizz Air flew up 55p to 1,480p as both Citi and JPMorgan started coverage with a “buy” recommendation. Wizz listed at 1,150p at the end of February.